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The present study aims to explore macro environmental analysis and its impact on business strategy.

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Introduction

The globalisation has impacted strategies of business which has resulted in business organisation undertaking steps of improvement. This will ensure sustainability of the organisation and long run and also make them competitive to provide an edge over its competitors. The present study aims to explore macro environmental analysis and its impact on business strategy. The study also aims to evaluate internal environmental capabilities and competitive environment for providing ways of improvement for upgrading market position and providing competitive edge. The study will also highlight strategic planning through very business model. Virgin Atlantic Airways Limited provides for commercial airline services. It offers domestic regional and international air transportation to its passenger and is a renowned name in the field of Aviation. Virgin Atlantic also delivers services of Air Traffic management in United Kingdom (Virginatlantic.com, 2018)

LO1

P1

A mission identifies the path of an organisation in which it would extend its journey. The strategic planning essentially involves mission that states purpose of the organisation and principles of business. Commitment forwarded towards suppliers and staff, social policies relating to anti discriminatory policies and environmental issues are features of mission statement. 

Virgin Atlantic has its operational spanning across many continents and hence it has incorporated mission, “to embrace the human spirit and let it fly” (Virginatlantic.com, 2018).

Objectives in an organisation are guided by its policies that facilitates functions and activities within the respective organisation.

The objective hierarchy incorporates corporate, functional, team and individual objectives that works as a guideline to related departments.

The corporate objectives involve growth of the organisation along with increasing profitability and maintenance of quality of product and services. As mentioned by Jansen (2017, p.14) secondary objective of the company combines the achievement of all the corporate objectives that have been set out. Setting corporate objectives include acquiring success through market share, profitability, cash-flow, and growth. This entails the organisations for further survival, customer satisfaction, industrial relations, quality of services and products and growth in payments to shareholders.This also involves the strategic planning process helping to engage a better success for Virgin Atlantic. As a CEO of Virgin Atlantic, analysing these factors can help to create a prosporous strategic planning report for the respective organisation.

Key Factors

The key factorsthat must be followed by the organisation is to investigate evaluate and response to processor of formulation of strategic plans.

In response to strategic planning process the business environmental stability is one of the vital parameters that need to be evaluated like changes in technology inflation rate variability in demand, prices of the competitive product and so on.

The financial strength of Virgin Atlantic must also strategize related to investment returns, leveraging, and liquidity, risk involvement of the business and inventory turnover that impacts the strategic planning processes (Saebi and Foss, 2015, p.201).

The Industry strength creates a growth potential along with profit potential, financial stability that relevantly signifies the technical knowlhow, capital industry with an ease of capital intensity and smoother entry to the new market.

The Macro environmentcan help in setting a competitive advantage that is influential factors that impacts up on organisational working externally and uncontrollable factors that have vital role in the decisions made by organisation. Macro environment includes factors such as economic factor democratic legal political and social conditions.

Stakeholder analysis

According toVeit et al. (2014, p.45) stakeholder analysis provides and Indus analysis of internal and external stakeholders related to a company. The Virgin Atlantic must price its stakeholders for mapping levels of interest in the operations. Providing them with vital information related to operationalization and engaging them fully for satisfaction of high level interest and high level of power will lead to commanding of loyalty in long term basis. 

 

 

Environmental analysis

According to Reim, et al. (2015, p.61), physical social and competitive environment must be taken into consideration for improving the process of planning in an organisation. Virgin Atlantic must undertake social and environmental actors which can be further divided into PESTEL factors.

 

 

Factors Explantion

Political and legal environmental

The factors include influencers related to priorities to public policies along with arrangement of funds. The Organisation was also lay importance to the laws valid in country of operations such as health and safety laws at work, safety standards, data protection laws, and so on.

Economic factors It includes influencers coming from regional National and international economic triggers. This includes economic growth rate of inflation rate of wages and interest agreements of economy.

 

Socio-cultural factors It include population and lifestyle prevalent in the operational area of the organisation. It is essential to undertake notice of the demographic and cultural changes in the society and in corporate strategies that Alliance with the cultural and demographic sentiments of the peopleDaSilva and Trkman (2014, p.379).

 

ethical involvement Ethics in a business organisation must include justice respect and law for model code of conduct. The organisation must ensure that the management and the employees undertake ethical standards while dealing with customers and suppliers.

 

technological factors It provides for changes in technology that provides for Rapid and preform effects through reductionin production cost assisting in development of better quality products and services and Urban Development of products and services (Rosemann and vom Brocke, 2015, p.105).

 

 

Porters five Force model

The business strategies must also incorporate five competitive forces that helps in determination of profitability in industry. According to Boyd et al. (2017, p.32), this process is either product oriented or service oriented and helps in influencing return influencing return on investments and price and cost required in an organisation. The five courses that Virgin Atlantic must undertake into consideration

Industry competitors

The industry competition analyses the rivalry determinants that includes brand presence and fixed cost additions.

