Final Strategy (2)

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INSTITUTE FOR INTERNATIONAL

MANAGEMENT & TECHNOLOGY

ASSIGNMENT

STRATEGIC MANAGEMENT

VIRGIN ATLANTIC AIRWAYS & XEROX CORPORATION

MODULE LEADER

MR. Vimal Babu

DR. Vinnie Jauhari

Submitted by:

HEENA GUPTA

PGPM 3RD SEM


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INTRODUCTION

This coursework discusses about the strategy concepts by different authors and

researchers and how the strategic management has become importance for firms

these days. Further there is a brief discussion about value chain analysis and

resource analysis with context to the two companies XEROX and Virgin Atlantic

Airways thereby introducing the company the key drivers and strategies of the

companies are being talked about so as to analyze the key role of strategies for the

companies in having edge over others lastly the competitor analysis is shown by

perceptual map of virgin atlantics airways and the market positioning of xerox with

shares and in the end lessons derived from the analysis are mentioned.


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EVOLUTION OF CONCEPTS AND DEFINITIONS-

In the definition given by Pearce et al (2012), if we look at from the perspective of managers

then the strategy is their future plan on a broader and large scale for attaining the goals of the

company by interacting with the competitive environment. Moreover, a strategy is like a mirror

that reflects awareness of the company of how, where, when, with whom and for what purpose it

should compete. In the English language the word strategy is used most dynamically. Strategy

is derived from the Greek words stratos meaning an encamped army covering ground and

agein i.e. to lead and together it means the general. Strategy therefore means the art of

generalship.Bailey (2007) quoted that strategic management is an approach for managing the

change which constitutes of following: positioning the firm through strategy and capability

planning. It is in the human nature to insist on definition for each and every concept. Strategicmanagement cannot be defined or rely on single definition of strategy. In this article Mintzberg

has presented strategic management in five different definitions of strategy i.e. plan, ploy,

pattern, position and perspective and they all are interrelated. Mintzberg(1987).

According to Dobson et al, 2004 companies are like armies because business is also always

standing on the forfront of war to compete with the competitors as enemies in the case of armies.

Therefore analyzing the weakness of the opponents and the strength within the act should be

performed. To understand the strategy of any firm we must look at the factors that have helpedthe company to gain that position. How does the organization reach its present state ? because

there we come to know what are the strategies and key drivers of the company.


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Introduction to Both the companies-

VIRGIN ATLANTIC AIRWAYS-

In an article given by Daas, 2004 in AviaMagazine.com Virgin Atlantic Airways is taken as one

of the first airlines with low budget. It was developed by Richard Brandson as an offshoot of

Virgin Group of Richard Brandson who was known for his legendary Virgin Records. It started

its flights between London and Newark and got its operations started from 22 June, 1984. In the

ending year 1984 it had flown over 1 million passengers and gave great competition to other in

the industry as an first airline to offer their business class passengers with individual Tvs.

(www.aviamagazine.com)

Xerox, is a synonymous name being used for photocopying but it is a global company that was

founded in 1906 in Rochester, NewYork. It started with the name Haloid Company and was

renamed later as Xerox Corporation in 1961. It was having excess revenues in 1996 with $ 17

billion. It produces and sells copiers, printers, scanners, fax machines, document management

software, and related products and services in more than 130 countries around the world. Digital

products contribute to one third of Xerox revenues. There are 86,700 employees worldwide

including 46,000 in U.S (1996). (Tung, 2001)

VALUE CHAIN ANALYSIS-

It defimes the the activities witin and around an organization which together creates a product

or service. It is these value activities and the outcome that they deliver, detrmines the value of

the product and services by the organization is best or not. It plays a key role in having the

competitive advanatge.
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www.management4all.org

Virgin Atlantic airways effectively implemented its value chain and became second largest

long haul airline only in two decades in UK. As we can see in the digram these activities are

being divided into two groups Primary and secondary activities. Primary activities (in context of

virgin atlantic airways) consists of :

Operations- Environmental friendly operations and aviation decision support

Inbound logistics- RFID tagging, Airplane Health management.

Outbound logistics- Fatest Check-in, Secure website.

sales and marketing- Marketing campaign, direct booking.

and services- Excellent customer service by virgin atlantic airways.

