Service design Essay Example

to work" (Virgin Atlantic, Undated).

Virgin Atlantic strives to keep customers loyal by strategically planning and implementing strategies that have contributed to its long-term profitability and success.

Analysis of the External and Internal Environment That Influence Strategic Choices of an Organization

Analysts Strengths

British Airways and Virgin Atlantic both have strong brand images and established brand names. They both have a good reputation, particularly online. Additionally, the size and scale of British Airways are noteworthy.

BAA focuses on consistency, reliability, and quality, setting themselves apart through value, service, and price. They are the largest airline and flag carrier in the UK, second largest long haul airline in the country, and third largest European carrier over the North Atlantic. British Airways' industry-leading strategy and aircraft purchases serve as a benchmark for others. The company prioritizes technological innovation to differentiate themselves and has partnerships with various one world partner airlines. Their commitment to social and environmental performance is showcased through their "Green" initiative in 2005. BAA boasts a strong organizational structure and leadership development program led by Richard Brannon. They strive to cater to diverse customers while maintaining a loyal customer base.

However, BAA acknowledges weaknesses such as a lack of marketing strategy for customer loyalty, ineffective utilization of alliances and partnerships, cost-cutting measures resulting in job reductions and decreased morale, and an excessive focus on the London market. Furthermore, they face competition from Low Cost Carriers and have underdeveloped channels.

Ex: Premium Economy

The airline industry is influenced by various factors, such as intense competition leading to lower fares, an underdeveloped distribution system, a decline in passenger demand, a small fleet of 38

airplanes, insufficient hedging for future fuel needs, and limited destinations (30 destinations). BAA may have changed its approach from focusing on the market to emphasizing assets, resulting in reduced flights to the US and the Middle East. There are potential opportunities for British and Virgin Airlines, as well as possibilities for alliances and mergers. Terminal 5 at Weathers - BAA offers growth prospects for airlines after recovery from setbacks. The 2012 Olympics also bring about shared opportunities. "Open Skies" opportunities exist with 280 airports across Europe. With the economy improving, there is high demand for flights and increased tourism. Latin America is considered a market with low terrorism risks and high growth potential. Intra-European aviation does not have dominant major carriers; Germany, Spain, and France follow the UK as the largest markets. The Asian market is projected to be the fastest growing over the next decade. Air services within the European Union have undergone complete deregulation and liberalization.

A SWOT analysis uncovered BAA's strengths in Partnerships & Alliances and efficiency through Technological Innovation. The introduction of Terminal 5 is anticipated to provide significant prospects for the organization, enhancing efficiency and reinforcing BAA's competitive edge in this field. It is also expected that this development will establish new benchmarks within the airline industry. Nevertheless, there have been instances where BAA has demonstrated lower effectiveness, particularly in terms of marketing strategy aimed at securing customer loyalty. Realigning its marketing approach would be advantageous for the organization in this aspect.

BAA must address industry threats in order to stay competitive and profitable. These threats include a potentially weakened economy and the impact of low-cost airlines.

Competitive

Strategies of the Case Study Been Considered

Key Messages

The Bag organization emphasizes consistency, reliability, and quality as its key messages. It is renowned for its excellent customer service and efficiency, leading to a positive reputation. In contrast, Virgin Atlantic sets itself apart with its focus on value, service, and price. Notably, it has been recognized as the top company in terms of online reputation (Creatively, Undated).

Virgin was ranked 2nd by BAA as the most child-friendly airline (Streetlight, Undated). British Airways, the largest airline and flag carrier of the United Kingdom, has a strong brand name and image. Its size and scale give it a competitive advantage over Virgin Atlantic Airlines, which is the second-largest long haul airline in the United Kingdom. Virgin Atlantic, a successful competitor, also possesses a well-established and highly recognizable brand name and image.

Despite Virgin Atlantic being a newer and smaller organization in the airline industry, BAA remains a larger and more established player. One of the key factors contributing to BAA's strength is its extensive airline fleet and range of destinations. BAA currently serves approximately 147 destinations across 75 countries as of March 2007, with a substantial fleet of 234 airplanes. This fleet is set to expand even further with the addition of 63 new airplanes, including 24 Boeing sass and 12 Airbus AWAY super Jumbos. These new additions will bring about innovative improvements in onboard products and services (BBC News, 2007).