 

Threats of new entrants

Aviation industry is a lucrative sector which always attracts new entrance. The diversity of competitor’s corporate steaks and product differentiation must be the phone issues that must be considered for understanding threats of new entrants (Wirtz et al. 2016, p.54). 

 

Threats of substitute services

The threat of substitute products that influences the planning process of business involves relative price performance of the substitute services. The switching cost and buyers propensity to word substitution also creates substitution threat.

 

Bargaining power of suppliers

The bargaining power of suppliers is highly dependent on concentration of suppliers and importance of volume supply to the organisation (Halpern et al. 2016, p.33).

 

Bargaining power of customers

The bargaining power of the consumers influences strategic decision of the organisation through concentration of buyers and the volume of buyers in the related market (Boyd et al. 2017, p.32).

 

 

 

The structure conduct performance model as developed by Bain in 1959 provides for analysis of strategic plans and its influence on business through three main parameters of structure, conduct and performance. The structure on forms to size of the firm and number of consumers it is catering to. The performances are highly dependent on the frequency of purchase levels and entry and exit barrier in the firm (Wirtz et al. 2016, p.54).  The conduct is dependent on the realisation of potential of the organisation to face the competition and also destructive price waste competition that may impact the strategies of business. The de facto Collusion must also be analysed for understanding the role of performance in a highly competitive business sector.

 

SWOT analysis

Strength

Weakness

 

? Global presence and trendsetter in airline industry.

? Primary focus on quality and incorporation of Total Quality Management in improvement processes.

? Focus on multiple consumers categories that have expanded the Horizon of market span.

? Consumer satisfaction is one of the main focuses.

? Challenges in financial needs and impact on the business operations due to fluctuations of dollar and Pound rates.

? Product differentiation is not well replicated.

? It has perception of being an expensive and lines among consumers which debtors the scope of reaching consumers in the middle class range.

 

Opportunity

Threat

 

? Product differentiation and changes in consumer preferences will help in providing ample opportunities for Virgin Atlantic towards positive trend.

? Coming up with offers and making let it to pricing of the airlines can provide opportunity to reach larger section of consumers  (Whyte and Lohmann, 2016, p.107)

? Aviation industry is a highly competitive market and there are huge numbers of players in the particular structure which pose a serious competition.

? The condition of the company faces threat because of the brexit issue which has detrimental effect on the number of passengers travelling affecting the business.

 

Benchmarks

 

The benchmarking indicators best exemplary practices that provide an organisation is over its competitors. According to Gao et al. (2017, p.142), these measurements service a guideline for other related forms in the industry for improving their performances. There are majorly three types of benchmarking-

 

Scenario planning refers to possible circumstances which involves policies for future and anticipation events that may impact the working of organisation. It is required to prepare the organisation for circumstances that may either by providing opportunities or causing destruction in the working on the organisation (Taneja, 2016, p.157).

Competitive analysis

Competitive analysis involves processes that identify the strength of the organisation for compositing in Marketplace. The competitive analysis subsets only after the environmental scan have taken place.

Situation target path method

This method employee’s evaluation and analysis of the current situation is required. As pointed by Uggla (2015, p23), with the help of this analysis the targets are defined along with goals and objectives for the future. To achieve the goals and objectives a path is determined which serves a guideline for ways of organisational working.

Ansoff matrix

The Ansoff Matrix consist of four options for development of Strategies for marketing (Veil et al. 2014, p.45)-

? Market development

? Market penetration 

? Product development

? Diversification

 

LO2

P2

Internal environment of an organisation must be analysed in order to examine and identify the strength and barriers for organisational performance audit. According to Jansen (2017, p,87), internal environment provides for an opportunity to recognise the limiting factors that impediments organisational working like limiting number of key personnel, inadequate research design, improper system for strategic intelligence, and lack in training of staff and so on. 

Organisational structure

It has been determining the allocation direction and controlling of organisational work for achieving goals and objectives of strategies without by the organisation (Taneja, 2018, p.98).

Coordination of work activities

Mintzberg forwards five methods of coordination-

? Mutual adjustments that provides for coordination among people working in the organisation.

? Direct supervision that provides monitoring by one person for coordinating works of others through instructions and orders.

? Standardization of output that is directly related to the level of performance in organisation and profits (Lawton, 2017, p.43).

? Standardise skills and knowledge that is provided through training to the staff in order to perform specified work.

Structural format

The formal organisation distinct characteristics such as division of labour according to responsibilities, power centres for controlling substitution of personnel and ability of the group to work in different way according to the work provided to them (Taneja, 2017, p.6).

Shape and sizes

It is essential estimate the shape and the size of the organisation understanding tall and flat organisation that are dependent on the management level and span of control.

