Competition in the Construction Industry: Laing O’Rourke

Competition in the Construction Industry Laing ORourke lead one construction stanch and explain the nature of competition in its specific market orbit and discuss how it may be advised to secure contracts for future work.Laing ORourke is the United Kingdoms largest privately owned construction firm it operates internation in ally across a variety of antithetical firmaments deep down the construction industry. Formerly known as R. ORourke Son until its take everywhere of Laing Construction in 2001, Laing ORourke is one of the leading construction firms in the UK. The firm has a strong standing in sphere of influences including, march oning, transport, power, wet and utilities, mining, oil and gas. (Laing ORourke, 2014). This firm operates heavily in the private sector, with investments from large scale hotel operators, for example the Atlantis hotel, The Palm, Dubai to football game stadium developments, much(prenominal) as the upstart expansion of the Etihad Stadium in M anchester. (Prior, 2014).Laing ORourke also engages in a substantial issue forth of work in the public sector, (Laing ORourke, 2014) however everywhere recent years the borders between the private sector and public sector perk up been blurred to a head where frequently only a specification is given by the public sector client and the financing, design, build and main(prenominal)tenance is taken on by the private sector firm (Myers, 2013). This methods popularity has soargond over the last 20 years mainly due to the dwindling amount of capital readily us subject to the public sector and also to the public sectors keenness to utilise as much of the firms specialist expertise and experience. This method of public sector and private sector partnership (Myers, 2013) is known as a Private Finance Initiative (PFI) and is often used for vomit ups such as schools, infrastructure, and hospitals. All types of developments which Laing ORourke has recently nethertaken. The contracts run for roughly 25 30 years (Myers, 2013) and so capitalises on the strengths of both sectors the specifications and requirements flood tide from the public sector client, and the development and maintenance aspects creation handled by the private sector firm. Because the private sector firm has had to invest its own assets into the PFI project, the public sector client pays an annual charge to the private sector firm or suffer al start the firm to retain any lucres do from the military operation (Myers, 2013). This method legally ties the contractor to the project and thus greatly increases the likelihood of the firm delivering a gamey timber product. As they ar responsible for the maintenance and running termss, (Myers, 2013) it is in the firms best interests to constrain a product which give non require a great deal of additional financial excitant to mention.Laing ORourke operates across most aspects of what Myers (2013) portion outs to be the broad definition of the construction industry. This ranges from suppliers of basic materials to the providers of profits such as transportation and demolition (Myers, 2013).Laing ORourke as a whole atomic number 18 cap sufficient of operate across such an expanse of sectors in the construction industry with the use of subsidiary companies. These atomic number 18 firms or departments which Laing ORourke has either created within the firm itself or purchased and brought under the Laing ORourke umbrella and allows for an blameless construction project to be completed using only one large contractor, themselves, instead of having to admit in sub-contractors and other professionals. This has a number of emoluments as it means that from day one thither laughing argumentation be excellent communication between everyone involved and consistency with aspects such as quality, pricing, budget and magazine anxiety (Laing ORourke, 2014). to the highest degree small firms specialise in a certain aspect of construction, such as building or civil engineering (Ive Gruneberg, 2000) precisely non usually a plurality of aspects. Laing ORourke is a major firm which owns different subsidiary companies within sub-industries which are of particularly mature use to the parent ships company. The firm electric ongoingly owns a total of 17 subsidiaries (FAME, 2014).An example of this practise would be that if Laing ORourke were to purchase or develop a steel fabrication firm and bring it under its confine wherefore all the steel work could be sourced from that arm of the company and sent to invest at infixed reduced termss instead of paying a higher price for an unconditional firm to provide the resources. This allows for a substantial reduction in overall price and lead sentence during the construction process and would no doubt arrive at the