The airline industry and its deregulation - Myassignmenthelp.Com

Question: Discuss aboutThe airline industry and its deregulation. Answer: Introduction The report helps in analyzing the different key forces that are having huge influence on the Virgin Airlines that is one of the companies of the entire Virgin Group of Companies. The Porters Five Forces analysis is required to be done for the Virgin Airlines in understanding the new entrants, buyers, substitutes and competitors in the market. The main aim and purpose of the report is to understand whether the decisions mentioned in the respective case study are non-programmed or programmed. The generic strategies have to be analyzed, as this will help in understanding the different issues that are appearing the company. The structure of the report includes proper SWOT, PESTLE, and Porters Five Forces analysis, as this will help in analyzing the issues in an effective manner. Analysis of the key forces in the general environment The macro environment is described with the help of PESTEL analysis that helps in analyzing the long-term influences. This is one of the best analytical tools in analyzing the external environment of Virgin Airlines for understanding decline or growth in the market ("VirginAmerica.com's New Look", 2018). It helps in understanding and identifying the different political, legal, economic, environmental, social and technological influences for the entire business environment. Political is one the factors that help in understanding the political influence on the entire Virgin airlines. In the year 2016, the Virgin Atlantic has operated in political environment that was challenging in nature (Suki, 2014). This was characterized by different kind of terrorist attacks in different destination key markets such as Brussels, Nice and Paris. The biggest shock politically was Brexit that occurred in the month of June in the year 2016wherein Britain voted to leave EU and there were huge uncertainty in the entire economy of United Kingdom (Daft Albers, 2015). There are different potential implications that included regulatory compliances wherein there were no future policy as well. Furthermore, the entire expansion of the Heathrow post Brexit will help in allowing carriers such as Virgin Atlantic as this will offer different direct flights in such a manner that included 40 new cities as well (Zou, Elke, Hansen Kafle, 2014). Economic is another environmental wherein the entire uncertainty following Brexit has economic impact on different British Airlines that included Virgin Atlantic. According to the different annual reports, as there was a drop in the Pound Sterling value, the revenues that is generated by Virgin Atlantic in the USA was negatively impacted as the largest expenses of the Virgin Airlines are in dollars and the revenues are in pounds. It has been seen that there was huge impact on the financial results of the company that was negative in nature amounting to 50million despite of different hedging profits (Ognyanova Ball-Rokeach, 2015). Social environment is another analysis wherein in the peak season of summer in 2016, it was difficult for Virgin Airlines to operate in an effective manner. There were number of union strikes of ATC that has hit France in the year 2016, as there was social unrest over series of different labor reforms that was disputed in nature (Misopoulos, Mitic, Kapoulas Karapiperis, 2014). This has caused different cancellation of flights of Virgin Atlantic Airlines to and over France. In the year 2017, a five-day strike has affected the different flights from UK and Virgin Atlantic along with other airlines had developed action plan in order to minimize the different strikes in ATC on the different passengers (DaSilva Trkman, 2014). Technological environment is another component wherein the entire airline industry is undergoing disruption digitally. The digital technologies are changing the entire structure of cost of the airline industry enabling new entrants that are WOW Air, in order to use the digital technology to disrupt the carriers of the legacy such as Virgin Atlantic (Dai, Liu Serfes, 2014). The Virgin Airlines has invested in the IT systems such as crew tablet devices, as this will help the managers to deliver personalized and seamless services to the passengers. The respective airlines will help in minimizing the disruptions digitally while taking proper advantage of the technology. Legal environment is another component, wherein in the month of December 2016, the pilots of Virgin Atlantic decided in order to take action industrially in row over recognition of union after the union of the pilots. The union of the professional pilots helped in representing over more than 75% of the virgins more than 900 pilots that demanded to be solely recognized kind of union for the pilots as well as for British Airline Pilots Association to be derecognized (Wiman, Walton, Shearer, Rondon Lee, 2015). Environmental is one component wherein Virgin Atlantic Airlines faced sustained operational kind of disruption in such a manner that caused due to the different weather disruptions. Due to the thunderstorms in the South East England, it has led to different cancelations for the entire airline industry that included