Business deals with providing goods and services to its customers and has an aim of making profits. An international business conducts its operations in more than one region by venturing into as many markets as possible. For its operations to run smoothly, management of the firm should analyse its strengths and weakness, its opportunities and threats and also its business environment. The analysis involves conducting investigations in both the internal and external environment of the firm. A report of findings is presented to the management which uses it to make strategic decisions. This report seeks to analyse Virgin Atlantic Limited as an organisation, its financial statements, and its business strategies, how it mitigates its crises and its roles and responsibilities in its society. Virgin Atlantic situated in Britain and offered air travel services for customers and cargo. It was established in 1984 and has grown over the years into a transnational company owned jointly Virgin group and Delta airlines.
Virgin Atlantic largely offers cargo and passenger air travel services. It has a variety of products to suit various clienteles. Apart from air travelling, it has tremendous assets in the hospitality industry where it provides lodging services to the upper-class members. Virgin Delta has increased its operations and has ventured in markets in all continents. Its large operations have ensured it makes consistent profits at minimum costs. The following report will analyse the operations of Virgin Atlantic Airlines.
Background and history
Virgin Airlines is an international air transport company with its headquarters in Crawley, United Kingdom. Its co-founders were Randolph Fields, Richard Branson and Alan Hellary (Anon, 2016). Their objective was to provide transportation services between London and Falkland. The idea of starting an airline was conceived by Field when the Falkland war ended. He needed an expert in the air transport industry and contacted Alan who was a former chief pilot at Laker Airways. Alan wanted to start a commercial enterprise in Falkland.
Following the collapse of Laker Airways, Alan’s former working place, they had the needed workforce to grow their idea into a commercial service enterprise. However, they faced challenges since the most convenient airport, Port Stanley, had a short runway and needed renovations. They dropped the idea and tried a different airport. Their second attempt involved applying for a license to operate between Gatwick and John F. Kennedy airport but their application was rejected (Anon, 2016).
After rejection at the John F. Kennedy airport, Field and Alan decided on applying for a license between the Gatwick and Newark. This posed a challenge as they faced stiff from the People Express and. They sort to seek more financing. Richard and Field met at a party, and Field presented his business proposal. After negotiations, Richard agreed to a business partnership, but Field had to reduce his stake in the company to twenty-five percent. The field was later bought out following disagreements on the running of operations. British Airways was incorporated and later changed its name to Virgin Atlantic Airways. It is now jointly owned by the Virgin Atlantic Limited holding fifty-one per cent equity and Delta Air Lines holding a forty-nine percent stake (Anon, 2016).
Virgin Atlantic was started to provide commercial air transport services between London and Falkland. With continuous success, it expanded its operations to different regions worldwide making it an international air transport service provider. The regions it operates in include United States, United Kingdom, Jamaica, Cuba, China, South Africa, Nigeria and Trinidad and Tobago. Virgin Atlantic offer transport services for cargo and people. It offers three different cabin configurations to its clients, the economy that accommodates all status, the premium economy and an excellent upper class. In addition to the air transport services, Virgin Atlantic operates lounges available for the upper-class in different cities.
Over the years, Virgin Atlantic has grown gradually. According to the annual reports of the year 2015, it recorded a revenue of two thousand three hundred and fifty-three million euros. Consequently, it recorded an operating cost of one hundred and ninety-six million euros which was a decrease from the previous year. Accounting for other expenses it had twenty-two million five hundred thousand euros as earnings before tax. This showed an eighty-five percent increase in profits of ten million one hundred thousand euros from the previous year. Its return on investment was six point eight percent.
International Business Strategies
International enterprises choose strategies depending on the product they are providing, markets they are venturing in, the competition they face and their environment. Globalisation of markets has done business to review their current strategies so as to meet their customers’ demand and deal with the competition. There are three main business strategies employed by international companies (Amuah, n.d.).
Standardisation business strategy is mainly used by foreign firms that seek to provide uniform products across all their markets. The unification policy deals with ensuring that a company maintains control of its operations and costs. It provides consistency, predictability and uniformity of services hence minimising operational cost and increasing customer satisfaction. On the other hand, it inhibits flexibility when an organisation ventures into a new market that requires change (Amuah, n.d.).
According to Reeve, M. & Deimler, M. (2011), new technology and globalisation have required firms to adapt to changing times so as to meet the market demands. Also, companies face many risks and an unstable environment. The adaptation strategy aims to aid business in facing these challenges and embracing the new changes. It also helps to identify emerging market gaps. It promotes flexibility of an organisation and increases identification and predictability of risks that an enterprise faces. However, this strategy does not help to control operational cost since it advocates for intense research to improve products and develop new ones.
