Competition in the Construction Industry: Laing O’Rourke

Competition in the reflexion Industry Laing ORourkeSelect oneness twist steady and explain the nature of competition in its specific market atomic identification number 18a and discuss how it may be advised to secure contracts for afterlife puddle.Laing ORourke is the United Kingdoms givingst confidenti whollyy leted construction true it operates internationally crosswise a variety of different sectors within the construction industry. Formerly known as R. ORourke Son until its takeover of Laing Construction in 2001, Laing ORourke is one of the leading(a) construction firms in the UK. The firm has a strong standing in sectors including, building, transport, power, water 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 stadium developments, such as the recent expansion of the Etihad Stadium in Manchest er. (Prior, 2014).Laing ORourke excessively engages in a substantial amount of work in the habitual sector, (Laing ORourke, 2014) however over recent old age the borders between the private sector and everyday sector build been blurred to a bit where a good deal only a specification is given by the public sector client and the financing, design, build and maintenance is taken on by the private sector firm (Myers, 2013). This methods popularity has so atomic number 18d over the last 20 years principally due to the dwindling amount of upper fountain readily available 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 projects such as schools, infrastructure, and hospitals. severally types of developments which Laing ORourke has lately undertaken. The contr acts run for roughly 25 30 years (Myers, 2013) and so superiorises on the strengths of some(prenominal) sectors the specifications and requirements coming from the public sector client, and the development and maintenance aspects being handled by the private sector firm. Because the private sector firm has had to invest its own summations into the PFI project, the public sector client pays an annual charge to the private sector firm or kitty al depressed the firm to retain either remuneration made from the ope balancen (Myers, 2013). This method legally ties the contractor to the project and thus greatly increases the correspondinglihood of the firm delivering a high feature ingathering. As they ar trustworthy for the maintenance and running costs, (Myers, 2013) it is in the firms best interests to create a product which will non require a great deal of additional financial input to maintain.Laing ORourke operates across most aspects of what Myers (2013) considers to be the broad exposition of the construction industry. This grasps from suppliers of basic materials to the providers of services such as transportation and demolition (Myers, 2013).Laing ORourke as a full-length atomic number 18 capable of operating across such an expanse of sectors in the construction industry through the use of ancillary companies. These be 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 entire construction project to be holy using only one large contractor, themselves, instead of having to hire in sub-contractors and other professionals. This has a number of payoffs as it means that from day one in that respect sens be excellent communication between everyone involved and soundbox with aspects such as quality, pricing, budget and time management (Laing ORourke, 2014). Most small firms specialise in a certain aspect of construction, such as build ing or civil engineering (Ive Gruneberg, 2000) but not usually a multitude of aspects. Laing ORourke is a major firm which owns different subsidiary companies within sub-industries which are of particularly good use to the parent familiarity. The firm currently 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 control indeed all the steel work could be sourced from that arm of the company and sent to site at internal reduced costs instead of paying a higher price for an indep shoemakers lastent firm to provide the picks. This allows for a substantial reduction in overall cost and lead time during the construction process and would no doubt have the capableness to have a positive surroundal effect.Laing ORourke have taken this practise a step further and have delved into the mining industry. They are amenable for rough construction materials from th eir initial removal from the ground all the steering up to their installation 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 significant building projects in the world. The firm was responsible for the construction works for the half a billion pound regene balancen project known as Liverpool One, in Liverpool in 2008 to mark the citys celebration as the European capital of culture. The project has been hailed as a great success, improved the local economy and transformed the image of the city almost in its entirety. (Laing ORourke, 2014).The size and range of Laing ORourkes operations position the firm in a sector of the market which can be expound a s an oligopoly. Cooke (1996) wrote that Oligopolistic industries are characterised by a small number of firms accounting for a large proportion (or all) of total out(p)put. 