Support activities are the activities that add value to product and service by themselves or by the

support of primary activities. They basically constitute of human resource management,

technology development and general administration.
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XEROX also had their resouces as it had its brand name, its global approach, customer

satisfaction and innovation and technology with high quality focus strategy.

KEY STRATEGY VALUE DRIVERS OF THE FIRMS-

VIRGIN ATATLANTIC AIRWAYSs KEY STRATEGIES

Aviation industry is highly competitive and in the industry where everyone gives same service,

same aircraft, in such a volatile industry Virgin Atlantic airways has used Differentiation strategy

to have a competitive edge over its competitors. Differentiation strategy means unique and

valuable distinction indentified by customer to be different from other competitors. It used

customer innovation and has long series of success, it gave individual tvs to its business class

customers, it came up with no smoking flights, innovative check-in, it was the first one to have

at-seat podcasting, the first airline to fly using biofuels and at present it is the first one to

introduce Limousines service for the upper class customers, their current theme was highly

effective i.e. your airlineseither got it or it hasnt. due to these sustained innovation it has

been a leader with thefirst mover advantage in the industry. Virgin Atlantic Airways have then

usedfocus strategy for having competitive edge. This means that focusing on a particular target

group by narrowing down the market. If we observe differentiation strategy then it has mainly

target upper class passengers and its marketing strategy to campaign and invest 10 million pound

is just to focus upon upper class people. It provided upper class experience to its passengers on

business class price. It came up with Upper Class Suite in 2003. To give their customers great

comfort they have used flip over chair that provides a flat bed and a wider seat to their passenger

that no other airline ever thought of. Moreover it had in-flight cocktail bar, massage, personal

limo services and its state of art clubhouse especially for the passengers of upper class.

There are basically three competencies which Virgin Atlantic Airways follow to have

competitive advantage are:

Creativity and innovation Excellent service in scheduling Transatlantic long haul service.

STRATEGY CREATION IN VIRGIN ATLANTIC AIRWAY:


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DISCARDED STRATEGIES

IMPLEMENTATION

ORGANIZATIONAL AND ADAPTIVE

STRATEGIC CHANGE

Intended strategies are result of planning and visionary leadership and on implementation someof them get discarded due to changing environment and then it adapted strategies when new

opportunities come up. Virgin Atlantic started recruiting expertise people in the industry and

concentrated on visionary strategy the airline then got success and awards for the quality and its

service over 12 years. There was limitation in its growth, then it learned from its experience in

changing environment and gave threat to British airways and the whole industry got affected by

the gulf war and the recession worldwide in 1990s but virgin came as a transatlantic market with

new innovation in their services and brought a drastic change gave high competition.

(Thompson, 1997)

FORMALLY

PLANNED

STRATEGIES

VISIONARY

LEADERSHIP

ENVIRONMENTAL

CHANGES

INTENDED

STRATEGIESACTUAL

STRATEGIES

PURSUED


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XEROX CORPORATION-

During 1970s Xerox market share started declining and therefore in 1980s it came up with new

strategies and ambitious programme so that it can take back its market leader position in the

market. It mainly emphasized on quality, leadership and management process, culture with

market orientation, employee empowerment and a learning organization, innovation process,

continual innovation. From 1992 to 1994,Xerox reorganizaed the company and came up with

new strategies that would strengthen its profitability and growth.

Xerox benchmarking - Xerox implemented a quality through leadership program which

employed cost of $ 125 million bt it was positive. In addition to it xerox observed american

express, LL. Beam so as to learn and increase their efficiency. This was known as competitve

benchmarking which is the process of continuously measuring product and services against the

toughest competiors in the industry. It helps xerox to adopt to changes in the environment.

Team players and Innovators- with the implementation of its strong strategies, the process was

continouous improvement and innovation to maintain the leader position. Its strategies

emphasisied on group development: people in Xerox are team players. Teams that achieve black

belts earn the title of X team i.e. a group of innovative people who se best practices are shared

across organizational lines. It is the highest level of team recognition in Xerox given in Annual

report of 1997. (Lynch, 2000)

Customer business units - till mid 1990s the operations of customer was based on national

boundaries. However xerox recognized that it is the small countries like Austria, Portugal,

Swtzerland, Belgium etc. that perform better in dynamic economic environment. Corresponding

to the size of smaller countries the company size for customers was discovered to be 400

employs. So by the year 1992-93 all the large companies split into small units. Customer

Business Unit managers were given roles to handle.

