Each of the organization will have their own strategy to operating the business, and the organization are running the business and competing with the competitors. Each organization must develop a strategy that best matches its internal capabilities and its situation with regard to the external environment, economy, customer desire and requirement, each organization may change their strategy from time to time. In the following paragraphs will be comparison and contrast of strategic development in between Virgin Atlantic Airways and Singapore Airlines.
Strategic Development Virgin Atlantic Airways and Singapore Airlines are using different strategic development. 3. 1. 1 Emergent and Intended Strategies Virgin Atlantic Airways is using emergent strategy development. Emergent strategy comes about through more everyday routines, activities and processes in organizations. It may not be directly to do with development of strategy. Singapore Airlines is using intended strategy development. Intended strategy is an expression of desired strategic direction deliberately formulated or planned by manager.
The implementation of intended strategy is also planned in terms of resource allocation, control systems, organizational structure and so on. 3. 2 Competitive Strategy Competitive strategy is concerned with the basis on which a business unit might achieve competitive advantage in the industry. According to Michael E. Porter mentioned and list out there are three generic competitive strategies which are: cost leadership, differentiation and focus. Cost Leadership Strategy In cost leadership strategy, an organization sets out to become the low cost producer in its industry.
The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. If an organization can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average. Differentiation Strategy In a differentiation strategy an organization seeks to be unique in its industry along some dimensions that are widely valued by buyers.
It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions to meet those needs. It is rewarded for its uniqueness with a premium price. Focus Strategy The focus strategy is the choice of a narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others. The focus strategy has two variants: cost focus and differentiation focus; Cost focus is an organization seeks a cost advantage in its target segment.
Differentiation Focus is an organization seeks differentiation in its target segment. 3. 2. 1 Competitive Strategy of Virgin Atlantic Airways Virgin Atlantic is focus on the Differentiation and Differentiation Focus competitive strategy. Virgin has delivering the image to consumer is fun and innovation. In the plane, they can provide the following entertainment and services: TV and movie channel, audio channel in different kind of music, Nintendo games, bulkhead telephone, retail and beauty therapy.
For the seat arrangement is different from another airline; Virgin has three classes of service: Economy, Premium Economy and Upper Class (Business Class). 3. 2. 2 Competitive Strategy of Singapore Airline Singapore Airline is using in cost leadership, differentiation and focus strategy. Singapore Airline is providing some special offer through online booking in certain non-peak period and they are using in cost leadership strategy. The cut-price strategy can enhance the competitive advantage to the competitors and reduce the lost during the non-peak period.
The fully branded of Singapore Airline is in differentiation strategy as their innovation, best technology, genuine quality and excellent customer service were to become the major drivers of the brand. Also, they have pioneered many in-flight experiential and entertainment innovations, and strived to be best-in-class. Singapore Airline is the youngest fleet of aircraft amongst all major air carriers and showing that they are using focus strategy. It can enhance cost efficiency to use the latest aircrafts. 3. 3 Porter’s Five Force Model Analysis
The Porter’s Five Forces Analysis (see Appendix 1) is used to assess the external environment of the organization and strategize accordingly. This analysis is conducted on the basis of five forces. They are threat of new competitors, bargaining power of suppliers, bargaining power of customers, threat of substitute products, and rivalry among existing firms. In the following form is showing that Porter’s Five Force Model Analysis in overall airways industry. Threat of EntryBargaining Power of BuyerBargaining Power of SupplierThreats of SubstitutesCompetitive Rivalry Low
Huge amount of capital investmentHigh More cut-price airline company appear in the marketLow No substitutesLow Other kind of transport tools choose but long transit time. High Porter’s Five Force Model Analysis in airways industry 3. 4 Conclusion of Strategic Development between Virgin Atlantic and Singapore Airlines Virgin Atlantic and Singapore Airlines are using different kind of corporate strategic approach. In the Porter’s five forces analysis can reflect more cut-price airline company appearing in market of the airway industry. As the result, both corporate are face on a high competitive situation.