PESTLE Cultural Factors Hundreds of flights to and from

PESTLE Analysis on Virgin Atlantic  1.1 Political Factors In the airline industry, one of the political factors are regarding the fear of terrorism attack. Terrorism is a serious problem now as there are some political problem from with the Islamic country. (Tanguay et. al., 2010). Since the threat of terrorism attacks are pretty often now, as an airline company, the operators are strictly required to focus more on ensuring the safety of the all the flights and also to make sure every plane are installed with the safety tools, like first aids box, life vest, oxygen mask etc. (Amernic et. al., 2004) With all these problem, the financial of airline operators, Virgin Atlantic, will surely be affected.  1.2 Economic Factors Brexit are constantly dropping recently and it is affecting the economic on most of the British airlines which including Virgin Atlantic. The fall of pound’s value caused lesser people willing to travel around the world for holiday due to the increment of unemployment rate and inflation rate. This will dampen the demand of air flights. And when the economy is not doing well, people tend to switch to cheaper fare airlines operators (Tierney et. al., 2008). Hence, to prevent people from switching to cheaper airlines operators, Virgin Atlantic started to reduce their ticket’s fare to attract more people to buy their tickets.   1.3 Social and Cultural Factors Hundreds of flights to and from Europe have been cancelled due to a strike by French air-traffic controllers. A number of ATC union strikes hit France due to a series of social disputed labour reform by the Socialist government, which caused Virgin Atlantic to cancel most of their flights to and over France. The affected airline operators already petitioned to the Europe government to come out a plan to minimise the impact of ATC strikes passengers as fast as possible. (Qin Xie,2016) 1.4 Technological Factors The advancement in technology grow unexpectedly fast in the 20th and 21st century. It is a well-known fact that everyone cannot deny. One of the best invention from technology is the internet. Internet allows everyone to get their things done in a few clicks, like paying the bills, buying things online, and of course, buying air tickets online. We not only able to buy the air tickets, we are able to compare the prices between a few airline operators as well. Online check-in is also recently invented as well. Virgin Atlantic’s app are available on cellphone as well for passengers to easy access to their flight’s information. In 2014, Virgin Atlantic introduced Google Glass will be used by their concierge staff to recognise their passengers. This technology allows staff to identify a customer, their flight details and also the passenger’s preferences will be shown as well. (Victoria Woollaston, 2014) 1.5 Legal Factors Different country has different laws and regulations. It implies on the different airline operators as well. For example, if a passenger is flying in to Singapore, he/she is not allowed to bring in any cigarette to Singapore, not even in the duty-free store. This rule also imply at the Woodlands custom between Malaysia Johor and Singapore.  1.6 Environment Factors Environment factors have the most impacts on airline industry. In 2016, Virgin Atlantic suffered from operational disruption in June and January 2017 due to the unexpected weather conditions. Heavy rain, thunderstorm, typhoon etc, will affect heavily on all the flights that are flying on that day. If the weather is not good, the flight will either be delay or cancel if it is very serious. This will result in loss of future revenue, customers’ trust and additional costs if the operators did not handle it wisely.  Porter’s Five Forces Analysis 2.1 Threats of New Entrants The threats of new entrants for Virgin Atlantic is consider low as a large amount of capital is require to enter the industry. Further, airlines cannot choose to exit the sector however they want as they have to carry out their contractual obligations towards their stakeholders. Having said that, it will be difficult for new entrants to enter the industry as the carrier need to have a large amount of capital and being responsible for their stakeholder. 2.2 Rivalry Amongst Competitor There are hundreds of airlines operators around the world. From offering at lowest fares to best luxurious business class. The industry will only become more and more competitive with all the different offers. Although not all of the airline makes profits from it but it does not stop carrier from setting company and enter the industry. (Management study guide.) As the competition become more and more intense, many companies are trying to merge their company to be a bigger company and wish to win over the better, bigger airline operators. (Grant, 2011) 2.3 Bargaining Power of Buyers That one force that give the most impact on Virgin Atlantic, it has to be the power of buyers. With the great technology, tickets can be booked through many websites. Virgin Atlantic itself is a successful low-cost carrier and many airline operators have successfully imitated Virgin Atlantic’s business model which means they are snatching away fliers. Therefore, Virgin Atlantic came out with loyalty program to encourage their regular customers to return.  2.4 Bargaining Power of Suppliers The main suppliers for Virgin Atlantic are Boeing and Airbus. In addition, the fuel supplier, ground support and catering vendors. However, there are not many suppliers who supply these items, hence the bargaining power of suppliers is high. Due to the limitation of supplier, airline operators usually sign a long term contract with the suppliers to prevent increasing of cost.  2.5 Threat of New Substitute The threat of new substitute for Virgin Atlantic can be consider very low. When talk about going to a place that is thousands of miles away in a fastest time, everyone will consider air travel. To save time, many of us would actually opt for air travelling even when it is just a 5 hour drive from Kuala Lumpur to Perak. However, due to recession, some might choose to travel by sea, drive or railway to save cost. There are also people who would prefer to enjoy while travelling to another country so they might opt for cruise. Instead of traveling to another country for meeting, telecommunication is also an option right now. It saves cost and time also lesser leave will be taken by the worker.  