Virgin Galactic Essay Example

about Five Forces Model competition that virgin galactic used.

While for the internal environment, the explanation about opportunities and threats, value, all of the resources, capabilities, and core competencies of Virgin Galactic. However, the limitation of this paper is the limited data collection because Virgin Galactic is a new company in the market, so the data is still restricted.

Other information will be explained clearer in this paper. External Environment Demographic segment Market of Virgin Galactic is thousands people around the world that wants to have new experience space for themselves and people that have large amount of money that can afford and willing to pay the ticket price.

In the long term, Moon will be the next travel destinations for vacation or family retreats (Anderson, 2009). That is why Virgin Galactic has potential customers around the world.

Economic segment The growth for some country around the world is different; they are unpredictable and cannot be clarify because of the inflation is different among develop or developing country and also because of current economic recession that happen, for example in America in end of 2009 that have negative effect to every country that have agreement with this country (Gibbs, 2009).

Virgin Galactic also has major companies that located in America that can have direct impact to the problem that happens in the country. Socio-cultural segment Many people are talking about space transportation and Virgin group quickly beginning to realize this will become trends among customers of tourism around the world (Conrady & Buck, 2007). So they started to find the target market that will be their first in flight passenger experience to the moon.

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Galactic also concerned with the nature and climate change that happens in the earth and also hired the best scientist, professional, and experts in this project. Technological segment The technology that Virgin Galactic is using is a new technology for spaceship that called SpaceShipOne, SpaceShipTwo and WhiteKnightTwo ("Virgin Galactic Unveils Spaceship Design," 2008).

They all use the same basic technology, carbon composite construction and design.

The spaceship is powered by a hybrid rocket motor technology; this is not a new idea but offers important safety and environmental advantages over liquid or solid systems that are more commonly used on manned space vehicles and the most fuel efficient to its size and uniquely useful and versatile machine. For Virgin Galactic spaceport using local materials and regional construction techniques that sensitive to its surroundings. Political/Legal segment

Probably the most challenging issues faced by commercial launch operators like Virgin Galactic is the regulatory of the government and environment. There are some regulation that have been made by Federal Aviation Administration (FAA) is an agency by United States Department of Transportation about requirements for human spaceflight that entitled “Human Space Flight Requirements for Crew and Space Flight Participants”, that include safety regulation for crew qualifications and training that Virgin Galactic should follow this regulations (Ben Yosef, 2005).

Global segment

Virgin Galactic is a new business type in global markets because when time Virgin Galactic entering the market, not many companies are moving in the space tourism market because the exclusivity and the high cost of the industry. Virgin Galactic now has gone internationally with thousands of employees and hundreds of loyal customers every year. Industry environment The tourism market

is developing during the entrance of Virgin Galactic, which can be seen by several types of tourism activities that gives interesting choices for consumer to spend their vacation.

Entrepreneur sir Richard Branson, founder of the virgin group of companies and Burt Rutan, president of Scaled Composites, Mojave, California, have signed an agreement to form a new company to build Virgin Galactic and being a first mover in commercial sub-orbital spaceships and launch aircraft (Parker & Bell, 2009). In other hand, in order to survive as number one in the space tourism market, Virgin Galactic execute a variety of ways to remain competitive among other competitors. Five Forces Model of Competition Threat of New Entrants – Low

In space tourism market, Virgin Galactic found that it is difficult to find the competitors in this market, because in this type of industry the competitors should have limitless funding that support the industry to grow bigger, to buy the newest technology and hire best engineers that really understand about the technology and the requirement of the business.

Barriers to Entry –High (a) Economies of Scale- High The tourism companies were expanding internationally at a fast pace especially the innovative one like space tourism industry.

Virgin Galactic will have joint venture with Scaled Composites, which will be the manufacturing company and also partnership with Abu Dhabi based Sovereign Wealth Fund, Aabar investments ("Virgin galactic overview," 2009). The purpose is to lower the costs for both companies, minimize the threat of new entrants and also expanding the business into worldwide business. (b) Product Differentiation- High Virgin Galactic has the newest technology and innovative devices that they presented for their customers

rather than other competitors that makes them more unique.

And only for US$200. 00 the customers can have lifetime experience to go outer spaces ("Virgin galactic booking," 2009). And also the high customer loyalty that has been built from Virgin Group has bigger impact to the customer perceptions about Virgin Galactic. (c) Capital Requirements - High The capital requirement that Virgin Galactic have is providing customer services for comprehensive information that customers need in terms of their regulations, reservation and any other data and also marketing activities such as advertising, TV commercial, and direct approach to the customers.

Bargaining Power of Suppliers- Low Virgin Galactic has many suppliers that supporting the production of the airlines for example, the fuel for the spaceships, the catering company that provide food for the customers, the spacesuits company, and also the training company for training the customers before they can experience the zero gravity. And also the choices of the company suppliers more diverse to Virgin Galactic, that means the bargaining power of supplier to Virgin Galactic is low. Bargaining Power of Buyers- Low

Because the customers of virgin galactic have many competitors in the space tourism market that is why the Virgin Company is increasing the quality of their product so the customers would not choosing another company that moving in the same fields. And also the competitive advantages that Virgin Galactic has are they offering the good quality of space traveling with the best price. Because the mission of Virgin Galactic is to end the exclusivity that attached to space tourism market and can fly almost anyone in to the space.

