The Competitive Environment of Virgin Airlines
THE COMPETITIVE ENVIRONMENT OF VIRGIN ATLANTIC AIRWAYS
Introduction
The Virgin Atlantic Airways is a UK-based private international airline that started operation in 1982. Flying up to 20 destinations in North America, Asia and Africa, it is 51% owned by Virgin Group and 49% owned by Singapore Airlines (Wikipedia). It competes with other local and international airlines including British Airways, the biggest and leading in UK. In 2005, it posted $2.5B in sales and $40M net income with year-on-year sales and net income growth more or less at 37% and 900% respectively (Hoovers). With this information, it suggests firm’s bright future and industry fair share of the market. However, external and industry environment analysis is a continuous process (Hitt, Hoskisson & Ireland 2003) that every now and then makes prediction and preparedness an integral part of strategic actions of firms to efficiently manage opportunities and threats outside its organization. The External Environment: PEST Analysis In the local environment, local elections to be held on May this year could made Tony Blair’s concentration in national issues such as health and education shift into local issues such as crime, anti-social behavior and environment (Independent). As a result, transport industries including aviation should consider this early the type of their fuels and fix emission loopholes. They must research oil suppliers that sell environment-conscious fuels and test its efficiency and compatibility with aircraft engines including preparation to possible fluctuations in present fuel costs. In fuel-related issue, the European Union resorted legal action against member countries like France, Germany and Italy of protecting their utility firms against foreign competition (Independent). As a result, prices of fuels failed to obtain efficiencies of competitive industry making oil prices for the transport sector more costly. Local
Introduction
The Virgin Atlantic Airways is a UK-based private international airline that started operation in 1982. Flying up to 20 destinations in North America, Asia and Africa, it is 51% owned by Virgin Group and 49% owned by Singapore Airlines (Wikipedia). It competes with other local and international airlines including British Airways, the biggest and leading in UK. In 2005, it posted $2.5B in sales and $40M net income with year-on-year sales and net income growth more or less at 37% and 900% respectively (Hoovers). With this information, it suggests firm’s bright future and industry fair share of the market. However, external and industry environment analysis is a continuous process (Hitt, Hoskisson & Ireland 2003) that every now and then makes prediction and preparedness an integral part of strategic actions of firms to efficiently manage opportunities and threats outside its organization. The External Environment: PEST Analysis In the local environment, local elections to be held on May this year could made Tony Blair’s concentration in national issues such as health and education shift into local issues such as crime, anti-social behavior and environment (Independent). As a result, transport industries including aviation should consider this early the type of their fuels and fix emission loopholes. They must research oil suppliers that sell environment-conscious fuels and test its efficiency and compatibility with aircraft engines including preparation to possible fluctuations in present fuel costs. In fuel-related issue, the European Union resorted legal action against member countries like France, Germany and Italy of protecting their utility firms against foreign competition (Independent). As a result, prices of fuels failed to obtain efficiencies of competitive industry making oil prices for the transport sector more costly. Local