Virgin Corporate Strategy

VIRGINS GROUP CORPORATE system DIVERSIFICATION 1. Introduction The consummate(a) throng is maven of Britains biggest and lucky empires in the 21st century. The smart set has successfully incorporated a undischarged number of diverse industries under the sodding(a) strike off. This includes travel, mobile, financial services, leisure, cosmetics, retail, and music businesses. thoroughgoing(a) has been able to dominate the British foodstuff and has therefore continued to apace expand into other regions much(prenominal)(prenominal) as the United States, Canada and Australia.The enterprise was founded by Sir Richard Branson in 1970 as a simple mail-order record retailer and has swelled into one of the almost prosperous business empires in the business world. To date, the pure Group has globalized and established in over cc small to mid-sized watertights, employing over 25,000 people. As a result, the company has exceeded over $7 billion in revenue in 2002. Each one of mods 200 debaucheds operates as a single entity.Branson either holds ownership of a firm as CEO, or has a minority or majority stake. The complete(a) Group does not hold a hierarchal presence within the empire, which allowed its various subsidiaries to operate in an autonomous manner. 2. Richard Branson The strategical thinking As the creator of virtuous and a famous personality around the world, Richard Branson has created an entrepreneurial culture that is carried throughout the consummate(a) group of companies.His anti-corporation and anti-bureaucracy spirit resulted in a flat organizational structure with transparency and quick communication his the true and care for friends let to an organization with great employee focus, and also attracted well-nigh of the top hat people to work for him for a moderate salary. Looking into his mixed bag of strategic thinking, we lavatory exit that it is characterized by having a potent relationship with risk. His placement towa rds risk is explorative, get outing to take risks in order to enter into exclusively freshly businesses that the company k freshly nothing until now. In addition to this, their type of thinking, as an mage of their leader, is characterized by being intuitive, requiring no systematic risk analysis, found mostly only in the rapid perception of alternative strategic intuition. This kind of thinkers are formerly known as entrepreneurs still in this stain combined with a affectionate social component as Sir Richard Branson frequently uses himself to convey the groups message into the media or as a tool to promote the groups distinguish. Is this kind of strategic thinking that explains the high level of unrelated diversification of the group that we are exploring in this report. 3. Organizational Analysis and Corporate Strategy ValuesThe perfect(a) Groups overall brand identity is built upon the founder Richard Bransons philosophy which states that if you keep your staff feli citous then the guest will be happy, and if you keep the customer happy then the dealholders are happy, shape the business around people, Build dont buy, Be the best, not the biggest, Pioneer, dont follow the leader or staff first, then customers and shareholders are some the main guidelines of Richard Branson and we can see it as some of the company values. This underlying belief transcends into severally one of Virgins subsidiaries and into separately exclusive organizational culture.This is unmingled in the way in which members of the Virgin group interact with one another, as it is apparent that all members at Virgin agree potently about certain beliefs, values, and assumptions, which are reinforced within the company. Virgin has continually retained a strong belief that it is their employees who deliver brilliant customer service give the company its personality, shape its culture, and innovate. They are viewed as Virgins greatest asset and as such, management considers that employees should be hardened with respect.Management figures after their employees welfare and allows them the freedom to grow and be themselves. Virgin actively encourages personal expression, whether it is in their speech, creative and conceptual thinking, or embellish code. It is these fundamental values and beliefs that put one over allowed Virgin to thrive in such a competitive environment, challenge radical opportunities and excel in its trades, darn still continuing to operate with integrity. As we know the inwardness competencies of a company should meet three requirements -Significant value creation for the leaf nodes Difficulty of caricature by competitors -Access to new markets As we look into Virgin we can see that each subsidiary shares a set of values that are continually strengthened value for money, excellent quality reapings, brilliant customer service, innovation, tilt and consistently having fun throughout the process. Virgin would only put its sh ape to a project if it met four out of five criteria it must be innovative, challenge authority, offer value for money by being remediate than the competitors, be good quality, and the market must be growing.In such a large conglomerate empire as the Virgin Group, these long set of fundamental beliefs continually work to strengthen the companys brand as well as its culture. 