potential to have a positive environmental effect.Laing ORourke have taken this practise a step further and have delved into the mining industry. They are responsible for some construction materials from their initial removal from the ground all the way up to their creation on site. Laing ORourke have been mining materials such as coal, iron ore, zinc, bauxite, alumina, diamond, and copper for over 40 years in Australia (Laing ORourke, 2014).Since Laing ORourke acquired Crown House Technologies and Barclay Mowlem in 2004 and 2006 respectively (Laing ORourke, 2014), they have completed some of the most recognisable and both culturally and economically signifi give the gatet building projects in the world. The firm was responsible for the construction works for the half a billion pound regeneration project known as Liverpool One, in Liverpool in 2008 to mark the citys celebration as the European capital of glossiness. The project has been hailed as a great success, breakd the local economy and transformed the see to it of the city almost in its entirety. (Laing ORourke, 2014).The size and range of Laing ORourkes operations set the firm in a sector of the market which suffer be described as an oligopoly. Cooke (1996) wrote that Oligopolistic industries are characterised by a small number of firms accounting for a large balance (or all) of total output. Laing ORourke is one of a relatively small number of firms that is responsible for a very large proportion of all construction work. This raises an interesting point as the industry is in fact dominated by a large number of small firms (Cooke, 1996). This is mainly due to the construction industry being fixing specific. The resources and materials for a project may all come from static factories, but the actual construction act itself must always take place on the site itself, such is the nature of construction (Cooke, 1996). This is unconstipated the case where an entire building may be produced using prefabricated components, the actual coming together of the move will happen on site. This is where a firm like Laing ORourke will utili se the smaller, more(prenominal) location specific firms to aid in their efforts. These smaller firms operate in an area of the market which could be described more as non emulous competition, even bordering on perfect competition in places. Cooke (1996) describes monopolistic competition asMonopolistic competition exists when a large number of firms are operating in a particular market but, unlike perfect competition, each producer offers the customer a passably differentiated product or when firms offering a analogous product are located in different geographical areasThis oligopolistic competition at the top end of the construction industry has meant that the top 50 construction firms in the UK, sometimes even the top 10, are usually the same familiar pee-pees, minded(p) they regularly overtake one another year to year as the market whoremonger often be volatile and firms suffer easily lose out financially if a project has not gone well. This was touched on earlier where most of the construction work carried out on a whole is in reality by a small amount of large firms.Construction can be a very lucrative business even on a small scale. Therefore the amount of money passing finished the accounts of a firm the size of Laing ORourke is phenomenal. This section will boldness into some aspects of the firms accounts, which are readily available to the public as the firm is a hold in company.Parker (1999) states that all company balance sheets are built up from three main categories assets, liabilities and shareholders funds. Assets can be defined as rights or other access to future economic benefits controlled by a company as a result of past transactions or other events. genuine assets are assets which are to not be put back into the firm. This intromits mainly cash, debtors and stocks (Parker, 1999). In contrast, fixed assets are assets which are to be used in the continued operations and growth of the firm.The total assets can be anchor by comb ining the fixed and current assets.The net assets can be rear by subtracting the current liabilities from the total assets. display board 1. downstairs lay outs the total assets and net assets for the years 2012 and 2013.Table 1. Balance aeroplane Laing ORourke20132012Total Assets255,100,000 + 929,700,000 =1,184,800,000250,300,000 + 970,000,000 =1,220,300,000Net Assets1,184,800,000 865,400,000 =319,400,0001,220,300,000 914,400,000 =305,900,000Source FAME, 2014It can be seen that the total assets have dropped from 2012 to 2013, however the fixed assets actually grew by 4.7 million and the current assets dropped by 40.3 million. This records that more money was allocated to be put back into the company in 2013 than it was in 