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Expansion and Culture.

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Introduction

Virgin Atlantic Airways just celebrated the 10th anniversary of its inaugural flight to New York. It has experienced tremendous growth within those years and has become Britain's second largest long-haul airline. Virgin has gained recognition for its attentiveness to quality and innovative product development by realizing that they are not only in the airline business, but the entertainment and leisure business as well. This mentality helped them prosper throughout the ten years, but now Richard Branson, the airline's chairman and founder, has turned his vision to expansion. The primary issue facing Branson is what should become of his international long-haul airline. To determine this, he needs to decide how to gauge whether there is the need to expand, and if so, which new markets the airline should serve. Additionally, he needs to create a plan that allows him to manage demand and capacity so that Virgin can maintain a relatively high load factor, insuring their profitability. Expansion and Culture At the time of their 10th anniversary, Virgin served eight cities with a fleet of twelve planes, half of which would be brand new by the end of 1994. ...read more.

Middle

A survey should be formed and sent out a measurable market. By defining a measurable market, Virgin will be able to recognize the markets needs and periodically assess how they are serving that market (which will be useful once the new routes are established.) This market should encompass everyone in the Virgin Freeway travelers' program. Targeting the frequent travelers would ensure that the research is gathered from the target market and also let those customers feel like they are part of the company. Additionally, the surveys should be distributed amongst employees to reinforce and confirm their ownership within the organization. Until this point in the case, the culture of Virgin had been open and flat. They had a loose organization and a high level of communication and interaction within all levels of employees. This culture was fostered by Branson who gave his home phone number to all staff members and encouraged them to call him at any time with suggestions or complaints. It was this investment in employees that lead them to love their job despite the fact that Virgin paid relatively low salaries. Letting employees have a say in new routes will only reinforce this culture by showing them that management really does care about their suggestions. ...read more.

Conclusion

Although shifting demand could help Virgin manage their capacity, the must realize that it will mostly apply to pleasure travelers since business travelers are usually not able to shift their needs as they please. To account for this, the blocks sold to travel intermediaries should be lowered during peak times to allow more space for pleasure travelers and last minute business travelers. An issue that may surfaces while managing capacity is Virgins pricing scheme. However, looking at exhibit 9, their closest competitor has higher prices for the majority of their flights. Therefore, if Virgin raised fares during peak times, it is feasible to believe that the other airlines would be doing so as well and not cause hardship for Virgin. Conclusion At the time of this case, Branson managed a successful airline company with a unique corporate culture. The arrival of a new decade is perfect timing for new routes to be offered. However, for its success, Virgin must pay close attention to internal happenings as well as expansion. They must insure that their corporate culture is not diluted during the expansion. Sometimes when a company expands, their distinguishing factors are muddled and the profitability and well being of the company declines. Virgin Atlantic Airways is built on its originality and attentiveness to customer desires. Without those factors they are nothing more than their closest competitor. ...read more.

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