3. Corporate Strategy training Diversification Entering new markets using the brand Virgin is the strong asset of the group. Diversification is the get a line of this process in which Virgin leveraged his brand recognition as a form of growth scheme for the company. It seeks to join on lucrativeness through greater sales volume obtained from new products and new markets.There are two kind of reasons for which a company look for diversification Defensive reasons which may be spreading the risk of market contraction, or being forced to diversify when current product or current market orientation seems to pr ovide no further opportunities for growth. revolting reasons may be getting into new positions, taking opportunities that offers greater profitability than refinement opportunities, or using retained cash that exceeds total expansion needs.Instead of focusing in increasing the main competencies of their initial core business Virgin focused in diversifying risk acquiring new skills, new techniques and new facilities hence through an offensive strategy. Therefore, they followed not the interior(a) phylogeny of new products or markets or acquisition of new firms only when alliance or spliff ventures with a complementary company which could enable them to operate in a new and unrelated market based on a set of attributes and values sort of than a market sector. It was about being the consumers champion We can all this type of strategy as Conglomerate diversification (or lateral diversification). The corporate strategy of the Virgin Group is to operate like a venture capital firm based on the Virgin brand. This strategy involves non-related diversification at the individual business unit level. By leveraging on the Virgin mug which has established prominence in the minds of consumers, Virgin is able to enter new business areas shaking up existing orders. Bransons has entered in a business after another in which he perceived a set of consumers that were being underserved by a complacent and dominant player.The rummy Virgin culture also allows Virgin to execute its ventures very in effect which were inspired in the keiretsu system as Branson was a convicted fan of the Japanese approach to business and their commitment to long-term development and focus on organic growth. The similarities are in a sense that Virgin is a group of companies pretty much change which have ballock links in management and financial and also share a common identity. The formal linkages between the companies are, as we saw in the case, the ownership, the brand and the management.I n order to protect the brand Virgin and Bransons name the group is keeping some companies that are running with losses. Speaking in financials they are selling some of the most profitable companies as Virgin Records to finance the new start-ups. This is due to the fact that they identify a company operating in a segment which is clearly moving toward due date to decline and instead of keeping it they sell moving to a new and growing market through diversification. The Virgin Group covers a good range of industries-from Travel and Tourism (Limousines, Vacations, etcetera , Leisure and Pleasure (Spa, Games, etc. ), Social and Environment (Green Fund, Virgin Earth), Beverages (wines and soft drinks), Media and Telecommunications (Radio, Broadband, Mobile, etc), Books, Clothing, Finance and Money, and Health (Health Bank, smell Care). But despite its diversification in terms of industries and products, it never diversified its brand names. All of its services and products in every i ndustry have the name Virgin affixed to it. Virgin is a strong but universal brand name so universal that many analysts believe the group should franchise to others unrelated companies.The Virgin brand made it accomplishable to overcome barriers to entry in various industries and sectors and has been the groups most important asset, together with Richard Branson. 4. Virgin pot Overview of Strategy Formulation Virgin genus Cola was created up during the early 1990s in a joint venture with Cott, a Canadian company that specializes in bottling own-label drinks for the UK market. Cott was looking for a major international brand that could have global appeal. Thats when Richard Branson attempt to extend the Virgin franchise into the cola market.Using the brand class in the Virgin Groups diversification strategy, Branson claimed to fight the incumbents, Coca-Cola and Pepsi Cola in alliance with an organization with core competencies in this area. Within a few months of its release, Vi rgin Cola had a 50% market share in the outlets that sold it. As Virgin stands for value of money, quality, innovation, fun and a sense of competitive challenge they focus in the brand ken to create the differentiation from the main competitors.Cross-promotion has been Bransons main weapon, serving Virgin Cola on Virgin Atlantic flights and (until they closed down) at Virgin Cinemas. In fact, we can see that this pattern was repeated successively in each new diversification, in each one was followed by expansions of the products markets, based either on new strategic alliances or within internal development and Virgin Cola followed the trend and also increased the portfolio and created new products (flavor expansions).The strong brand positioning and the innovative character were the key issues in the product differentiation options which can be can be explained due to the clients linkage with the High risk perception associated with the products potential malfunction and the clien ts low level of assumption in the choice of the product. We can also observe several stages of internationalisation to countries where there was an Anglo-Saxon matrix, in this case France, Belgium, South Africa and later on the US.We can also see that there are still some actions regarding vertical integration, but more with a commercial purpose rather than operational. So far it has failed to overtake Pepsi in the UK as Richard Branson claimed it would, and unlike Pepsi or Coke its relatively hard to find cans of Virgin Cola on sale anywhere as they have a weakness in distribution channels.