1. Introduction Virgin Blue is the low-fare/high quality carrier, one of the leading airways in Australian airline industry. Its objective has been established itself as Australia’s leading low-fares scheduled passenger airline through continued improvements and expanding offerings of its low-cost service and caters to customers who are after an economical, yet reliable airline. Virgin Blue was launched on August 3, 2000. Having only starting with two aircrafts, it has since expanded to all major Australian cities and favoured holiday destinations (Virgin, 2007).
Virgin stands for value for money, quality, innovation, fun and a sense of competitive challenge (Virgin, 2007). 2. Strategic management and strategic competitiveness In this context, VB has built strong strategic competitiveness in Strategic management. Strategic management is an endeavour to examine wealth creation and capture it by firm. Firms should be aware of their business level and should struggle to maintain or to expand their competitive advantage. Strategic competitive advantage is gained when the firm fully achieves core-value implementation.
However, due to the advent of 21st century’s rapid, changeable and uncertain environment landscape, firms may encounter strategic discontinuities. In order to navigate effectively in this new competitive landscape, firms have to develop strategic flexibility and competitive advantage while building dynamic core competences, performing strategic leadership, employing valuable strategies, implement new strategic structures and so forth. VB has built strong competitive advantage by low leisure fare, offering corresponding quality compared to other airlines by innovations and services.
However due to the quick responses of other airlines and the entrant of new low-fare provider, the VB’s competitive advantage is getting threatened. 3. External Environment Like every other organisations, external influences will always be presented. Virgin Blue has learnt firsthand how external influences can influence organisational behaviour. These external environments consist of general, industry competitor analysis which each presents factor/conditions of firm, affects firm’s profitability and predicts the dynamic of the competitors. As or VB, technological and global segments can be indirectly effected in general environmental term since it is strongly related to their profits. VB has to keep in pace with the existing technology and seek ways to survive within global competitors. Airline industry’s entry barrier is quite high which makes the industry seem attractive, hence, the competition between the airlines are somehow fierce. Australian domestic market is facing renewed competition due to the Singapore’s Tiger Airway and Tiger Airway is in an effort to break the “cosy duopoly” of Qantas and Virgin Blue.
VB has to analysis and understand rivalry competitor’s capabilities and current strategy in order to stay in the track. 4. Internal Environment The internal environment consists of the inherent competencies of the firm and the structure of its internal systems and processes. It is imperative for the organization to conduct an internal analysis to obtain a clear picture regarding its strengths and weaknesses. This helps the organization to design suitable strategies towards leveraging its strength to gain sustainable competitive advantage in the market.
VB has achieved its core competency by cutting costs by limiting the number of airports serviced, operating one type of aircraft, the Boeing 737,paying employees less than its major rival Qantas and successful outsourcing.. A continuous focus on cost-containment and operating efficiencies is a critical aspect of the Virgin Blue’s success. VB obviously has chose “Low-Cost” strategy and VB has created value to customers by providing as high quality and low cost carrier.
VB supplies its own customer and ground handling services at its busiest airports but outsources these functions at other airports. It also outsources catering at all airports, some maintenance services, and the overflow from its call centers (Virgin Blue 2003). VB is more flexible about the implementation of a thirty-minute flight “close out” notion. VB also has announced a program to offset its greenhouse gas emissions relating to save global nature or reduce carbon emissions, which increased company’s image and passenger number.
Yet, to have sustainable core competencies, VB will have to create innovative ideas that are costly to imitate or non-substitutable in order to attract more customers and to lower the price since having low cost itself as a core competency is risky and insufficient to survive in this turbulent globalized . society. 5. Business level Strategies An organization’s core competencies should be focused on satisfying customer needs or preferences in order to achieve above average returns.
This is done through Business-level strategies. Business level strategies detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service markets. Business-level strategy is concerned with a firm’s position in an industry, relative to competitors and to the five forces of competition. VB is implementing cost leadership strategy, concentrating on searching for ways to lower the cost, providing satisfactory quality at the same time.
It was achieved by homogeneous aircraft fleets, simple business processes and superior method of outsourcing. Successfully implementing and maintaining this strategy needs constant focus on driving costs lower relative to the competitors. However, making use of cost leadership is risk-free, as seen in present state, Tiger airway has caught the cost advantage of VB with differentiations, while Qantas still leading the airline industry. 6. Conclusion In conclusion, Virgin Blue’s idea: “That people would fly a lot more, if it costs a lot less” turned out to work brilliantly.
VB’s growth has been not only been impressively fast, it’s also been based on developing good ideas through excellent management principle rather than on acquisition. VB looks opportunities where they can offer something better, fresher and more valuable and seize them. Also, Virgin Blues is reported to be Australia’s most on time airline. Steven Townend, Chief Commercial Officer and Deputy Managing Director of BOC Aviation said that “Virgin Blue is an established name in the Australian market for business and leisure travel”.
Overall, VB has successfully achieved strategic management with above returns over past 10years. Still, VB will have to concentrate on their own capability, initiate value creating services or technologies attempt ways to gain core competency which superiors other airlines. 7. References Hanson, D. , P. Dowling, et al. (2008). Strategic Management: Competitiveness and Globalisation. Asia Pacific Third Edition. Southbank, Victoria, Thomson. Traca,D. &, Croti,E(2004) , Virgin blue: Fighting with national champions, from http://dev. ulb. ac. e/soco/tracadan/uploads/file/Virgin%20Blue. pdf David J. Teece; Gary Pisano(1997). Amy Shuen, Strategic Management Journal, 18(7), 509-533. Hitt, M. A, Keats, B. W, & DeMaiie, M. S(1998) Academy of Management Executive. Navigating in the new competitive landscape: Building strategic flexibility and competitive advantage in the 21st century, 12( 4) Fenner. R (Jul 28, 2010). Virgin Blue, Tiger seek to lure business flyers from qantas. Bloomberg News. Retrieved from http://www. bloomberg. com/news/2010-07-27/virgin-blue-tiger-seek-to- lure-australian-business-flyers-from-qantas. tml ——————————————– [ 1 ]. Internal environment from University of new Orleans http://jobfunctions. bnet. com/abstract. aspx? kw=internal+environment&docid=88706&tag=conte nt;col1 [ 2 ]. Bamber. G. J, Lansbury. R. D, Rainthorpe. K, Yazbeck. C, Low-Cost Airlines’ Product and Labor Market Strategic Choices: Australian Perspectives, from http://www98. griffith. edu. au/dspace/bitstream/10072/13201/1/40523. pdf [ 3 ]. Azriel. J(1999), Strategic management from http://www. albany. edu/faculty/ja0754/bmgt481/lecture1. html