2012. The net assets show a growth of nearly 15 million.Below Table 2 shows similar look into another large construction firm Carillion.Table 2. Balance Sheet Carillion20132012Total Assets1,952,900,000 + 1,683,200,000 = 3,636,100,0002,026,500,000 + 1,834, 800,000 = 3,861,300,000Net Assets3,636,100,000 1,661,600,000 = 1,974,500,0003,861,300,000 1,688,400,000 = 2,172,900,000Source FAME, 2014This data shows a drop in fixed assets of about 73 million and also a drop of about 150 million current assets from 2012 to 2013, which shows that fewer assets were allocated in both sectors, so it is possible that the firm did not perform as well in 2013 as 2012. The net assets also show a drop over the time period. This is in contrast to Laing ORourke, who actually increased its overall assets. This does not mean though that Carillion have less assets than Laing ORourke, on the contrary, Carillion, even though the firm did not increase its assets over the year, do however still have about 6 times the amount of Laing ORourke.Gross profit can be arrange by deducting the turnover from the follow of sales. cabbage margin ratio can be found by dividing the net profit beforehandhand tax by the turnover and multiplying the answer by 100.Return on c apital employed can be found by dividing the profit before tax by the capital employed and multiplying the answer by 100, as is shown in the table (3) below.Table 3. Profit and passing account Laing ORourke20132012Turnover1,640,100,0001,622,400,000Cost of sales1,473,000,0001,448,700,000Gross Profit1,640,100,000 1,473,000,000 = 167,100,0001,622,400,000 1,448,700,000 = 173,700,000Net profit before tax21,500,00027,400,000Profit Margin1.311.69Return on capital employed6.738.96Source FAME, 2014Table 4. Profit and loss account Carillion20132012Turnover3,332,600,0003,666,200,000Cost of sales2,984,600,0003,279,400,000Gross Profit3,332,600,000 2,984,600,000 = 348,000,0003,666,200,000 3,279,400,000 = 386,800,000Net profit before tax110,600,000179,500,000Profit Margin3.324.90Return on capital employed5.608.26Source FAME, 2014These figures clearly show us that in both firms the gross profit figures have fallen. Also the profit margin and bring forth on capital gained has fallen in both c ases. Both firms did however come a profit over both years and the figures show that Carillions profit margins and return on capital gained are significantly higher than those of Laing ORourke. contemporary ratio can be found by dividing the current assets by the current liabilities.Acid test ratio can be found by subtracting stock from the current assets and dividing the answer by the current liabilities.Also the efficiency ratio can be found by dividing turnover by the current assets.Table 5. Solvency efficiency Laing ORourke20132012Current Assets929,700,000970,700,000Current liabilities865,400,000914,400,000Current ratio1.071.06Acid test ratio0.920.87Efficiency ratio1.761.97Source FAME, 2014Table 6. Solvency efficiency Carillion20132012Current Assets1,683,200,0001,834,800,000Current liabilities3,636,100,0003,861,300,000Current ratio1.011.09Acid test ratio0.981.05Efficiency ratio1.982.00Source FAME, 2014These figures show that both Laing ORourke and Carillions current ratio a nd acid test ratios are hovering around the 11 mark, but both firms display a reasonably high efficiency ratio.Laing ORourke are at the forefront of the construction industry with new ideas and methods with regards to reducing their impact on the environment. Their current methods include cutting carbon, eliminating waste, sourcing responsibly, and implementing a stringent environment indemnity that should see their impact on the environment be reduced significantly. Their greatest priority though is to refuse all accidents through their Mission Zero policy. This policy aims to eliminate all accidents resulting in the loss of one or more shifts by 2015 and to eliminate all accidents of any severity by 2020 (Laing ORourke, 2014). These efforts should go a long way to improving their exploit along with eliminating the bad practices often associated with the industry.To provide success in the future the firm could aim to eliminate waste from their productions entirely and endeavour to not just become carbon neutral, but to become a carbon negative firm that will actually help reverse the effects that the industry has on the environment. Also a continued development and implementation of Building Information Management (BIM) into their projects of all sizes up and down their cut line would further increase their effectiveness and efficiency as a firm (www.bim.construction.com, 2014).ReferencesBIM Construction (2014) Building Information Management. unattached from http//www.bim.construction.com/ Accessed 22 April 2014Cooke, A.J. (1996)political economy and Construction. Basingstoke