The aircraft purchase strategy implemented by BAA is regarded as a benchmark within the industry, influencing the decisions of other carriers. This has proven to be a successful approach, giving BAA a competitive advantage over

Virgin Atlantic, which only operates with 38 aircraft and has a limited network of 30 destinations (Airfields.Net, Undated). BAA views partnerships, alliances, airline franchising, and low-cost carriers as effective strategies.

British Airways is joined by American Airlines, Cathy Pacific, Funfair, Iberia, Japan Airlines, LANA, Male, Santa, Brussels Airlines, and Royal Jordanian to form the partner alliance called Oromo. Meanwhile, Virgin Atlantic is starting to form alliances or partnerships with its main competitors like Singapore Airlines and Malaysia Airlines in order to eliminate competition. However, Virgin's alliance is still in its early stages, whereas British Airways has already established a strong position and holds an advantage over Virgin Atlantic in this regard.

BAA Connect, which was launched in 2006, offers scheduled and charter airline services to and from various regions in the UK. It serves as the main carrier for flights from Manchester, Stansted Airport, and oversimplification. British Airways is the parent company of BAA Connect, but it has been recently sold to Flyby, a regional airline. Consequently, British Airways' franchise agreement with KGB Airways will come to an end on March 29, 2008. This decision poses a potential threat to BAA Connect as it may lead to the loss of business and market opportunities.

The efficiency and effectiveness of Bag may also be affected in this segment. In March 2008, the British Airways operation will move to Terminal 5, which provides a significant opportunity for the business. Terminal 5 is a state-of-the-art facility with 96 Check-in Kiosks that aim to reduce waiting time and improve overall efficiency. The baggage system at Terminal 5 is designed with proven technology used in various global airports (Terminate. Baa.

Com, Undated).

BAA is streamlining its operations to enhance customer service through the implementation of "new and innovative technology". The Chief Information Officer of BAA, Mr. Paul Copy, has established an IT and business change unit to oversee the integration of various business processes (The Register - Management, Undated). This presents a significant opportunity for British Airways, placing competitors like Virgin Atlantic at a disadvantage. Nevertheless, Virgin Atlantic's marketing director, Paul Dickinson, stated: 'Our goal is to showcase the superior facilities we offer to business travelers in anticipation of the launch of Terminal 5' (Redoubt, Undated).

Since the air services in the EX. were fully deregulated and liberalized, there is a market opportunity for business growth in the airline industry. The presence of 280 airports within Europe further enhances this potential. Moreover, an improvement in the economy is expected to increase the demand for flights. Additionally, other opportunities such as 'Open Skies' initiatives, including BAA's plan to launch an 'open skies' airline, and the high growth potential in Latin America and the Asian market offer prospects for BAA's exploration and exploitation. Technological innovations are a crucial aspect within this industry, with Bag's competitors like Virgin Atlantic also stepping up to the challenge. For instance, Virgin Atlantic Airlines has invested in innovative features that set their company apart. The IT company Coaching has developed an innovative solution for a smooth take-off, consisting of a multi-channel booking system built on a robust and scalable e-business architecture. However, technological advancements can also pose a threat to the airline industry, as video conferencing, for example, may reduce business travel.

The increase in Internet bookings has led to increased price

transparency, causing fierce competition between various airlines, including Lacks and Legacy Carriers. This has resulted in reduced profitability and weakened financial standing. However, British Airways is dedicated to addressing its social and environmental responsibilities and aims to improve its environmental performance by mitigating the negative effects of its activities on both global and local environments.

Both BAA and Virgin Atlantic are addressing the environmental impact of aircraft noise, emissions, and global climate change. BAA acknowledges the local impact of these factors around airports, while also considering the carbon dioxide and atmospheric effects on a global scale (British Airways, Undated). However, Virgin Atlantic offers an alternative solution that may be more effective. In 2005, Sir Richard Brannon announced plans to power Virgin Atlantic planes using plant waste instead of traditional fuel sources. He explained that they would build cellulose ethanol plants to produce environmentally friendly fuel derived from plant waste (Spaceflights News, Undated). Brannon believes this is the future of aviation fuel. Additionally, British Airways had to undergo organizational restructuring and cost-cutting measures following the terrorist attacks on September 11, 2001. This led to significant changes within BAA's organization culture. Consequently, British Airways has laid off 15,000 employees since then – a move that undoubtedly impacted employee morale and motivation.

