Since its initial two aircrafts, Virgin Blue enlarged to all main cities and popular holiday attractions, and become one of Australian greatest domestic airlines. Through enlarging offerings and continuous developments of the low-cost services, the company has run strongly. The main purpose of this report is to apply strategic management theory to the case study of Virgin Blue, to make sure whether Virgin Blue has gained strategic competitiveness in strategic management. With respect to the strategic theories, it will discuss strategic management and strategic competitiveness, and the characteristics of the 21st century competitive landscape has affected the strategic competitiveness of firms Virgin Blue. Following this, it will analyze the role of external environment in company performance, including the political, economic, social, technological, and environmental. Then, it will discuss the role of internal environment in company performance. Finally, it will explain how Virgin applies business level strategy to obtain competitive advantages in today and for the future.
2. Strategic management and strategic competitiveness
Virgin Blue has established and maintained powerful strategic competitiveness in strategic management. Strategic competitiveness is the outcome of successfully implement a value-creating strategy, examining wealth creation (Chang & Yeh, 2001). Companies need to know business level and strive for sustaining or enlarging competitive advantages. Strategic competitiveness is achieved if the company totally gains core-value creation (Ketelhöhn, 2006). For the sake of drive efficiently in the new competitive situation, companies must improve strategic competitiveness when acting strategic leadership, adopting valuable strategies, establishing core abilities, and carrying out competitive strategy (Donoso & Crittenden, 2008). However, the 21st century's changeful, fast, and variable competitive environment landscape has affected the strategic competitiveness of companies, which might run up against strategic discontinuities.
Virgin Blue has established powerful competitiveness through low cost, low leisure fare, providing corresponding quality compared with other airlines in terms of humanistic services and innovations. Nevertheless, owing to the fast reactions of other airline companies and the newcomers of low-cost offer, the competitive advantages of Virgin Blue are under threats. Nowadays, consumers would not lower requirements since they go on to develop more service comprehension enhancing their hopes from the benefits of staff to convenience in buying plane tickets. When consumers are not content, they will not buy the service offered and look others (Lane & Piercy, 2004).
3. External environment
No matter how steady the internal impacts are in a company, external environments are always shown (Pagell & Krause, 2004). Like any other companies, Virgin Blue has mastered how external environments affect organizational behavior, including the economic, technological, and environmental factors. The political factor stands for how companies affect the government and how government affects companies. Virgin Blue concerns about total rules influencing its business. The economic factor involves the guideline of economy where companies compete, as for Virgin Blue, it is essential to analyze the economic situation before making decisions.
Technological factor is crucial importance for Virgin, as consumers can obtain information through its website. Virgin is constantly browsing the external environment to recognize underlying substitutes for technologies to sustain competitiveness. Additionally, the environment plays an important role in the operating of a firm, especially in airlines. The environment is also crucial importance for Virgin Blue, so the company has take steps of the Carbon Offset Program, aimed to energy conservation, and neutralized emissions.
4. Internal environment
Sustainable competitive advantage is obtained, if a company takes advantage of distinct resources, abilities to generate new core competencies (Calantone, Kim & Schmidt, 2006). With distinct management structure, Virgin Blue settles appropriate people for appropriate position at appropriate time, which is more like a family rather than a hierarchy. Moreover, due to irrelevant diversification, the firm lowers risks and challenges in the airline market. The company also offers space for reestablishing internal resources and taking the advantages of resources configuration.
Virgin Blue represents value for benefits, quality, innovation, entertainment and a sense of competitive challenge. Through better scheduling system, the company sustains low cost culture, such as outsourcing of catering. In addition, Virgin Blue launches competitive shifts, such as a member lounge, code sharing alliances and enhancing marketing. It has harmonious relation with government, community, and copartner. However, Virgin Blue has some internal weakness, namely, self-governed organizational style is not profitable for playing comprehensive advantages, and its decision process excessively relies on Brason.
5. Business level strategies
Virgin Blue adopts cost leadership to lower the cost through a series of cost cutting measures, such as all in-flight meals and leisure offered onboard, cutting operating costs by the application of a single category of plane, and low wages. Moreover, the airline industry is more price elastic, Virgin has successfully sustained low cost culture by better scheduling system. In addition, the company offers defense against its competitors and assist to produces added market share. As a low cost and high quality carrier, Virgin Blue is among the leading airlines in Australian aircraft industry.
In terms of differentiation, Virgin Blue involves the generation of the product and service which is considered as distinct run through the airline industry. This character is related to its strong brand recognition, consumer service, and technology characteristic. Barriers to of new entrants and enhanced customer loyalty can create more benefits. With respect to cost focus, Virgin Blue would like to emphasize on the home company market share from 10% to 15% in following one or two year. Moreover, concerning differentiation focus, the company emphasizes not only home market but also global market through partnership with The Air New Zealand, and strategic alliance with the British Airlines.
6. Conclusion
In conclusion, Virgin Blue has obtained strategic competitiveness in strategic management. Virgin Blue represents value for benefits, quality, innovation, entertainment and a sense of competitive challenge. Virgin Blue adopts cost leadership to lower the cost through a series of cost cutting measures, and involves the generation of the product and service which is considered as distinct run through the airline industry.
