Assignment1 Business System Analysis ———Virgin Australia 1.Virgin Australia is the second largest airline in Australia. Its routes in Australia are from its centre in Brisbane, Melbourne and Sydney, 29 cities in total.
(Virgin Australia, 2016) It also was called Virgin Blue in 1999 as a low cost airline. After several years, they call themselves as “new-world carrier” by enhancing serves and technology. (Virgin Blue, 2011) In 2011, Virgin Australia announced a new business strategy ‘Game Change’ strategy and in 2012 The market that Virgin Australia chiefly competing in is domestic leisure market with Qantas, Tiger and Jetstar on large heterogeneous groups of people, such as businessman or students.
(Farabi, 2012) The business is aiming to provide online booking, included flights services, hotels booking, travel insurance, vehicles and holiday travelings. Virgin increases company visibility through advertisements, new dining options on board, promotions and loyalty initiatives. (Farabi, 2012) They also provides best services to guest, included guide guests when they arrive at the airport, efficiently check in, rebooking flights, gate notice, currency exchange and special assists.
(Virgin Australia, 2016) In order to make airline efficient and profitable, Virgin Australia using discounts ticket, economy class and first class as parted of pricing strategies. Airline also provided specially custom-made family packages for young families to enjoy holidays with their children. Reference List:Yasir Farabi (2012), Marketing Plan of Virgin Australia, Munich, GRIN Verlag, retrieved from HYPERLINK "https://www.
(17 May 2016) retrieved from HYPERLINK "http://connectonline.asic.gov.au"connectonline.asic.gov.
auVirgin Australia. (2016), Department profile, retrieved from HYPERLINK "https://www.virginaustralia.com/hk/en/about-us/careers/department-profiles/"https://www.virginaustralia.
com/hk/en/about-us/careers/department-profiles/ HYPERLINK "http://www.virginaustralia.com/au/en/about-us/media/2005/D_019920/"’Virgin Blue Announces Birth of the ;New World Carrier; in CAPA Report’ – Virgin Blue media release (6 May 2011)2.
Bargaining Power of Buyers: The bargaining power of buyers for Virgin Australia is strong in respect to customers have several options to choose their services, such as prior class air traveling services, discounted air traveling services and so on. In airline industry, customers always want to select the best offerings with minimum paid. Virgin Australia still has large pressure even though they are low cost airline.
More and more company imitated its marketing planning. Thus, the quality of services is the next parts of competition. Bargaining Power of Suppliers: The suppliers bargaining power is weak for Virgin Australia on account of numerous suppliers provided similar services. The suppliers for Virgin Australia are Boeing, airbus, and some suppliers provided aviation fuel and spare parts.
(Virgin Blue, 2011) In airline industry, Virgin Australia is one of the largest companies compared with others. As such, Virgin Australia have advantage to compete from expensive supplies like jet fuels. (Virgin Blue, 2011) New Entrants: The force of new entrants is weak in respect to quite high barriers to enter the airline industry.
It needs a number of capitals to enter the market. Airline industry need to undertake several rules, such as security and financial stability. Moreover, airline industry also have high exit barriers cause of suppliers and aviation sectors. Threat of Substitute: The threat of substitute is weak for Virgin Australia due to the most suitable and fastest transportation in west at longer distances is air traveling rather than road vehicle or water transport. Therefore, the threat of substitute is weak. Existing Rivals: The rivalry among existing firms is too strong for Virgin Australia.
There are more and more carriers entering the airline industry to seek interests. It causes intense fare competition and wars. Hence, most airline industries cannot make profit consistently by server rivalry among existing firms. Reference List: HYPERLINK "http://www.virginaustralia.com/au/en/about-us/media/2005/D_019920/"’Virgin Blue Announces Birth of the ;New World Carrier; in CAPA Report’ – Virgin Blue media release (6 May 2011) 3. Cost Leadership: As we known above, Virgin Australia is the low cost airlines.
The company is focus on both the quality of services and customers’ demand. But Virgin Australia lost its cost leadership with some of their competitors, such as Jetstar or Tiger airline. The mainly competitive advantage comes from the product differentiation strategy. Product Differentiation: Virgin Australia’s differentiation strategies can be observed from several aspects included services, catering service on board, packages, uniforms and so on. In addition, Virgin Australia has three different classes: first classes, premium classes and economy classes. The first class passengers can enter the indoor bar area, spa and office. Passengers even can select to book a limousine or motorcycles at airports.
(Virgin Australia, 2016) Virgin Australia also provided others premium services. For example, Virgin serves more than 30 destinations with airbuses, Boeings and airplanes. It also offers instant and urgent cargos for different countries around world.
(Henry, 2008) In my perspective, the porter’s strategies which Virgin Australia has been using is differentiation strategy in oder to increase popularity around the airline industry and market. Virgin Australia is famous for its diversity entertainment and well traveling services owing to differentiation strategy. The mainly difference between Virgin Australia and other similar airlines is its advanced modern technology. Also, Virgin Australia is the first airlines to offer passengers with personal entertainments and services. (Shaw, 2011) However, Virgin Australia also is a low cost airline. Thus, it combines cost leadership and product differentiation. The mixed strategy helped Virgin Australia not only achieve higher market share, but also gain market growth.