Thirdly, the combination approach that helps ensure the stability of the business, expansion of activities and allocation of resources. This method helps companies to maintain their current market shares hence stability. It also allows for venturing into new market segments. A business that has no intention of having a product mix can capture a bigger market share by reaching different age groups and genders of customers in its current market. This approach has helped companies that have achieved maturity stage to remain stable (Hartman, 2016).
To choose an appropriate strategy, firms have to identify their objectives. International enterprises aim at having a market share in every region. Multi-domestic businesses seek to diversify their product mix through the identification of gaps in different markets and aim at filling them. The adaptation strategy suits such business as they can embrace the differences in these markets (Schwalbe, 2006). Global companies, however, seek to get a market share by introducing their product. Standardisation strategy is adopted by global business as it helps them maintain uniformity in their products and reduce operational cost. They also employ the combination approach to ensure stability and increase their market share.
Virgin Atlantic provides air transport in all the markets that it has ventured. It is a global business and mainly employs the standardisation business strategy. Using this strategy, Virgin Atlantic can control its operation cost (Reeve and Deimler, 2011). It also ensures that all its services are uniform in all markets so that some customers do not feel discriminated. Apart from uniformity, consistency and predictability ensure that its employees can always conduct their activities without frequent disruptions.
The standardised approach is not enough for Virgin Atlantic as it has to deal with a changing business environment and consistent competition. It, therefore, incorporates the adaptation strategy so as to deal with the increasing business risks. The adaptation approach aids it in predicting risks, adapting to market demands and venturing into new markets (Dickinson, 2009). Besides, using the combination approach it can reach a variety of customers by customising its services to accommodate its clients' needs. It sustains its market share and ventures into new market segments by providing a range of services such as lodging for the upper class.
Business integration involves incorporation of organisations’ operations and culture with information technology. Information technology includes the application of the internet and computers to process an organisation’s information. This integration of informatics aids in storage and easier retrieval of information as well as manipulation of data to get the desired information. Using the internet has helped businesses disseminate information which has increased advertising, brand establishment and maintain a business image (Saroj Rani., 2009).
Virgin Atlantic aims to integrate a tool set that would contribute to customer satisfaction, reduce the disruption of day to day services, improve performance and enhance the detectability of infrastructure problems (Ryakhovskaya, 2014). To reach its goals, it integrated an HP solution involving an operation centre and a central business application software. This solution leads to various improvements in the running of activities in Virgin Atlantic.
These improvements included the platform that ensures the availability of management thus making decision making easier. High visibility of infrastructure problem due to the availability of a central toolset. The primary software helps by monitoring international servers and network environments. Moreover, the first application software linked all the department in the organisation making it easier to disseminate information and aid in the management of assets and daily operations (Hp.com, 2016).
Human Resource Management
Human resource is comprised of the personnel that works in an enterprise. Human resource is an important part of an organisation as it makes policies and strategies. It implements those policies to meet an organisation's goals. Human resource management, therefore, is the administration of the working personnel (Kunasz, 2008). It involves motivation of employees, performance appraisal, remuneration, training and development of employees, recruitment and selection.
Recruitment means attracting the desired workforce, selecting from the available candidates and appointing the most suitable candidates to perform jobs they are suited. Recruitment is conducted by the organisation itself or delegates to an agency. Virgin Atlantic management has set a website where job vacancies are advertised but delegates the actual hiring process to organisations (Pollitt, 2007).
Motivation is the driver of one's behaviour. It explains why a person acts in a certain way and why there is repetitive action. It is divided into intrinsic and extrinsic motivation. Intrinsic motivation arises from self-determination to seek out knowledge, challenges and testing of one’s capabilities. It is driven by enjoyment and personal interests, hobbies, and one does not require remuneration. This kind of motivation last longer and is self-sustaining. The disadvantage is that it is slow where manipulation is required to change behaviour (Madsen, 1968).
Extrinsic motivation is the desire to perform to attain a particular outcome. This kind of motivation arises from external factors such as remuneration, punishment, and the circumstances one is living in. Extrinsic motivation can be manipulated where a change in behaviour is desired. The hierarchy of needs by Abraham Maslow classifies a person’s needs, and he believes that they affected one's behaviour (Madsen, 1974).