Virgin Airlines as well (Mills, 2017). Five Forces analysis of Virgin Airlines Rivalry among the different competitors is one the five forces wherein it can be seen that Virgin Atlantic Airlines has different competitors who have entered in order to gain profit of the respective airlines. The entire airline industry does not gain profits on a regular basis, it has stopped different competitors to enter into the market and the competition is high in nature as well (Lee Leskey, 2015). The entry as well as exit barriers for the entire aviation industry is quite high in nature as this has been seen that there is huge amount of capital required for entering into the sector. There are relatively few competitors in the market for Virgin Atlantic Airlines and this has created and limited competition as well. The number of competitors in the entire airline industry is less and Virgin Atlantic Airlines has taken huge space in the entire airline industry (Han Hwang, 2017). Bargaining power of the Buyers is wherein the consumers or buyers hold huge power due to greater system of distribution (Heizer, 2016). There are different channels wherein the tickets are booked wherein the buying patterns or the power has influenced the Virgin Atlantic, as there are huge numbers of choices available in terms of different fares. The online system of booking has helped in providing different options to the customers for booking tickets. The product is important to the different customers, as this will help in analyzing the entire volume that is required to be analyzed in the airline company (Grant, 2016). Bargaining power of Suppliers is one of the components wherein the suppliers of the aircrafts are Boeing and Airbus. There are different suppliers including the ones who make spare parts and taking into consideration that the entire airline industry has no such carriers as it will dominate itself from terms of suppliers (Kaynak Kucukemiroglu, 2015). The power of the suppliers is becoming low in nature in terms of the cost of fuels that is a premium product where buyers are taken as favorable product for the entire company. The suppliers has to be kept in mind in such a manner that this will help in analyzing that suppliers is valuable in nature and this will help in analyzing the low concentration of the suppliers (Rezaei, Fahim Tavasszy, 2014). Threats from the entry of new entrants is another force wherein Virgin Airlines faces tougher external environment and this has made hard for the different entrants to take a place in the entire competitive market. Furthermore, yet once a particular company has entered into the business, it can rise to the peak or decline in the position of the entrants. Proper high requirements of capital is essential in nature as this helps in understanding the different threats from the competitors who are trying to gain such profit from the Virgin Atlantic Airlines. There are different customers who are loyal to different other brands and this can affect the Virgin Airlines to suffer and this will be affecting the entire loss to the respective airline company. Substitute of existing products is another component wherein there are no such threats for Virgin Atlantic Airlines. The main priority of the Virgin Atlantic is the customers who chose to travel by air (Snider Williams, 2015). As there is ongoing recession, there are different companies are utilizing these options such as telecommunication as well as virtual meetings as this will avoid travel and continue to work. The other substitute companies or airline companies are of low quality and standards and this will be strength for the Virgin Airlines as well. There is limited number of substitutes in the entire market, as this will help in gaining huge competitive advantage in the market (Williams, 2017). SWOT analysis of Virgin Airlines A proper SWOT analysis of the Virgin Airlines helped in analyzing the different strengths and weaknesses that is faced by the Virgin Airlines. The SWOT analysis helps in understanding the internal and external performance and situations. Strengths Virgin Atlantic Airlines enjoys brand reputation that is strong in nature and this was ranked sixth in the survey of the best airlines. Virgin Airlines has been rated as one of the top airlines in the entire airline industry The fleet has been modernized in nature The Virgin Airlines has been awarded as the best cabin crew from Airlineratings.com The new VHQ headquarters has been opened in the month of September Virgin Airlines has launched AIR4, Virgin Atlantics transformation technologically in the history of the company Weaknesses There has been heavy reliance on the personality of the celebrity of Richard Branson for the brand promotion of the respective airlines Heavy competition from the cash rich gulf airlines Disproportionate growth has skewed the flights of USA when it is compared to the other high growth regions such as China, Middle East and India Opportunities The government has approved third run away at Heathrow is the best opportunity for BA There has been continued low prices of the fuel in the year 2017 that will translate the low cost of the fuels Virgin Atlantic Airlines can increase their different routes and destinations internationally Threats Brexit