Macmillan.FAME DatabaseIve, G.J. and Gruneberg, S.L. (2000)The political economy of the Modern Construction Sector. Basingstoke Macmillan.Laing ORourke (2014) Environment. Available from https//www.laingorourke.com/responsibility/environment.aspx Accessed 22 April 2014Laing ORourke (2014) Health and Safety. Available from https//www.laingorourke.com/responsibility/health-and-safety .aspx Accessed 22 April 2014Laing ORourke (2014) Our History. Available from https//www.laingorourke.com/who-we-are/our-history.aspx Accessed 22 April 2014Laing ORourke (2014) Our Sectors. Available from https//www.laingorourke.com/our-work/our-sectors/mining-and-natural-resources.aspx Accessed 22 April 2014Laing ORourke (2014) Our Work. Available from https//www.laingorourke.com/our-work.aspx Accessed 22 April 2014Laing ORourke (2014) What We Do. Available from https//www.laingorourke.com/what-we-do.aspx Accessed 22 April 2014Myers, D. (2013)Construction Economics A New Approachonline. 3rd ed. London Routledge. Accessed 22 April 2014.Parker, R.H. (1999)Understanding Company Financial Statements. 5th ed. London Penguin.Prior, G. (2014) Laing ORourke wins Man City stadium expansion. Available from http//www.constructionenquirer.com/2014/03/31/laing-orourke-wins-man-city-stadium-expansion/ Accessed 22 April 2014Word Count 2002Business Economics Management for Construction (UBIL6Y-20- 1) Page 1 of 9 competitive Advantage thoroughgoing(a) Atlantic and RyanairCompetitive Advantage Virgin Atlantic and RyanairThis report analyses how governing bodys can be strategicalally lamd towards success. The report uses the strategic materials the cultural mesh, the VRIO framework, the value chain and the the three levels of culture to identify how memorial tablets make competitive payoff. Virgin Atlantic and Ryanairs strategies are then subject to scrutiny under these frameworks to identify, in reality, how this is achieved.Competitive Advantage and Distinctive ResourcesThe intention of dodge is competitive reward. Competitive utility emerges when an organisation enforces a strategy that creates value that is not being achieved by its competitors (Henry, 2008). The reward becomes sustainable when competitors cannot mirror the value creation of the strategy. A characteristic resource of an organisation can be defined as a resource that cannot be imitated by other o rganisations (Henry 2008). strategical Planning Vision, set MissionA distinct characteristic of a successful organisation is limpidity over what is to be achieved. A clear purpose can enthuse employees, managers and senior managers due to the similar values they may share (Scott Jaff, 1993). A vision is the desired state the organisation aspires to accomplish, values are the core principles of an organisation and the billing gives reason to why an organisation exists (Kaplan et al, 2008). They deal to be clear and terse and easily understood by all levels of the firm.Carpenter and Porras (1996) emphasised why clarity of vision and mission hold importance they suggested employees who have a better understanding of the mission and vision are able to have a greater awareness of the organisations strategy and how it is implemented. Secondly an explanation is given to staff of how strategy helps achieve the vision and mission of the organisation. Finally they offer guidance to strat egy development as they guide the strategy which guides the organisation.Values create the foundations of an organisation what the company promotes within their working culture can greatly influence decisions on every level thus a companys strategy for the future will be formed around these core concepts and beliefs. They allow the formation of the organisations purpose the fundamental reason for existence.Case frank example Ryanair Virgin AtlanticVirgin Atlantic and Ryanair are successful airline companies who achieve competitive advantage in different ways.Ryanair is a concentrated low cost airline who offers a no frills service to customers. The strategy of Ryanair is to be a cost leader. The purpose of Ryanair is therefore to provide a cheap, no frills escapism of stairs service that is profitable.Vision, Value and mission of RyanairVisionTo offer low fares that generate increased passenger trade while maintaining a continuous focus on cost-containment and operating effici encies.ValuesCost efficient = low fares low be.MissionTo firmly establish itself as Europes leading low-fares scheduled passenger airline through continued improvements and expanded offerings of its low-fares service.Source http//www.ryanair.com/doc/investor/Strategy.pdf (2013).Ryanair measures its success through profit. Ryanair recorded a jump in profits towards the end of 2012 which indicates that Ryanair is achieving its purpose (http//www.bbc.co.uk/news/business-20202579).Virgin