Maslow categorised a person's needs from the lowest to the highest as follows. A human’s primary desire is physiological, that is, food, clothing and shelter. A person will always seek to ensure that these needs are satisfied. Secondly, a person desires a healthy and safe environment. The social needs of love and friendship come third. The social needs are important since a person seeks a sense of belonging (Dudovskiy, 2012). Once one can satisfy the physiological and social needs, desire to be recognised arises. A person tries to raise and maintain self-esteem and be recognised by their peers. Lastly is self-actualization where one seeks to test their capabilities to achieve their full potential (Madsen, 1974). In self-actualization, one aims to explore their full mental capacity, their spiritual world and even their physical capabilities and limits.
Virgin Atlantic utilises this hierarchy of needs as an important tool in motivating its employees. To ensure sufficient motivation, it ranks its employees according to their immediate needs. For junior employees financial incentives is the main instrument but as the levels rise their perspective and professional growth are considered. However, Virgin Atlantic’s management fully embraces financial remuneration as core to all its employees and utilises it as a motivational tool (Dudovskiy, 2012).
Fredrick Hertzberg classifies motivation into need-based, learning-based and process-based. Need-based motivation is divided into motivational and hygiene factors. Motivational factors included responsibility, remuneration, achievement and recognition and reconsidered as necessary tools for employee motivation (Pollitt, 2007). However, health factors such as company policies and working conditions are not crucial to motivation but ignoring them would be a source of de-motivation and dissatisfaction. Virgin Atlantic management analysis of this theory is put into practice by ensuring that the airline is hygienic and policies are not in conflict with its employee’s objectives. Also, it offers generous perks to its employees to as a tool of motivation.
Though motivation is useful in ensuring efficiency of a firm, Virgin Atlantic recognises that training and development for its employees are necessary (Kunasz, 2008). It entered into a contract with Capital Capture consultancy with the aim of reducing the time required for data processing. It, therefore, can train its employees according to their performance levels hence developing them professionally.
Global crisis and natural disaster Management
A crisis is a sudden unexpected situation that affects the operations of an organisation. Crisis management, therefore, is a process used by business to manage these unexpected situations. The global financial crisis was an unexpected situation that affected the world between the years 2007 and 2009. Individuals and organisation were affected all over the world. The purchasing power of people dropped as a result of the Depression that affected all economies. People's spending habits decreased, and financing became expensive. The tourism and hospitality industry, associated with the aviation sector, lost a significant number of clients. Virgin Atlantic, being a company in the airline industry, was significantly affected by this crisis. This was as a result of the number of customers who preferred travelling decreased. Many organisations in the aviation reported high losses. Later when the prices of fuel dropped, Virgin Atlantic and the whole airline industry were able to reduce costs and, therefore, the general prices. Once the economies recovered from this crisis, losses cut and Virgin Atlantic was able to remain stable.
Apart from the financial crisis, the aviation industry has been affected by natural disasters such bad weather and contagious diseases. Once such accidents occur, governments give orders that limit travelling with an aim to protect its citizens. Airlines are, therefore, obligated to cancel all flights to the quarantined areas. With cancelled flights, funds have to be refunded, and this reduces revenue for the companies. Virgin Atlantic has had to deal with such disasters now and then. In 2012, hurricane Sandy affected the United States, and Virgin Atlantic had to cancel its flights to the affected areas (the gardian, 2012).
Corporate Ethics and Social Responsibility
Corporate ethics examines the principles upheld by an organisation and the moral problems it faces in its environment. Corporate social responsibility is the self-regulatory ability of an organisation so as to defend both ethical and legal standards. Maintaining a good public image for an organisation is necessary. Social responsibility and upholding good business ethics has helped enterprises improve and maintain their public image (Visser, 2007).
Virgin Atlantic seek to uphold ethical standards and be socially responsible to its society. According to ANON (2016), in 2013, it was a joint award winner of the Observer Ethical Award. It took an initiative to help commercialise aviation fuel with small carbons that are easy to recycle and sustainable for air travelling. This action improved Virgin Atlantic’s public image and increased its customers’ confidence. It also placed it among the best airlines in Britain hence ensuring its survival and sustainability.
Virgin Atlantic is a transnational organisation offering air travel service to its customers. It was started in 1984, and its operations have ventured into various regions. So far Virgin Atlantic has been a profitable and competitive enterprise. It can integrate different strategies to remain stable and productive. It has incorporated information technology and can quickly mitigate its crises. Moreover, it is socially responsible to its employees and the whole society.
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