SWOT Analysis on Virgin Atlantic 3.1 Strength Virgin Atlantic is the only British airline that make into the global top 10. Virgin Atlantic and ranked sixth place in a survey of the best airlines in the world. In another word, Virgin Atlantic have very strong brand image and won many awards. For example, ACW Cargo Airline of the year in 2011 and 2014, Payload Asia Belly Carrier of the year in 2015 and the most recent one, FTA Multimodal Air Cargo Operator of The Year Award in 2017. They have won a total of 32 awards since 1990. (Virgin Atlantic)  Virgin Atlantic also put in effort to give the best service for their passengers. New mobile app, improved self-service check-in kiosk are installed for the passengers. Not only this, Virgin Atlantic also invested in tablet for the in-flight crews to provide a better service for their passengers. As I mentioned above, Virgin Atlantic also bring in Google Glass to provide personal service for the Upper-Class passengers by the concierge staff. Virgin Atlantic is also well-known for being the first airline to introduce Pets Onboard plan. Pets are allowed to travel on board with the passengers in Virgin Atlantic now. 3.2 Weakness Virgin Atlantic on focus more on Europe and North America. The only Asia country they have flight to is Hong Kong, Shanghai and Delhi, Dubai for the Middle East. As a strong brand image airline, Virgin Atlantic should consider entering to more Asia countries. In a survey of most visited countries in the world in 2015, Singapore ranked 24th, Japan ranked 21st, South Korea 19th, Macao 18th, Thailand 14th, Malaysia 12th, and China ranked 4th. (Alex Salamanca, 2015). Just imagine if Virgin Atlantic start to have flights for the country above, I believe their revenue will definitely increase.  3.3 Opportunity There are plenty of opportunities for Virgin Atlantic. They can start to have flights to more Asia countries. It will not only increase their profit, it will also help to expand the company and spread awareness about their company to Asia. Especially for China, China is the one of the biggest country in the world. Currently, China have at least 200 airports. If Virgin Atlantic manage to enter the China market, it will be a big achievement for the company. Virgin Atlantic also approved for the expansion at Heathrow Terminal which is a major hub across all around the world. With the expansion, it will allows Virgin Atlantic to have more direct flights and destinations.  3.4 Threat As the economic change, the fuel for plane will be increasing. Fuel is the most important thing for a plane to fly, so it will affect the cost. Terrorism is also a threat that affect Virgin Atlantic. Recently, a bomb threat was announced inside one of the Virgin Atlantic’s plane and the staff have to remove the passengers for a strict security check. Another threat will be the competitors. UK have a lot of airline operators and most people like to compare Virgin Atlantic with British Airline.  4.  According to the case, the decision is programmed from 1997 to 2011. The Virgin Group manage the Virgin Rail well and it also doubled the number of passengers to 28 million a year. It also managed to earn a great financial return. They also have high customer approval ratings. All these are only manageable when the company follow the right procedure and law.  However, in 2012, the contract was due and Virgin lose the bid to their rival, First Group. Branson was frustrated with the result and he thinks that there must be an error with the rival bids and lead him to start a fierce attack. In this case, the action is non-programmed. Branson hired a lawyers and advisers to check if the rival bids were done correctly and also planning to sue the government even when his lawyers voice out that it might affect the company image. Later, it was announced that there was indeed some error with the calculation.  Even though the decision is non-programmed, Branson still manage to keep his company going.  5. The story does support the emergent view of strategy. Richard Branson operated his business in a way that if his business reached a certain amount, he would open a new business for opportunity. He is always ready to take up challenges which lead him to such a successful person. For example, when the postal strike took place, and affect his mail business, he did not hesitate and open the Virgin Retail when the UK government change the retail maintenance fee, he took up the challenge and he managed to get a 15% discount price compared to other shops. Not to forget, when the government make a change in the laws and regulations in the airline industry, he opened Virgin Atlantic and it is still doing well.  Virgin Group now have more than 30 businesses in many different fields and are still expanding. They are hoping to increase their revenue by maintaining their current business while still able to keep their brand image. Virgin Group are also well-known for being able to take care of their employee with excellent work-life balance scheme, health care, bonus and rewards. From doing this, the employee will choose to stay loyal to the company and the turnover rate will not be high as well. From here we can tell that Virgin Group are clear with their goals and are currently implementing planned strategy to achieve their goals and maintain their image.  6.1 Cost Leadership Strategy It is always the lower cost fare and middle range fare are more attractive to the customers. Although Virgin Atlantic cannot be categorize into the lower cos fare group, but Virgin Atlantic make sure their customers receive excellent service and a comfortable flight.  6.2 Focus Strategy Virgin Atlantic focus more on entering a particular market as well as understand the market. However, focus strategy cannot be use alone and cost leadership strategy or differentiation strategy should be considered as well.  6.3 Differentiation Strategy Virgin Atlantic have their unique way to attract their customers. They are always using different way to be more recognized and to be special from other airline operators. Virgin Atlantic can be differentiated by their great service, good image and creative products. Like having Google Glass as a tool to serve their Upper-Class passengers, their touchscreen seatback entertainment, having an improved check-in kiosk and online check-in to reduce the waiting time for the passengers. For their staff, Crew PlanIn App, has been use to assist their customers. (Katie Allan, 2017). From here, we can tell that Virgin Atlantic value a lot of customer service and are willing to improve and invest in technology and human resource to provide a fantastic service.       

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