Analyzing Virgin Group's Business Strategy

This assignment analyzes the dynamic nature of the business environment and highlights Virgin Group's successful strategies across various sectors. It explores common resources and capabilities employed by their subsidiaries, delves into their diversification tactics, and proposes recommendations to enhance their management structure for sustained growth.

COMPETITIVE STRATEGY
& INNOVATION

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK .............................................................................................................................................3
Resources and capabilities linked with virgin companies .....................................................3
Business Diversification strategy of Virgin company............................................................3
Recommendations on changes in organisational structure and management system ...........3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Strategic management refers to the framing of goals and objectives by higher
management level so that it can be accomplished in effective manner. Proper plans and actions
are developed that mentions steps that have to be followed by individual of organisation. The
report highlights the case of virgin group which is included in conglomerate industry supplying
different types of services like health care, banking, electronics, commercial aviation and many
other. It is a well established company that's primary purpose is to satisfy the needs and wants of
customers in effective manner. The assignment focuses on resources and capabilities of this
company as well as various modifications that are inculcated in organisation's structure and
management system (Johnson, 2016).
TASK
Resources and capabilities linked with virgin companies
Every business organisation require sufficient amount of resources that is required to
carry out several interrelated activities in conducive manner. Virgin group of companies is a well
established organisation that carry out number of operations in different type of segments.
Richad Branson and Nik Powell owned all these subsidiaries and control different segments. As
there are diversified transactions that are run hence, it is necessary to implement single capability
to all these subsidiaries. This helps in running the whole work process in smooth manner. All
these sections need to be coordinated properly so that ultimate objectives could be attained in
efficient manner. Prospective resources of this company include human and financial resources
that have to be managed effectively. VRIN model is formulated in order to understand this
process more deeply which consisted of four components that are described below:
 Value: All resources that deliver more value to the company is included in this
component. Virgin deals in number of segments therefore, they concentrates on
supplying quality services to the potential customers. There are several ways through
which value can be increased with employing skilful employees and financial resources.
 Rare: this factors helps in maintaining the unique position in customer's mind and market
place as compared to other competitors that are present in same industry. The Virgin
Atlantic is consider best subsidiary that offers high and excellent services to their

customers. Workers and employees of this company is one of the factor that helps in
creation of proper image in current market place (Adner, 2012).
 Inimitable: This include resources and capability that is present with Virgin and is not
adopted by any other rivalry organisation (Ngo and O'cass, 2013). Virgin have world
class services and is among the well known brand in market place. The human resources
are well structured resource which is not present within its competitors and thus, enable
them to stand different from others.
 Non- Substituted: this factor involve all those resources that do not get imitated by any
other organisation and assist in building unique image among all competitors. For
fulfilling this sector virgin must carry out their work process very efficiently and
effectively. Virgin have high leadership and entrepreneurial capacity that make this
company stand apart from rest of the organisation.
 Brand Name: Virgin Brand name is common to all subsidiaries that are under control of
this this. As there are number of products offered by them which include health care,
internet, mobile phones, retail, electronics all are run under same brand name “virgin
Group”.
 Risk Taking: There are number of risks that have to be faced by several subsidiaries of
Virgin Group. Hence, if one sections faces some risks other automatically gets affected.
 Richard Branson: He is the founder of Virgin groups and owned all the subsidiaries that
are present under this group. He manages all the departments and sections properly and
efficiently.
Business Diversification strategy of Virgin company
As Virgin company operates in different types of sectors dealing in diverse activities.
Therefore, it is necessary for the company to carry out their diversification strategy by applying
privatization and de regulation process properly. Branson established in this company in sectors
like, financial services, apparels, auto mobiles, retail segment, beverages and many other.
Various sectors that need diversification of sectors are described below:
 Financial sector: Virgin group of company could diversify their services by establishing
in online sector, customer satisfaction so that outcomes could increase in order to
maintain their prospective image.

 Apparels segment: Virgin company can diversify their current business in bridal shops so
that current status could increase in market place.
 Auto-mobile segment: It is another best option that can be selected by Virgin company to
diversify their current business operations.
 Transportation sector: Owner of this company has diversified its business in
transportation segment in response to some difficulties that are recorded in airways and
railways (Bereznoi, 2015).
BCG matrix is adopted to analyse the different aspects so that effective decisions can be
made in that regard. This matrix helps the virgin group of companies to examine number of
business segments so that optimum utilisation of resources can take place and there is no wastage
for the same. This is directly linked with the performance level of the company so that deviations
could be identified and proper steps can be taken to remove it. It is analysed in four segments
that are described below:
 Cash Cows: This involve all those companies that are performing well and is earning
high outcomes in the form of profits as compared to their input level. ROI is significantly
higher and is recorded with high returns. Virgin flights is the best example among group
of companies that falls under this category.
 Dogs: This section include those organisation that have critical situation as they have
lower market share and growth. These companies is not earning sufficient amount of
profits and have incurred huge losses (Qi, Zhao and Sheu, 2011). Clothing, vodka, cars
section of Virgin group falls under this section, hence, Branson have to take decision to
divest these businesses.
 Question Marks: This segment involve all those organisation that have low market share
high rate of potential. Virgin finance, social environment and shopping is included in this
sector and is known as “ problem child”. The solution to shift towards cash cows is to
allocate the total funds optimally so that final results can be attained in set time period.
 Stars: This include top most organisation having high market share and growth. This
section involve organisation that is having high market and growth rate. Virgin company
have well established market share and high growth rate in market place, this is directly
related to earn high outcomes and profits.
Porter's Five Forces Model