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 location specific. The resources and materials for a project may all come from atmospheric static factories, but the actual construction activity itself must always take place on the site itself, such is the nature of construction (Cooke, 1996). This is even the case where an entire building may be produced using prefabricated components, the actual coming together of the parts will happen on site. This is where a firm like Laing ORourke will utilise the smaller, more location specific firms to aid in their eff orts. These smaller firms operate in an area of the market which could be set forth more as monopolistic 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, distributively producer offers the customer a slightly severalise product or when firms offering a similar 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 names, granted they on a regular basis overtake one another year to year as the market can often be volatile and firms can 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 actually by a small amount of large firms.Construction can be a very lucrative calling even on a small scale. Therefore the amount of money passing through the accounts of a firm the size of Laing ORourke is phenomenal. This section will look into some aspects of the firms accounts, which are readily available to the public as the firm is a limited company.Parker (1999) states that all company balance sheets are create 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. Current assets are assets which are to not be put back into the firm. This includes mainly cash, debtors and stocks (Parker, 1999). In contrast, fixed assets are assets which are to be used in the continued operations and appendage of the firm.The total assets can be found by combining the fixed and current assets.The give notice assets can be found by subtracting the cu rrent liabilities from the total assets.Table 1. below shows the total assets and net assets for the years 2012 and 2013.Table 1. Balance Sheet Laing ORourke20132012 congeries 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 =305,900,000 obtain 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 shows 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 = 2,172,900,000 microbe FAME, 2014This data shows a drop in fixed assets of close 73 million and also a drop of about cl 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. megascopic profit can be found by deducting the turnover from the cost of sales.Profit margin ratio can be found by dividing the net profit before value by the turnover and multiplying the answer by 100.Return on capital employed can be found by dividing the profit before tax by the capital employed and multiplying the answe r by 100, as is shown in the table (3) below.Table 3. Profit and loss 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 return on capital grasped has fallen in both cases. two firms did however make a profit over both years and the figures show that Carillions profit margins and retu rn on capital gained are importantly higher than those of Laing ORourke.Current 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 cogency 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 and acid test ratios are hovering around the 11 mark, but both firms display a moderately 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 pillowcase speed of light, eliminating waste, sourcing responsibly, and implementing a stringent environment policy that should see their impact on the environment be reduced significantly. Their greatest priority though is to eliminate 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 performance 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 expression Information Management (BIM) into their projects of all sizes up and down their supply line would further increase their effectiveness and efficiency as a firm (www.bim.construction.com, 2014).ReferencesBIM Construction (2014) Building Information Management. Available from http//www.bim.construction.com/ Accessed 22 April 2014Cooke, A.J. (1996)Economics and Construction. Basingstoke Macmillan.FAME DatabaseIve, G.J. and Gruneberg, S.L. (2000)The Economics of the Modern Construction Sector. Basingstoke Macmillan.Laing ORourke (2014) Environment. Available from https//www.laingorourke.com/ office/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 Ac cessed 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 9Competitive wages vestal Atlantic and RyanairCompetitive Advantage utter(a) Atlantic and RyanairThis report analyses h ow validations can be strategically drived towards success. The report uses the strategic role models the cultural web, the VRIO framework, the value chain and the the three levels of culture to delineate how organisations earn belligerent advantage. 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 purpose of outline is matched advantage. Competitive advantage emerges when an organisation enforces a strategy that creates value that is not being achieved by its competitors (Henry, 2008). The advantage becomes sustainable when competitors cannot mirror the value populace of the strategy. A distinctive resource of an organisation can be defined as a resource that cannot be imitated by other organisations (Henry 2008).Strategic formulation Vision, regard ass MissionA distinct characteristic of a successful organisation is clarity over wh at 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 karyon principles of an organisation and the mission gives reason to why an organisation exists (Kaplan et al, 2008). They need to be clear and concise and easily understood by all levels of the firm.Carpenter and Porras (1996) underscore 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 taper to strategy development as they guide the strategy which guides the organisation.Values create the foundations of an organisation what the company pr omotes within their working culture can greatly trance 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 Example Ryanair Virgin AtlanticVirgin Atlantic and Ryanair are successful airline companies who achieve emulous 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 in that locationfore to provide a cheap, no frills flight service that is profitable.Vision, Value and mission of RyanairVisionTo offer low fares that generate increased passenger traffic dapple maintaining a continuous focus on cost-containment and operating efficiencies.ValuesCost efficient = low fares low costs.MissionTo firmly establish itself as Europes leading low-fares scheduled passenger airline through co ntinued 