Market and customers

Information related to consumer is essential and there are five main areas of Investigation related to customer analysis-

? Key customer identity including name location size and product market.

? Consumers history like frequency of Orders order size key decision makers

? Relationship of consumer with product (Pisano, 2017, p.87).

? Consumer’s attitude and behaviour towards the competitive products and emotional factors related to reasons for buying.

? Profitability obtained from the sale of product to the consumer.

Resource based view of competitive advantage

The internal analysis of operationalization in Virgin Atlantic must include competitive advantage that will help in providing profitability in game for having valuable and unique resources.

As suggested by Francis et al. (2017, p.65), resources can be classified asVRIN -

Valuable

Resources in the organisation are available and have strategic value. Does recognition of valuable resources that will provide opportunity growth in market must be evaluated.

 

Rare

Resources that is difficult to find and provide organisations an edge over its competitors.

 

Imperfect Imitability 

Difficult to copy or imitate the product also helps organisation to sustain the competitiveness.

 

Non substitutability 

This provides that the resources cannot be easy substituted by any other alternative resources. 

 

 

McKinsey 7s model as tool of Management

? Structure required for execution of strategy (Taneja, 2017, p.89)

? System needed for execution of strategy and inventing as per the business system

? Style incorporates leadership style and cultural qualities in an organisation

? Staff required for growth of the organisation

? Skills required for development and growth

? Strategy that is required for solving specific business problems

? Shared values for achieving organisational goals and objectives.

 

Value chain analysis

The implementation of value chain analysis is required for benchmark activities and can be separated into primary activities and support activities. Support activities involved Human Resource Management Technology procurement and firm infrastructure. As stated by Derudder and Witlox (2016, p.37), primary activities involve outbound and inbound logistics services and market sales.

Cost benefit analysis 

The evaluation of cost benefit analysis helps in identification of project objectives and net benefits from the projects that can be an estimated..

LO3

P3

The analysis of competitive environment is essentially required for devising a strategic plan for providing sustainability two business in face of competition.

Balanced scorecard

The balanced scorecard is a combination of both qualitative and quantitative indicators relating to performance. According Taneja (2017, p7), it helps in recognising expectations from stakeholders and choices of strategy for evaluation of effectiveness of organisation. It involves alignment of action and strategies to achieve the organisational goals through evaluation of customer satisfaction, internal business processes, organisational capacity and financial performances.

Competitive analysis 

The competitive analysis boys market forecast and sales forecast. As mentioned by Uggla (2015, p.56), market forecast must incorporate specific market search for obtaining data related to total market demand and evaluation of demand of the similar forms and products.

Sales forecast estimates sales of the product in future through marketing mix.

Estimation of demand involves controllable strategic variables and uncontrollable variables.

Controllable variables and factors which are under the control of the firm's management that has uncontrollable variables are factors which are beyond the control of Management (Flouris and Oswald, 2016, p.87).

Industry Analysis 

The threat of entrant 

Virgin Atlantic must undertake a comprehensive analysis related to the new entrance in the aviation industry which has the capacity to bring more competition.

 

Threat from substitute products

Virgin Atlantic undertakes threat of substitute services that are offered by other companies which is successful and satisfying consumer need (Taneja, 2018, p.43).

 

Bargaining power of consumer

Virgin Atlantic undertakes consumer’s collective power for providing them better quality and services at a competitive price. This may possibly need to reduction in the profitability of suppliers and hence the consumer’s collective power must be effectively examined (Whyte and Lohmann, 2016, p.56). 

 

Bargaining power of suppliers

The supplier’s electric power can exert pressure for prizes. The Virgin Atlantic estimates the importance of suppliers product according to the demand of consumers.

 

Power of distributors

Virgin Atlantic must restrict its outlet for distribution for maintenance of high prices in order to bring down the power of distributors.

 

Rivalry in the current competitors

The intensity of competitive rivalry affect the profitability. Since Virgin Atlantic has large number of levels in the market it is essential that the organisation stimulates advertisement and other stimulating factors to increase customers demand.

 

Market analysis 

Virgin Atlantic must undertake market analysis in order to estimate market size in relation to its competitors for forecasting areas of growth and decline. This will help in drafting strategic planning for the company. Analysis of customers and distributors must also be undertaken by Virgin Atlantic for analysing buying behaviour of the customer to provide opportunities (Relm, et al. 2015, p.75).

Kotler's 5 dimension of strategy

? Industrial assumptions according to which the conditions can be shipped

? Strategic focus focusing on the value of the product to dominate the market

? Customer creates value through innovation and focus on mass buying.

? Assets and capabilities that must leverage the existing capabilities of the company

? Product and service offerings that provides for total solution of the consumer needs.