(Farabi, 2012)Reference List:Virgin Australia to accomplish high quality with low cost compared with other familiar airlines. (Shaw, 2011)Glosary, retrieved from HYPERLINK ;https://www.virginaustralia.com/au/en/help/glossary/;https://www.
virginaustralia.com/au/en/help/glossary/Virgin Australia. (2016). Stakeholder Engagement | Virgin Australia. retrieved from HYPERLINK ;https://www.virginaustralia.
com/au/en/about-us/sustainability/stakeholder-engagement/;https://www.virginaustralia.com/au/en/about-us/sustainability/stakeholder-engagement/Henry, A. (2008) Understanding Strategic ManagementShaw, S.
(2011). Airline marketing and management4. Virgin Australia has creative technology and high-quality services because they listen to the feedback of their customers. Therefore, Decision Support System is the crucial types of information system make the company success.
Decision Support System allowed the Virgin Australia to analysis data from customers and saved in database. By the help of Decision Support System, the company can generate a statistical data to improve the quality of services and create creative types of facility. Moreover, Virgin Australia made a number of significant decision to gain profit and market growth by the help of Decision Support System, included the ‘Game Change strategy, alliance strategy, differentiation strategy and management strategy.
For example, for the internet booking system, the Virgin Australia provided three class of ticket options, included first class, business class and economy class. (Shaw, 2011) They always correspond to each of these three types of users: The idols or leaders, businessman and students. After the flight, the customers can give their advice for services, food or entertainment on the internet or to the flight attendant.
That was data what users enter into the Decision Support System. The Virgin Australia would improve their services on basis of customers feedback. That was data what company extract from the Decision Support System. Reference List:Shaw, S.
(2011). Airline marketing and management5. The Decision Support System has helped Virgin Australia to achieve high levels of differentiation strategy and cost leadership strategy. From the Decision Support System, the company achieves cost leadership by giving discounted to the specific groups and hold differentiation strategy by diversity services and entertainment. Virgin Australia perfectly combine cost leadership strategy and differentiation strategy by Decision Support System. Also, the Decision Support System provided some competitive advantages.
Competitive Advantages: Firstly, in order to gain a competitive advantages and achieve high interest with low cost, Virgin Australia uses different resources to distinguish its services from others competitors. Differentiation strategy gives Virgin Atlantics a unique position to differentiate itself from other competitors in the airline industry and promotes customers to prefer Virgin Australia rather than other competitors which provided similar services. (Thompson, 2010) The most special characteristics of differentiation strategy is innovation.
In the airline industry, innovation gives them opportunity to attract customers and gain competitive advantage. This strategy makes Virgin Australia higher reputation and more reliable. Secondly, this strategy enables Virgin Australia to be sustainable in the current airline industry by gaining the competitive advantage. By the help of Decision Support System, Virgin Australia can know about what customers want and try their best to give it to them. It is capable of attracting more customers than their competitors. Reference List:Thompson, J. L.
, Frank M. (2010) Strategic Management: Awareness & Change 6. Two detailed examples of decision-making: 1. The first instance of significant decision made by Virgin Australia is change marketing strategy from low cost airline to full service. They called this decision as ‘Game Change’ strategy.
This strategy gave enormous benefits to the company. Virgin Australia started to conceive creative activities and utilize new technology after that. They promoted product’s development and diversity through brand extension. (Meng, 2012) For example, in 2014, the company applied new online check-in system with phone and computer. (Virgin Australia, 2016) In 2016, Virgin Australia activated a new product called Economy Space. It made traveling more comfortable and relaxed. (Virgin Australia, 2016) Therefore, it not only brings the company prestige but also gives the company a sustainable future.
Furthermore, mixed strategies also starts here. It kept costs low as much as possible on the basis of high quality services and then achieved both cost leadership and differentiation strategy. (Virgin Australia, 2016) Game Change strategy becomes one of the primary elements in competitive advantage. 2. The Second example of crucial decision made by Virgin Australia is becomes the alliance with Air New Zealand. (Virgin Australia, 2016) Through this alliance, Virgin Australia has connected Air New Zealand’s domestic network to Virgin Australia’s domestic network. (Virgin Australia, 2016) This provides the largest Australian airline network for trans-Tasman travelers.
Moreover, this alliance promotes the development of low cost with high quality services. They can satisfy customers’ need and make full use of space and flight avoid waste of space and cost. According to the statistics, low-cost airlines allow passengers to spend more at airports than full-service airlines. (Virgin Australia, 2016) Finally, alliance also reduces the competition and remain the win-win strategy.
In airline industry competition, Air New Zealand is a strong assistant for both of them to gain reputation and customers from other companies. Reference List:Virgin Australia. (2016). Air New Zealand and Virgin Australia airlines announce joint network. retrieved from HYPERLINK "https://www.
(2016). Virgin Australia History. retrieved from HYPERLINK "https://www.virginaustralia.com/au/en/about-us/company-overview/virgin-australia-history/"https://www.
virginaustralia.com/au/en/about-us/company-overview/virgin-australia-history/Kok Meng Chan(2012). Virgin Australia: Situation analysis of the ‘Game Change’ strategic plan