from Europe created uncertainty in the environment of business and the financial markets Digital disruption continues to be major threat There has been adverse conditions of the weather The rise in the cost of the labor is affecting the margin for the Virgin Atlantic Airlines There has been huge change in the regulations of the airways and the increase in the cost of the fuels as well Continuation feud between the PPU and Balpa has been recognized as sole union of Virgin Airlines From the above SWOT analysis, it can be analyzed that there are different strengths of the Virgin Atlantic Airlines that include that it has strong foundation along with efficient services. The Virgin Atlantic Airlines has satisfied and proper base of the customers and this has become the preferred airlines for the affluent customers as well. The advertising technique that is used by Virgin Atlantic is innovative in nature and Richard Branson does the entire branding. Virgin Atlantic Airlines has carried more than 5 million passengers in a whole year and it has become the largest British Airlines with more than thirty-five destinations. Furthermore, there are different weaknesses of the Virgin Atlantic Airlines that included that there is severe amount of competition for the respective airlines in the market. The market share of Virgin Atlantic Airlines has been limited in nature and the growth is limited as well. The global presence has been limited in nature that can cause issues for Virgin Atlantic Airlines and this is specially taking place in the emerging countries. Furthermore, there are different opportunities for the Virgin Atlantic Airlines that included Heathrow terminal is major hub across the entire world and it has created huge presence. The respective airlines have leveraged their strong presence of brand as this helped in penetrating globally in the market. The Virgin Atlantic Airlines is increasing the international destinations and routes as well. Lastly, there are threats to the respective airlines named Virgin Atlantic Airlines that included that there is rise in the cost of the fuel along with changing regulations of the aviation industry as well. The huge amount of rise in the cost of the labor affects the entire margins for the Virgin Atlantic Airlines and there is huge competition in the entire European market as well. It has been seen that there are different competitors of Virgin Atlantic Airlines that included British Airways, Qatar Airways and Emirates. Analysis of the decisions: Programmed or Non-Programmed The decision that has been mentioned in the Virgin Group is programmed in nature, as there have been different situations in the respective airlines. The officials of the respective group have encountered such situations that include business of Virgin Rail wherein there has been competition and lost bid for the 15 years to the rival FirstGroup. The entire Virgin Group help in surviving all over again after such issues that has taken place and the decisions that are taken by the entire group has implemented different strategies presently that helped them in solving such crisis and issues in an effective manner. There has been different uncertainty in the business matters that is causing issues in the entire business. This has caused and implemented higher level of risk factors in the business of the Virgin group regarding specific decisions. The programmed decisions are related to the different daily activities that can be handled with the help of different business rules and procedures. Virgin Group is using such techniques in an effective manner, as this will help them in solving the different matters wherein too much discussion is not required as well. In the programmed decisions, the managers of the Virgin Group had made real decisions as this will specify different procedures to follow when the similar kind of situations occur in the organization. Example of dependency of decisions From the example of Virgin Rail, it can be analyzed that the dependency of the decisions is related to the different flaws that has occurred in the different decisions that has been taken by other companies in Virgin Group. With the help and dependency of different rules, regulations and procedures, it will be easier for Virgin Group to make appropriate changes relating to the decisions of their company. Analysis of the emergent view of strategy followed by Virgin Group In the last couple of years, the Virgin Group has focused on the geographical expansion strategy of the existing product portfolio. This helps the entire Virgin Group has taken its successful concept of the entire Virgin mobile phones in other countries. The emergent approach that is followed by Virgin and the strategies were partly successful in nature as well. The emergent view of the strategy that is followed by Virgin has to be analyzed in such a manner that this will help the entire Virgin Company in maintaining protecting the brand and this will help them in diversifying the entire business in an effective manner. The emergent view of the strategy that is followed by respective company is experimental in nature wherein the respective company is trying to adopt different changes that will help them in gaining competitive advantage in the entire