Threats of Substitutes Products- High Substitutes

product for space tourism industry could be considered high in this situation. Because the competitors can offer lower price, but still its quality and performance capabilities are not better than Virgin Galactic, and also Virgin Galactic also environmental friendly because they take off in the air not in the grounds. That is why many customers are much prefers Virgin Galactic rather than other competitors. Intensity of Rivalry among Competitors- Low

There are not many equally balanced competitors in the space tourism industry, and industry with this characteristic tends to have infirm rivalries.

Due to the expensive technology required in this industry and the high educational engineers and expertise. So the cost to entering this industry is relatively high. Opportunities and threat Maybe Virgin Galactic not the cheapest price but the opportunities of virgin galactic because having the best price from all the space tourism company is they can widen their target market and open more alternative experience for customer to try.

While for the Virgin Galactic threats is economic recession that could be happening and affecting the buying behavior of the customers, and also the appearance of new company that moving in the same field. Competitor Analysis Space Adventure Space Adventure is focused on actual private spaceflight that can take private citizens to have experience in outer space ("Space Adventure: About Us," 2009).

The current strategy that Space Adventure is doing various promotions about the expedition to the moon and visiting private pace stations and also find the corporate clients around the globe, media exposure and capturing public interest about space travel. Space Adventure strength is having several type of experiences rather than Virgin Galactic,

for example, Lunar Mission, Orbital Spaceflight, Suborbital Spaceflight, Zero Gravity Flights, and more Spaceflight experiences. And Space Adventure also charge lower price than Virgin Galactic for their customers, for example price for Suborbital Spaceflight is US$102,000 (includes US$4,000 cancellation insurance) ("Suborbital Spaceflight," 2009).

The weakness of Space Adventure is their promotions that do not worked really well and customer loyalty of Virgin Galactic is higher than the Space Adventure because Space Adventure is a new comer rather than Virgin Galactic that under parenting company of Virgin Group. Internal Environment Resources 1. Tangible Resources- Strong For the financial resources, Virgin Galactic has build a partnership with Aabar investments from Abu Dhabi that will investing $280 Million and taking a 32% stakes in Virgin Galactic’s business ("Virgin galactic overview," 2009).

And for the technological resources, Virgin Galactic has a joint venture with Scaled Composites, which will be the manufacturing company for the Virgin Galactic spaceships and also the Uk’s Foster partners for the development of the spaceport that has proven successful. 2. Intangible Resources- Strong Human resources of Virgin Galactic are strong because they only hire best engineers and marketing people to support their business. And the attractive innovation that Virgin Galactic offers is being the role in the market.

Capabilities

Virgin Galactic’s capabilities are their management has the ability to have partnership and joint venture with other companies while maintaining an effective, low cost, organizational structure. Through their research and development, Virgin Galactic is able to maintain technological leadership in space tourism industry. Core Competencies a) Valuable- Yes Because Virgin Galactic focus on customers satisfaction and offers the high technology with the best price that customers

can have, that creates value for their customers by being the top in the industry. ) Rare- Yes Virgin Galactic extends innovative technology and successfully managed to raise a unique business to the customers. c) Costly to Imitate- Yes The technology of Virgin Galactic has been develop by best scientist and engineers and being maintained frequently that makes competitors have difficulty to imitate the technology.

d) Non-Substitutable- No Because as time passes, new technology will develop and customers have different variety of choices that can be considered as substitute products for Virgin Galactic.

Strategic issues 1. Economic problems In the 21st century, the nature of competition in many of the world’s industries is changing, and also the global economy that which goods, services, people, skills and ideas move liberally across geographic borders which raises the new type of business. That is why problems that Virgin Galactic could face is the new innovators that would come up to the market with new innovative ideas and creativity in space tourism market so the customers will try the newest way to spent their time. . Technological problems There is an increase in rapid technology changes in the world every year, many scientist and professional inventing new machinery, tools, electronic networks, massive database, artificial intelligence, and any other inventions that could destroy the value of existing technology and creates new markets.

Virgin Galactic should aware of these problems that could affect the market and the industry of space tourism. 3. Organizational problems

Organizational problems that frequently happens in Virgin Galactic is about the internal factors that affect the business like credibility that sometimes can give bad impact to the

company if its not run properly and if the icon of Virgin Galactic sir Richard Branson is died, who will continue all his effort? , Financial partnership that Virgin Galactic have with Aabar investment from Abu Dhabi and if something happen with Aabar investment will affecting the financial sectors of Virgin Galactic, the integrity of the employees to the company that have big influence to the production process and transparency. Strategic Actions

There are two strategic actions that Virgin Galactic can do to avoid or reduce the strategic problems that could affect the company. 1. For technological problems, Virgin Galactic should more prepare with the rapid change of the technology around the world.

That is why they should more engaged with best supplier technology, the best engineers and scientist that can give them innovative choices, or Virgin Galactic can expand their business due to the rapid change of technology so the technology that they are using is not outdated and also can minimize the errors that could happen. 2. Organizational structure is very important for the business.

Virgin Galactic is a service company, so they have research and technology division and also sales division that will help the decision-making.

For example the financial agreements that virgin galactic have with Aabar investments, if something happens with the company, the sales division of Virgin Galactic should prepare all the consequences that will happen and make several alternative to handle the problems, like minimize the expenditure. Recommendations In technology sectors, virgin can make cooperation with Boeing for the manufacturing and assembly of the spaceship, so that they can minimize the cost, make the spaceship less expensive.

And for

the economic sectors, Virgin Galactic could find strong and liquid investors to finance the company so they would not go bankrupt like the fact that Japan Airlines (JAL) that currently struggling in the economic climate because of massive debt (Walker, 2010). So they will have to select their investor carefully in order to survive the competition.