Virgin Blue and the Australian Airline industry
This report investigates and scrutinizes the external environment in which Virgin Australia functions. With a view of achieving the objective, the complete report provides a structural view of Australian Airline industry and theoretical frameworks and strategies which impact the firm. The report is dedicated to the external environment which surrounds the Virgin Australia by assessment of different trends. This is possible through the scanning as well as monitoring. The periphery of an enterprise is very huge and it is quite difficult to capture the snapshot of different airlines simultaneously. The reaction towards the changing market environment is consistently the modification of theoretical frameworks and strategies. The report makes an attempt to investigate the different measurement criteria. Virgin Australia is also called as the Virgin Blue. This firm is the second largest Airline of Australia and it was co-founded in the year 2000 through a popular British Business Richard Branson and Virgin Blue owner Brett Godfrey.
General Environment
Virgin Blue operates in an environment which has an impact on the strategy and for itself. There are certain crucial forces which can affect positively or negatively the firm and its competitors which exist in the Australia airline industry (Kushwah, 2018).
Demographic Environment
Changes in demographic environment are very crucial for an airline industry as business is conducted through luxurious and reasonable pricing service. Australia comprises not only growing people but ageing people as well. Out of 19 million people living in Australia, the younger generation is represented by more than 6 million. This is known as the demographic group which is reported to influence the spending pattern of Australia. With the enhancement of reserved baby-boomers and people living in debt, these Australian customers will enhance the level of consumption (Grier, 2014). In this demographic environment, Virgin Australia main focus on gaining business through the offer of the major services in different cities within Australia. Most of all the customers are young professionals and these are called as Generation Y. There are business class people which are aged under 30 to 55 and represent the largest part of the Australian population (Tidstrom, 2012).
Socio-Cultural Environment
There is a continuous trend for environmental concerns around the whole world and Australia cannot be considered as an exception. These days, people look forward to eco-friendly transportation and less carbon emitting technologies. The regional services and transport department has shown an increasing trend for providing the leisure destinations and fulfilling the needs for lifestyle and fun for Australians (Vydra, 2007). Furthermore, in today’s business environment, timetables are taking over the service, but for a sensitive, business traveler, scheduling is very important.
Impact of Demographic Environment on Virgin Australia
Legal/Political Environment
The Australian airline industry is massively regulated and is undergoing through considerable changes from the past decade. There is a deregulation trend. According to the Airline Deregulation Act 1991, it has been playing a role in the evolution of the domestic airline industry and providing freedom for airline companies. These companies can set the own prices and strategies the routes (Certomà & Tornaghi, 2015). The government has not adopted the open skies framework, but has accepted the policy through Qantas. According to the new standards, there is longer check in progress and baggage checks. The access of airport terminals is restricted unless passengers have the boarding pass. There are strict regulations which will have an impact over the consumers and filling the airplane capacity and also have an impact over the customer perception (Varghese, 2018). . During the initial stages, this company was started as the low cost carrier. Later on, the company has focused on improvising the operational services and became the new world carrier as it was described through the Virgin Blue itself. In year 2011, the company has come up with a new strategic plan which introduces the new catering service, new uniforms, new business class and remaining the new Virgin Australia. The airline has been rated as the 4 star airlines through a research consultancy.
Economic Environment
The rate of the Australian dollar is expected to rise in the upcoming years and the stock market will surge by ten percent. It can be a short term increase in unemployment and interest rates can be lowered by 4 percent. According to the market watchers point out there will be pick up jobs as the economy grows (Celata & Sanna, 2012). The Virgin Australia airline is largely effected through the fall of interest rates and this will have an impact over the consumer behavior. The markets are being held by the concerns through China, Spain, Greece and USA. The Markets will start improving as it gets volatile patch in middle of year (Bekaert & Engstrom, 2017).
Over the past two decades, there are different frameworks to manage the strategy risks and to decide which model is appropriate for Virgin Australia. This largely depends on how the organization operates. Every approach will be requiring the different structures and risk management roles. The employees must be encourages to challenge the present assumptions and risk info. The finding is that one size cannot fit with everyone. In order to counter the efforts of authorities and regulatory associations is to standardize the role functions (Burrowes & Hendricks, 2005).
Environmental Concerns and Virgin Australia
Independent experts-Few organizations those like Virgin Australia push for technological innovation. The company will face the intrinsic risk as pursing the complex and long product development assignments. Most of the risk arises due to nature and this can be changed slowly over a given time period. For these types of organizations, risk management is handled at a given project level. The company Virgin Australia has established the review board of independent experts that challenge the project engineers. This also ensures the product development cycle takes place periodically and the review board needs to meet on a quarterly basis (Moynihan, 2008). Environmental scanning is must for monitoring, evaluating and dissemination of data for the key people working in the corporation. The identification of strategic factors is must. There are external and internal elements that can determine the future course of action for the firm. There are few external variables which form the internal corporation like strengths and weaknesses which are within the control of the top management. The simplest methodology of environmental scanning is by SWOT Analysis and these are strategic factors for a given company. Evaluation and control are the two processes within which performance results can be measured. These are the final and major elements of strategic management and therefore stimulating the whole process of changing environment.
Facilitators-Most of the firms like water utilities and traditional energy operate in stable market environments and have a relative customer demand. In these types of situations, risk will stem through unrelated operational decisions across the complex organization like Virgin Australia. The single staff members may not be having the knowledge of performing the operational risks and firms need to deploy the risk management groups, which will collect information through operating managers. The awareness of the managers needs to be increased and decision makers must be provided with the complete picture of the company risk profile (Ebrahimpour, Kabir & Yousefi, 2009).
Embedded experts-The airline industry poses a big challenge of volatile asset markets and the impact of the decisions which is made on decentralized traders as well as investment managers. The risk profile of workers can change dramatically with a major movement in markets. For these companies like Virgin Australia require to follow an embedded expert theory. The firms need to continuously monitor the risk profile and working with line managers. The generation of new ideas, risks and innovation is possible only through risk management and earning profits. The Virgin Australia has adopted this model. The present environment is very dynamic and rapidly changing. Modern businesses find very difficult to operate. Because of the uncertainties, constraints and threats, the business firms are under great pressure and need to find out the ways for the survival (Ebrahimpour, Kabir, Esteky & Yousefi, 2008).
Regulatory Environment of Australian Airline Industry
The best utility of strategic management is to explore the possible opportunities and achieve an optimum level of performance by minimizing the threats. The company can maximize its competitive advantage by merging with other firms. Strategy formulation and implementation requires the observation and understanding the environmental variables. Business strategy emphasizes on the firms product and services. This will further classify into opportunities and threats. Threats can be casual or serious and strategic formulation always provide for the better environment understanding.
Conclusion
Virgin Australia has a system which promotes the risk discussions. In a few cases, the risk is predictable. The companies are quite familiar with the risks and the external environment. Companies label and compartmentalize the risk along the business functions line. There are few firms which compartmentalize the management theories behind the brand risk, supply chain risk, IT risk and human resource risk. The organizations can disperse efficient risk management and information. Good risks are integrative and confrontational. Very large businesses are derailed through the combination of events that can force another in different ways. Managers need to deploy the organization risk perspective by anchoring into strategic planning. This is an integrative process which must be well-run. The companies can utilize the Balanced Scorecard for strategic communication and management
References
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Tidstrom, A. (2012). Conflicts in business relationships in light of the external environment. International Journal Of Business Environment, 5(2), 122.
Varghese, M. (2018). Imagining the Political in a Post-Political Environment. Journal Of Extreme Anthropology, 2(2).
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