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 people love to fly and pe ople love to work.Source Virgin Atlantic (2013)Virgin Atlantic measures it success through feedback from both staff and customers through effective feedback ashess 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 statement be 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 flow of activities 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 integration and external adaptation. Culture is created through the actions of upper level management in relation to what they take precedence to, what they focus on and what behaviours they punish or reward. Hall (1993) suggested culture can be viewed as an intangible resource that can be classified as an asset or competency contributing to an organisations sustainable competitive advantage as culture can hinder a strategy or make a strategy excel.Scheins (1988) three levels of cultureHatch (1993) described the model as a conceptual framework for intervening with and analysing internal organisational culture. Schein (1988) described culture as three levels categorised intoArtifactsEspoused ValuesBasic Underlying Assumptions.They show how deeply values and beliefs are embedded into an organisation. The model shows the degree to which culture is visible to an organisation and brings about an understanding of the way business process are carrie d out and what can be done to assist change in an organisation. It is used to name 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 discernible 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 direct 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, v ision 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 services are offered at Ryanair this reflects cost efficient culture as instead they sell secondary services on flight.Head 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 uniforms.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 uniform/ unmoving 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 get a frills free flight where the expectation of other airlines is to receive complimentary services.Source Ryanair (2013).The three levels of culture demonstrate how the strategy of cost leadership is create into the culture of Ryanair culture so it becomes an unconscious process from staff and an expectation of customers.The Value ChainThe value chain was first characterised by 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, interrelated, economic activities which include both autochthonic and secondary activities. The value chain serves as a guide for identifying the key activities 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 per form identified activities in the value chain in a superior way to competitors.Source Williams (2013).The value chain is shared into primary activities and secondary activities which need to linked 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, valet de chambre resource management, procurement and technological development.Value Chain 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 ActivityInfrastructureverbal descriptionRyanairs Head Offices are minimalSupport ActivityHuman resource Managementverbal descriptionManagement control, limited training, unkept number of staffSu pport ActivityTechnology developmentDescriptionInternet booking 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 ActivityOutbound logisticsDescriptionFast turnaround times of aircraft, reliable servicePrimary ActivityMarketing SalesDescriptionLow cost promotions, Free publicity, Internet sales, controversialPrimary ActivityServicesDescriptionLimited resources and very basicThroughout the value chain, each activity is based around cost efficien cy. 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 neededInstilling 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 applied science 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 character 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 six interrelated elements centred round the paradigm (the organisations core belief) which constitutes as the work environment. The paradigm is structured on collective 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 needs to inspire innovation meaning that although culture needs to be embedded in an organisation it needs to also be flexible in order to achieve sustainable competitive advantage.Cultural web of Virgin AtlanticT he 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 supply are spacious, have a relaxed atmosphere 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 maintain a small company mentality inside a big company.Control Financial and performance results are displayed for everyone to see encouraging and empowering staff to take responsibility for their performance.Symbols Brandi ng 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 interact with each other creating the core belief of quality and innovation.The VRIO frameworkBarney (1997) described strategic resources as valuable, rare, inimitable 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 worker or sustainable.Oriordian (2006) described four questions that need to be asked when identifying an organisations resources and capabilitiesHow valuable is the resource?How rare is the resource?Can the resource be imitated?Is the resource organised 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 costly to imitate then temporary competitive advantage results.If the resources of an organisation are valuable rare and costly 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 incident 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 an d sustaining superior performance (Porter, 1998). feel to the future Airline companies will be have to face rising fuel costs and an increasing demographic of consumers who have less disposable income. This could appoint 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 bear on the needs of the organisation at hand.