Atlantic is a leisure airline who is able to diversify into unusual leisure routes and serve different demographic locations to Ryanair. The overall purpose of Virgin Atlantic is therefore to grow a profitable airline that focusses on business and leisure markets and the quality of service offered whilst empowering staff.Vision, Value and Mission of Virgin AtlanticVisionThe success of our three year strategy requires us to build on these foundations by focussing on the business and leisure markets and driving efficiency and effectiveness.ValuesCaring, honest, value, fun, innovation.MissionTo grow a profitable airline where plurality revel to fly and people love to work.Source Virgin Atlantic (2013)Virgin Atlantic measures it success through feedback from both staff and customers through effective feedback sy musical themes including 360 degree feedback. The feedback received is often positive and shows Virgin Atlantic is achieving its purpose of providing an airline where people love to fly and staff love to work (Virgin Atlantic, 2013).The above examples demonstrate how vision, values and mission financial statement underlie the purpose of an organisation and how combining the three together form the foundation of strategy.RyanairThe first organisation to be looked at is Ryanair and how it achieves its cost leader status by looking at its culture in terms of the three levels of culture framework and by applying the value chain to analyse how they integrate the die hard of a ctivities to achieve competitive advantageCulture and its connection to strategySchein (1988) defined organisational culture as a pattern of basic assumptions a given group has created by learning to handle problems of internal consolidation and external adaptation. Culture is created through the actions of upper level management in relation to what they take antecedence to, what they focus on and what behaviours they punish or reward. Hall (1993) suggested culture can be viewed as an nonphysical resource that can be classified as an asset or competency contributing to an organisations sustainable competitive advantage as culture can hinder a strategy or nark a strategy excel.Scheins (1988) three levels of cultureHatch (1993) described the model as a abstract framework for intervening with and analysing internal organisational culture. Schein (1988) described culture as three levels categorised intoArtifactsEspoused Values prefatorial Underlying Assumptions.They show how deeply values and beliefs are embedded into an organisation. The model shows the degree to which culture is open to an organisation and brings about an understanding of the way business process are carried out and what can be done to assist change in an organisation. It is used to diagnose cultural characteristics of an organisation which can then be used to develop or maintain Strategy and the strategic advantage that ensues. The table below summarises each level of cultureThree Levels of CultureArtifactsThe most observable level of culture and can include business process, aesthetics of the organisation or organisational structures for example. All are visible indicators of culture but are difficult to interpret.Espoused ValuesThey underlie behaviour and can, to some extent, determine behaviour. They are not like a shot observable and can include strategies, goals objectives or philosophies for example.Basic Underlying assumptionsThese assumptions are unconscious and often stem from values until they are taken for granted and transfer to the unconscious.Source Williams (2012).Ryanair Three levels of CultureThe culture of Ryanair is cost efficiency which is reflected in their values, vision and mission where they create their main competitive advantage of being a low cost, frill free airline.Using the framework a diagnosis can be made of the culture of Ryanair and how this creates competitive advantage.ArtifactsNo complementary operate are offered at Ryanair this reflects cost efficient culture as instead they sell secondary services on flight. star office staff supply own pens and are not allowed to charge their phones at work in the office, reflective of low cost culture.Employees pay for their own training and ordereds.Ryanair use subsidiaries to make fares cheaper, they are obtained from using local airports so the savings can be passed onto customers.Espoused ValuesThe policies enforced by Ryanairs senior management, e.g. the policy of having to buy own u niform/ stationary equipment, reflects cost efficient nature.Basic Underlying assumptionsEmbedded guidelines in Ryanair staff employees deliver a cost efficient service to passengers and they know that they are getting a frills free flight where the antepast of other airlines is to receive complimentary services.Source Ryanair (2013).The three levels of