 

Competitor’s collaboration 

The competitive collaboration provides unique opportunities for many players in the same sector to elaborate on technological and improvement of designs. This can be made visible through benchmarking exchange schemes. Virgin Atlantic must incorporate this scheme in order to understand factors of benchmarking in the organisation to collaborate with key drivers for success and increasing profitability (Veil et al. 2014, p.45).

LO4

P4

Porter's Generic Strategies

The generic strategies as outlined by Michael Porter in his book outlines for basics generic strategies

? Cost leadership that aims at minimising the cost of organisation.

? Product differentiation which forwards making product and services attractive for competition (Saebi and Foss, 2016, p.203).

? Cost focus that caters to price segmented market and customer differentiation for catering two large masses of people.

 

 

Bowman’s Strategic Clock

This model is designed for providing an insight into the strategic Positioning in terms of competitive advantage (Boyd et al. 2017, p.45). It involves-

? Low price and low value as per the marketing strategy

? Hybrid which is a combination of low prices and differentiation

? Differentiation and focus differentiation that focuses on higher prices is the consumer is willing to pay because of the premium quality of the product.

? High risk margins which involve strategies with high prices that does not provide any additional benefits to the consumer. This can be profitable in short term and only in the absence of any substitute or a low price alternative product (Wirtz et al.2016,p.36).

? Monopoly pricing is only possible in the business which has no competitors. 

? Market share loss that is perceived through middle price range.

 

 

 

Product/Services-Market Strategy 

The product service market mix combines products and services from Organisation in current and new markets and must include potential offering of new products and services (Halpern et al. 2016, p.34).

Market penetration

? The current market and product is essential for maintaining its share in the market and Secure dominance of the market.

? It will help build structure in new market by reducing the impact of competitors and increase usage among the existing consumers (Wolf and Floyd, 2017, p. 1788).

Market development: The present product in new market

? Virgin Atlantic may explode new geographical areas and new market for expanding their range of products and services.

? New channels of distribution and specification as per the domestic needs can also be Incorporated. This may include differential pricing policies to attract other customers as well (Taneja, 2017, p.89).

Product development: products and present market

? Virgin Atlantic may introduce new products in the present market Bank operating innovative technology or because of development forces of competitors.

Market diversification

? Diversification through new product in New Market can lead to growth and provide prospective chances of growth (McLean, 2018, p.56).

Disinvestment withdrawal and retrenchment strategy

The management must also consider Strategies for contraction of business in size and structure and also decisions to pull out Sunday Market in case of losses incurred by the company.

Role of leadership in strategic implementation

The corporate leaders play an important role in policy implementation and strategic implementation buy delegating responsibilities. The leadership involvement can be seen through-

? Involvement in strategic implementation and participation and programs (Taneja, 2017, p.34).

? Interest that the corporate leadership takes in management of the company’s affair along with introducing necessary implementation.

? Monitoring and taking the next step related to the policy implementation and bringing about necessary change and alterations time to time as per the changing needs of the consumers.

Role of employees in implementation process

Strategic implementation requires attention from employees and managers to work with efficiency and carrying out a wide range of duties and responsibilities. The employees of Virgin Atlantic must diligently work towards achieving the strategic goals set up by the company in order to cater to satisfaction level of consumers (Lawton, 2017, p.54). This will help in bringing more consumers and help in growth of the organisation along with providing them an edge over its competitors.

Business plan

Virgin Atlantic

Aims and objectives

• The company provides for Air transportation services and has operational area involving number of continents.

• Virgin Atlantic provides high quality airline services at a competitive price. The company has huge distribution channels and online services for the convenience of the consumers.

• Short term objectives include growth of market.Medium term objective includes improving product and services.Long-term objectives include developing new products for new markets in order to expand the market share.

Target customers

• Age - all age 

• Gender- all genders 

• Income- middle and higher classes

• Types- all types

• Target- International

 

Competitor

? British Airways

? Lufthansa

Operational plans 

To bring about future development plans for expanding consumer base and expanding the market to other new markets as well.

Conclusion

It can be safely connected that strategic planning is maintenance of sustainability and tackling competition. The present study analysis macro environment for understanding processes of business strategy along with highlighting the internal factors that impacts the business organisation. The study observes that it is essential to understand competitive advantage of the organisation along with process of strategic implementation for developing business and exploring opportunities for Business expansion.

Recommendation

Recommending on the strategic direction of the organisation-

? Virgin Atlantic corporate new products such as food customisation according to cater the needs diverse consumer.

? The form can also in corporate loyalty programs and care miles along with providing bonus features such as access to airport lounge and discount offers on Airport shopping facilities. 

? Exploring new markets and other countries for expanding operational areas also help in growth of the organisation keeping in view future perspectives.

? Providing training to staff for enhancing Customer services can also help in rough differentiation of Virgin Atlantic and helping the organisation growth and creating a positive brand image.

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