Introduction Strategy is about achieving competitive advantage. A company can achieve this by being different, delivering a unique value addition to the customer and by having a clear and enact-able view of how to position itself uniquely in the industry. This essay uses Virgin Blue as a case study to find out if it has successfully achieved strategic competitiveness in the Australian airline industry. The I/O and the Returns-based models of above average returns are central in classification of external and internal environment elements. Strategic Management and Strategic Competitiveness Strategic management is the systematic analysis of the external and internal environment to form a basis of re-evaluating the current management practices with the aim of achieving better alignment of corporate policies and strategic priorities. Strategic competitiveness is achievable when a company formulates strategies that give it an edge over its competitors. The strategy formulated should be rare, that current and potential competitors are unable to duplicate because it is costly, and in that way the firm achieves sustainable competitive advantage. The 21 st century competitive landscape is rapidly changing because of technology and uncertainty. This means that managers have to adopt new ways of thinking. Managers have to value flexibility, innovation and speed in responding to existing competitors and new entrants to remain in business. These characteristics may have affected the entry and survival of Virgin Blue into the Australian airline industry. In order to enter the market, Virgin Blue had to introduce low cost and take measures to keep the costs low and using imaginative tactics of thinking outside the box to remain innovative. External Environment External environment consists of factors outside the control of the firm that affect the ability to meet customer demands and that face the whole industry. These factors based on resource-based model include political, economic, socio-cultural, technological, and legal. They determine the laws to apply in running business, the economic conditions that the firm will have to operate in, the characteristics of the market, and the technology determines the way the product should be (Millmore, 2007). In the case of Virgin Blue, the economic aspect of external environment can be considered to have crucial importance. The rising fuel costs, increasing operating costs, and increasing terminal costs are some of the economic challenges the Virgin Blue faced as it pursued its low cost services strategy. Additionally due to the economic slowdown in 2008, Virgin Blue recorded a loss of $160 for the financial year 2008-2009. This loss must have had a great influence on how the firm was to be run to survive this period until the economic recovery period in 2010 when Virgin reported a profit of $21.3 million. Internal Environment Internal environment encompasses elements that are specific to a firm and affect its ability to meet customer. Financial resources, organizational resources, physical resources and technological resources are the tangible elements considered to affect the internal environment of a firm in Resource-based model of above average returns. On the other hand, the intangibl