culture demonstrate how the strategy of cost leaders is built into the culture of Ryanair culture so it becomes an unconscious process from staff and an expectation of customers.The Value fibrilThe value chain was first characterised by hall porter (1985) and is a chain of activities that group together the main value adding activities of an organisation and can be used as a strategic planning tool. Porter (2007) described an organisation as a compilation of individually distinct, inter link, economic activities which include both basal and secondary activities. The value chain serves as a guide for identifying the key activitie s within an organisation which make up the value chain that have the potential to create a sustainable competitive advantage. The competitive advantage emerges from the ability of the organisation to perform identified activities in the value chain in a superior way to competitors.Source Williams (2013).The value chain is divided into primary activities and secondary activities which need to tie in together strategically across the organisation so resources can be optimised and coordinated in a way to sustain competitive advantage. Primary activities are activities classified as products or marketing related activities. Support activities assist the primary activities and include infrastructure, human resource management, procurement and technological development.Value strand of RyanairThe Value chain of Ryanair is a demonstration of how they integrate both primary and support activities together to create competitive advantageSupport Activities which add value to RyanairSupport A ctivityInfrastructure descriptionRyanairs Head Offices are minimalSupport ActivityHuman resource ManagementDescriptionManagement control, limited training, down in the mouth number of staffSupport ActivityTechnology developmentDescriptionInternet reserve system, Low tech marketing, Internet sales, Integration of systemsSupport ActivityProcurementDescriptionOutsourcing, low costs alliancesThe support activities defined show how they can accommodate the primary activities in a way that is cost effective. For example, Ryanairs point of sale is internet based, cutting out the middle person so flight bookings go directly to Ryanair themselves.Primary Activities which add valuePrimary ActivityInbound logisticsDescriptionQuality training, Low cost suppliers, Airport agreementsPrimary ActivityOperationsDescriptionNo added frills (low cost.)Primary Activity outbound logisticsDescriptionFast turnaround times of aircraft, reliable servicePrimary ActivityMarketing gross revenueDescriptionLo w cost promotions, Free publicity, Internet sales, controversialPrimary ActivityServicesDescriptionLimited resources and very basicThroughout the value chain, each activity is based around cost efficiency. Money is saved throughProviding a basic service to customersUsing the internet as a point of sale which incurs lower costs as less human capital is needed instill a cost efficient mind set in staff through managing staff in a cost efficient manner by lowering overheads on training, uniform and fancy officesEnsuring there technology and logistics are built around time efficiency ensuring maximum usage of craft and ensuring services they offer are reliable.Source Ryanair (2013).Virgin AtlanticVirgin Atlantic has a reputation of quality, whether it is quality in terms of service, treatment of staff or the design of the actual aircraft. The cultural web will be used to identify how culture contributes to competitive advantage of Virgin Atlantic and how its resources are distinctive to those of its competitors.Cultural Web StrategyCorporate culture and reputation are significant, intangible resources of an organisation that can create sustainable competitive advantage. The cultural web is a diagnostic tool that looks at the internal environment of an organisation aligning strategy with culture Johnson (2000). Seel (2000) describes the cultural web as half-dozen interrelated elements centred round the paradigm (the organisations core belief) which constitutes as the work environment. The paradigm is structured on incorporated experiences and informs what people in the organisation do and has influence over how change should be responded to. Stories, symbols, power structures, organisational structures, control system and ritual routines are the six elements that make up the web and are the focus of strategic change. Each of the elements must be examined in order to gain understanding of an organisations culture (Johnson, 1992). Organisational culture necessit ate to inspire innovation meaning that although culture inescapably to be embedded in an organisation it needs to also be flexible in order to achieve sustainable competitive advantage.Cultural web of Virgin AtlanticThe