market. The different generic strategies of the Porter is followed by Virgin Group as this will help in generating different strategies that will help them in expanding their other businesses. The strategies that are emergent in nature and used by Virgin Group of Companies are not successful completely but it is partially successful in nature that has to be taken care of the different issues faced by the other brands of Virgin. The Virgin Group will implement strategies relating to the different issues faced by the company presently as this will help the entire airline company in solving the issues in an effective manner. The effectiveness is essential in nature, as this will help in solving such issues within a specified deadline. Virgin Group requires understanding the different alliances that will help them in minimizing the risks in a positive manner, as this will help in solving the issues. Generic strategies followed by Virgin Group Virgin Group helps in understanding the requirements of the customers and this has been rendered as the niche airlines who are seeking value for money. The Virgin Group has managed in serving different kind of customers in an effective manner. The different generic strategies that can be followed are as follows: Cost leadership: is one of the generic strategies, as this will help in attracting the customers towards their different businesses such as Virgin Mobile Company along with Virgin Atlantic Airlines. The cost leadership strategy is helping the company in increasing their profit by reducing the cost Differentiation: Virgin Group of Companies provides the customers with customized along with different flexible services with their different companies. The different passengers feel delighted in nature when they are offered services that are of their choice and this helps in increasing the satisfaction levels of the customers. On the other hand, there are different ranges mobile phones that are sold by Virgin Mobile Phones that includes ability to deliver good products along with innovative strategies (Putz, Vorwagner Hoch, 2016). Focus is another generic strategy that is adopted by Virgin Group wherein the focus of the group is to enter the niche market along with understanding the market dynamics in an effective manner. The focus strategy does not work alone and therefore, it has to be teamed up with differentiation and cost leadership strategy. Virgin Group of Companies is using Porters Five Forces Generic Strategies in such a manner that it will be competitive in nature. One of the main strategies that are adopted by Virgin Group is to promote the brand all over the market with differentiation strategy. The differentiation strategy helped Virgin Group of Companies to be known as well equipped and convenient in nature for the customers. Issues faced by Virgin Group of Companies There are different other issues that have been faced by Virgin Group of Companies are as follows: There has been huge competitiveness that has been one major problems in Virgin Group of companies and the change in the GDP is reflected on the cost of the fuel in the airlines sector along with rise in the prices of the mobile phones and there has been no integration on the operations (Shaw, 2016) The fuel price has been one of the factors that is faced by the Virgin Atlantic Airlines and this is imposing the charges of fuel on the different customers as well (Berghfer Lucey, 2014) There has been different kind of government legislations that is one of the challenges faced by the Virgin Group of Companies, as there are different sub companies involved with it. There are different changes in the rules and regulations imposed by the government that can affect the respective company negatively The increase in the competition in the entire European market is affecting the entire Virgin Group of Companies and this is affecting the regulations as well There has been severe competition as there has been limited market share growth for Virgin Group of companies especially for the airlines (Baker Saren, 2016) The safety management is another issue that is faced by Virgin Group of Companies that is affecting the customer base of the Virgin Airlines along with Virgin Mobile Phones. There has been different safety issues in the Virgin Airlines that is affecting the customer base and this is affecting reputation of the airlines and there are change in the preferences of the customers in the mobile department (Hapsari, Clemes Dean, 2016) There is lack of operational efficiency in the management of the Virgin Group of companies wherein the customer service is getting affected in a negative manner. This is causing huge negative influence on the airline and mobile companies along with Virgin Rail (Bilotkach, Gaggero Piga, 2015) Therefore, it can be analyzed that Virgin Group of Companies has faced these challenges presently as these are affecting the reputation of the company. The Virgin Group of Companies need to understand the issues in an effective manner as this will help them in solving the issues and gain competitive advantage as well. References Baker, M. J., Saren, M. (Eds.). (2016).Marketing theory: a student text. Sage. Berghfer, B., Lucey, B. (2014). 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