BAA invested in innovative IT solutions, as mentioned earlier, to reduce the negative impact on the organization's efficiency, resulting in cultural changes. It is questioned whether this was the right decision by BAA management. Similarly affected by "9/11," Virgin Atlantic did not lay off 15,000 employees. From the beginning, Virgin Atlantic had a competitive advantage over BAA due to its strong management and organizational leadership. Virgin

Atlantic's organizational structure is well-designed, with a talented management team led by Sir Richard Brannon.

Virgin Atlantic has successfully implemented a leadership development program that prioritizes business objectives over human resource strategies (Virgin Atlantic, Undated). This approach has proven effective and contributed to the company's success. In contrast, BAA lacks a marketing strategy for attracting and retaining customer loyalty, which is a weakness that needs addressing. It is suggested that BAA's growth is primarily driven by globalization and traveler's needs rather than the effectiveness of their marketing campaigns. Despite having excellent infrastructure, BAA must improve its marketing efforts to attract potential travelers. Additionally, the company lacks a strategic management plan for future investments, crucial for airline growth. Conversely, Virgin Atlantic appeals to a wide range of customers and holds a competitive advantage in customer loyalty compared to BAA.

Virgin Atlantic is currently reviewing its global advertising strategy in order to increase its advertising effectiveness. This could potentially result in major changes to its worldwide agency arrangements (Redoubt, Undated). Meanwhile, British Airways needs to reconsider its marketing strategy, aiming to turn its weakness into a future strength. An excellent opportunity for British Airways lies in becoming the official airline for the 2012 Olympic Games. The airline has secured marketing rights to the 2012 brand, outbidding Virgin in the process (Sport Guardian, 2008).

The implementation of this action aligns with Bag's strategy and is expected to give BAA global visibility, thus opening up new opportunities for the organization. Bad publicity can significantly harm a company's brand image and reputation. In this case, both British Airways and Virgin Atlantic faced allegations of fuel surcharge price-fixing due to poor

decision making by their management. As a result, BAA and Virgin had to run a nationwide advertising campaign targeting around 8 million customers to explain the process of claiming money back (Telegraph. Co. UK, 2008).

Both BAA and Virgin pilots have faced scandals involving alcohol testing positive (Biked, Undated) ; (Personnel Today, 2007). Furthermore, another issue for BAA is the announcement made by British Airways on November 6, 2007, stating that they will no longer allow surfboards on their flights, while Virgin Atlantic made a different decision. This choice has had a negative impact on BAA, leading to reactions from the global surf community. There is also an ongoing petition against BAA (Surfing Waves News, Undated) ; (Go Petition, 2007). The credibility and survival of BAA may be at stake due to these poor decisions and the existence of the petition.

British Airways (BAA) has developed a successful and scalable e-business architecture, which combines technical and strategic expertise. BAA excels in implementing technological innovations, utilizing Information Technology and the Internet as vital components of its strategy. As a result, 76% of all BAA bookings are now conducted through its e-ticket system, providing customers with online/Kiosk check-in and seat booking options.

BAA is recognized as a market leader for its effective IT solutions such as the fare-explorer booking engine (British Airways, Undated) and the award-winning in-flight entertainment system ('Best in Europe', Ashtray Survey, 2007). In order to cut costs, Management and Leadership implemented a restructure of the organization (Computing, 2004), leading to a complete organizational restructuring and cultural change. British Airways has laid off 15,000 jobs since 2001, which has had a detrimental effect on the

morale and motivation of its employees.

BAA implemented innovative IT solutions to minimize the negative impact on organizational efficiency, resulting in cultural changes. The effectiveness of this decision by BAA management is still uncertain. In contrast, Virgin Atlantic managed to avoid laying off 15,000 employees despite being affected by "9/11". Unlike BAA, Virgin Atlantic had a competitive edge in terms of management and organizational leadership from the start. Sir Richard Brannon leads a talented management team that has established a robust and well-designed organizational structure for the airline.

Virgin Atlantic implemented a leadership development program that was guided by business objectives rather than human resources strategies, which has been more successful and has contributed to Virgin's success (Virgin Atlantic, Undated). Over the years, Virgin Atlantic has demonstrated greater efficiency in this area compared to BAA. Additionally, BAA faces another challenge as British Airways announced on November 6th, 2007 that they would no longer transport surfboards on their flights, whereas Virgin Atlantic made a different decision.