Developed powerpower was given to individual CBUs, including the responsibility of profit

and loss. Managers were empowered to take decisions so as to how unit operated. The effect of it

was beneficial for profitability. For example in Italy there were three CBUs and was going in

losses consistently, their revenues increased by 25% with insight of profitability.


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JetBlue Air France

AirTran Delta Air

British Airways

Continental

Japan Airlines

Low-Cost Air Travel High -Cost Air

Ryan Air Zoom Air

Thai Sky Airlines Air Asia

Sky Airlines US Airways

United

Air Canada

Low Quality Air Travel


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Airline industry has lot of competition and consumer also have wide options with them to select

airline of their status and lifestyle. The perceptual mapping given above shows the consumer

mindset that where virgin atlantic falls when compared with competitors. The rating of air travel

is done on two basis the cost of travel and the comfort level. The map shows that the passesngers

who prefer low cost air travel without taking into consideration comfort go for airlines such as

sky airlines and ryan air, while there are other travellers who are willing to pay more. If we take

the case of Virgin atlantic airways consumer is willing to pay a higher cost so as to travel with

comfort and luxury. (Cordiner, 2011)

In 1960s when the japanese countries try to enter photocopying markets at international level ,

but they had to face Xerox which was dominating the market. Xerox had a policy of leasing out

its machines and then giving to the engineers to maiantain them this always attracted large firms

those have large printing demands but small companies accepted japanese offering. Therefore

after 1990s, Xerox started loosing its market share of the overall market but despite of it

mainatined its leadership position in the high segments because it had the ability to provide high

level of service to its customers and even the japanese companies never tried to match because of

the high cost in setting up and difficulty faced in obtaining minimum levels of business to make

profits. Xerox faceed tough competition, in 2009 the company had $ 485 million on sales of $

15.2 billion. In next third quarter its profit doubled to 250 million. The firm had aquired global

imaging systems in 2007 that contibuted to its growth. (Leckey, 2011). Xerox as a leader among

competitors always had key factors its success strategy was always employees oriented.

Increasing the involvment of employees will definitely give great results to customers.

Empowering the employees help in giving customer satisfaction.


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LESSONS LEARNED FROM VIRGIN ATLANTIC AIRWAYS AND

XEROX-

Innovation was common in both the companies. Therefore, both the companies shouldfocus on adoting to new technology etc.

Both the companies should evaluate their current strengths and competencies. Focus on aquire, outsource, build-in house. Should develop a plan that can dominate the markets of both the company. Continuous improvement should be focused upon. Virgin Atlantic mainly focuses on upper class but it should check its competencies in

other target group also.

Xerox is doing great through Lean six sigma it should see which are the other areas it canleverage into.

Linking technology and market is the major challenge that should be looked after. Xerox must make advancement in digital technologies, cost reduction, and should

broaden its product and service distribution network worldwide.

There are other companies also which are pioneers in innovation and are continuouslythriving upon something new that others have not thought of so it is important for both

the companies xerox and virgin atlantic airways to keep a pace to dynamic changes andkeep coming up with new innovations.

Customer sattisfaction is the key for both the companies so evry day they should work oncustomer needs and wants and should be prepared for future challenges.


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References

Duke, Charles B. (2004), creating economic value from research knowledge (online)(cited on 25 October, 2012). Available from

Management4all (2012) value chain framework (online) (cited on 25 October 2012)Available from

Fao (2012) The value chain (online) (cited on 25 October 2012) Available from

Virgin Atlantic (2012) History (online) (cited on 25 October 2012) Available from

Mintzberg, Hnery (1987), The strategy concept I: five ps for strategy, California MangementReview, 30:1, pp: 11.

Dobson, Paul et al (2004), strategic management, second edition, UK, Blackwell PublishingLtd.

Lynch, Richard (2000), Corporate strategy, England, Person Education Limited. Avia magazine (2012) Airline profile (online) (cited on 25 October 2012) Available

from

Xerox (2012) Our company our capabilities our commitment (online) (cited on 25October 2012) Available from

Klm (2012) The 7 service standards (online) (cited on 25 October 2012) Available from Tung, Rosalie L. (2001), Company Profile 18 Xerox Corporation, Learn ing from World

Class Companies, Derby, Thomson Learning 2001.
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Final Strategy (2)