paradigm of Virgin Atlantic is reflected in their mission statement to grow a profitable airline where people love to work and people love to fly. The core belief of Virgin is delivering quality experience.Stories Most stories involve Richard Branson (the founder of the virgin brand) and often relate to his personality or management style and portray him as an anti-corporate, innovative hero.Rituals Virgin Atlantics headquarters are spacious, have a relaxed aura and when staff reach training milestones they and their families are invited to an event which is often attended by Branson himself.Power Structures Most decisions and visions are controlled by a driven, close knit group of senior executivesOrganisational structures Small, focussed teams that work to mainta in a small company mentality inside a big company.Control Financial and functioning results are displayed for everyone to see encouraging and empowering staff to take responsibility for their performance.Symbols Branding is smart and slick and conveys the good reputation that the brand Virgin has.Source Virgin Atlantic (2013)The cultural web shows how the six elements act with each other creating the core belief of quality and innovation.The VRIO frameworkBarney (1997) described strategic resources as valuable, archaic, unreproducible and organisable. The VRIO framework is a tool an organisation can use to examine its internal environment and views organisations as bundles of resources. If these resources are correctly used then an organisation can gain competitive advantage over competitors depending on the four characteristics identified by Barney (1997) and determines whether the advantage is temporary or sustainable.Oriordian (2006) described four questions that need to be a sked when identifying an organisations resources and capabilitiesHow valuable is the resource?How rare is the resource?Can the resource be imitated?Is the resource nonionic in an efficient manner?If the answer is yes to the above questions then the resource offers a competitive advantage over competitors.When analysing an organisations resources one of the following answers occur (Barney 1997)If an organisations resource is not valuable then the firm can expect to be at competitive disadvantageIf the resource is valuable but not rare competitive parity is reachedIf the resource is valuable but not rare a competitive advantage is reached but it may only be temporary.If a firms resources are rare, valuable but not pricey to imitate then temporary competitive advantage results.If the resources of an organisation are valuable rare and pricy then a sustained competitive advantage will result if the resources are organised properly.VRIO framework of Virgin AtlanticVirgin Atlantic has a number of resources that help sustain its competitive advantage over competitors. Its brand and reputation are indisputably its strongest resource whereas its customer service, geographic location (in terms of flight destinations) and human resources are a competitive advantage now, but have the risk of being imitated in the future.The VRIO framework for Virgin Atlantic shows that competitive advantage is gained from there resources that are valuable, rare, inimitable and organised. The brand name Virgin and the ability the name has to raise capital due to Virgins reputation are the resources that ensure sustainable competitive advantage is achieved. Technology, the location of where flights are available to and from and the organisational structure of Virgin are all resources that can create competitive advantage but have the possibility of being imitated by competitors which means the advantage may only be temporary.ConclusionBy exploring the strategies of both Virgin Atlantic and Ryanair it is clear that different strategic routes can be taken to achieve competitive advantage. Both organisations use their resources effectively to achieve their purpose. Competitive advantage is about creating and sustaining superior performance (Porter, 1998). Looking to the future Airline companies will be have to face rising fuel costs and an increasing demographic of consumers who have less liquid income. This could propose challenges to both organisations. Ryanair focus on cost efficiency, however, if fuel prices were to rise substantially they would have to consider ways in which they can continue to deliver there no frills flight service at competitively low price. With regards to Virgin Atlantic they would have to cater to the consumer with less disposable income by considering how they could improve the efficiency of its processes and activities to appeal to this audience. There is no right way of forming a strategy as not one applies to every organisation. The most effective strategies are those that meet the needs of the organisation at hand.