It is a tool that can be adopted to examine the competition level of business organisation.
Hence, it is used to perform the industry analysis that are described below:
 Threats of new entrants: Virgin hold a large amount of market share and is well known
among people. Hence, there is a threat of new entrants which will result in decrease in
profits.
 Threat of Substitutes: Every products have some substitutes present in the market place
therefore, it result in loosing of virgin group's overall strength and power.
 Bargaining Power of customer: customers have some bargaining power which results in
creation of some pressure over resignation. Therefore, Virgin group have to be attentive
in this process. Customer's power is high if there are number of options available to the
customers and vice versa.
 Bargaining Power of Suppliers: Virgin group have to purchase number of inputs from
several; suppliers that are present in business environment. There are several factors
which include power of distribution channel, effect of input on cost system and
differentiation process.
 Industry Rivalry: There are number of competitors that are present in the industry. This is
important for the Virgin group to examine the strategies of these rivalries so that steps
can be taken place accordingly.
Recommendations on changes in organisational structure and management system
Every business organisation system follows certain structure that defines clear
relationship among various level of management. It consists of roles and responsibilities that
have to be complied by every individual that is working there. Similarly, Virgin management
Limited has defined structure that is followed in the organisation in efficient manner. As
company operates in different sectors the management system must be implemented in proper
manner so that final objectives could be accomplished in set time period. Branson's management
style involve rendering managerial support system to all subsidiaries of virgin company. The
strategic model that is followed by this company involve number of modifications and alteration
sin several key areas.
Some recommendations of changes in management system and organisational structure
are discussed below:

 Company should formulate divisional structure: As it operates in number of areas and
division supplying different types of products (Klingebiel and Rammer, 2014). Hence,
virgin group should adopt divisional structure of management in which sectors of similar
nature like virgin travel, rail, media, music , trading and many others.
 Second recommendation involve classifying the activities in accordance to the nature of
departments. It is the responsibility of management to classify departments on the types
of services which is imparted by the organisation. Virgin group of companies deals in
several areas that include health care, radio, music, books, banking, mobile phones.
Therefore, it must be classified according to it. So that whole work process can be
conducted smoothly and accomplished of final objectives.
 Third recommendation involve that virgin group can reduce their overall operations and
transactions so that proper attention could be imparted on each division properly. Apart
from it, management of Virgin should concentrate on continuous market and product
development so that customer's can be retained for longer period of time.
 Another recommendation include that every personnel should be motivated to contribute
their effective decision in management and it must be properly supervised in order to find
out the deviations that may occur and effective decision could be taken place.
 The hierarchy system must be properly implemented so that every one know their roles
properly and proper management must be performed.
 Branson carry out authoritative management style as he control all business operations by
himself, therefore, it is necessary to carry out management style with participative in
which each and every individual have the same say in the organisation and results in
contributing effective actions in decision making process.
From the above discussion it has been concluded that there is requirement in bringing
several changes and modifications in current management structure that is controlled by Branson
(Govindarajan and Ramamurti, 2011).
After Branson's dies
 As virgin group deals in number of departments like entertainment, retail, travel hence
number of steps need to be taken in order to manage all the operations in effective
manner.

 Proper management have to be established for each department by new owner who will
take the place of Richard Branson. As there are number of issues that has been faced
under his ownership in regards of business model.
 Halo effect that has been carried out by Branson will be reduced that will result in
increasing the overall value of the group.
 There are number of problems with present management style and structure which will be
minimized so that no more issues could occur in this regard.
CONCLUSION
From the above prepared report it has been concluded that business environment is
dynamic in nature which keeps on changing with time. Hence, it is necessary for the companies
to keep in pace with these modification sin order to establish their competitive edge in market
place. The report highlights the case of Virgin group which operates in various types of factors
and focuses in earning high outcomes and profits. Report have throws light on common
capabilities, resources that is adopted by their company in all its subsidiaries. Apart from it, its
diversification strategies are also been discussed. Its present management structure require
several changes hence, some recommendations are provided in order to enhance its management
structure at sustainable level.

REFERENCES
Books and Journals
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Adner, R., 2012. The wide lens: A new strategy for innovation. Penguin UK.
Bereznoi, A., 2015. Business model innovation in corporate competitive strategy. Problems of
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Qi, Y., Zhao, X. and Sheu, C., 2011. The impact of competitive strategy and supply chain
strategy on business performance: the role of environmental uncertainty. Decision Sciences.
42(2). pp.371-389.
Klingebiel, R. and Rammer, C., 2014. Resource allocation strategy for innovation portfolio
management. Strategic Management Journal. 35(2). pp.246-268.
Govindarajan, V. and Ramamurti, R., 2011. Reverse innovation, emerging markets, and global
strategy. Global Strategy Journal. 1(3‐4). pp.191-205.
Ngo, L.V. and O'cass, A., 2013. Innovation and business success: The mediating role of
customer participation. Journal of Business research. 66(8). pp.1134-1142.
Ganter, A. and Hecker, A., 2014. Configurational paths to organizational innovation: qualitative
comparative analyses of antecedents and contingencies. Journal of Business Research. 67(6).
pp.1285-1292.
Inauen, M. and Schenker-Wicki, A., 2012. Fostering radical innovations with open innovation.
European Journal of Innovation Management. 15(2). pp.212-231.
Parnell, J.A., Long, Z. and Lester, D., 2015. Competitive strategy, capabilities and uncertainty in
small and medium sized enterprises (SMEs) in China and the United States. Management
Decision. 53(2). pp.402-431.