Competitive Strategy and Innovation - Virgin Group

This presentation discusses the competitive strategy and innovation of Virgin Group, focusing on their resources, capabilities, and major investments. It also analyzes the internal and external factors that have influenced the group and the strategies employed. The presentation concludes with recommendations for the future of the group.

COMPETITIVE STRATEGY AND INNOVATION

Virgin Group
Music
Mobile
Media
Lifestyle
Virgin Direct
Virgin Net
Virgin Money

Resources and Capabilities of Virgin Group
Resources
Brand
Finance
Innovation
Staffs
Capabilities
Management and
marketing
Increasing global
presence
Industry links

Critically assess whether, in your opinion, there was any evidence that Richard
Branson and his group management team followed a consistent strategy or not in the
major investments. If so, what sort of approach might it have been based upon, and
what was the role of the Virgin head office function?
 By analysing the strategy used
by the company in running
Virgin Atlantic, Sir Richard
only followed the internal
factors of political, economical
and social factors from the
PESTEL tool thereby avoiding
the external factors
Technological infrastructure,
environmental, and law.

Contd….
PESTLE Analysis
This tool is used to analyze the external factors of the business
organization.
 Political: stability of the government
Competing with British Airways
 Economic: growth, stability and market potential.
 Social : practices that exist within the society
 Technical : technological infrastructure used to diversify
the organization .
 Environmental: factors consist of the market
implemented laws, and statutes.
 Legal: power and honesty forms the judiciary part of the
company.

Using appropriate academic models and concepts identify and discuss the
chief internal and external factors that have influenced the Virgin Group
and the strategies employed up to the time of the case.
Internal factors can be determined by
SWOT analysis.
Strength: The main strength of the Virgin
Atlantic group is its brand value and brand name
and the global name earned through the strong
leadership skills of Sir Richard Branson. The
employees are depended on Richard Branson.
Weakness: The Company’s policy for entering in
all sorts of business and industry has created
confusion among the co-workers and the
management as it creates lots of problems in
managing every sector the company with an
adept niche.

Continued..
 Opportunities: Opportunities are
related to the external factors of the
company. There are many uncharted
lands where the company has not
made its expansion of the products
and services.
 Threats: Threat is also considered
as the external factor for the
company. The main threat for an
organisation like Virgin Atlantic is the
increasing competition in the various
areas that the company provides
their service to the consumers.

Porter’s Five Forces
The bargaining power of buyer
The Virgin group tries to depend on innovative ideas and make successful
plans for keeping the price of the products low. In case of railway business
it’s not always possible to travel by the different private or public
transport. So the person does not have much time for bargaining power as
travel is very much important for the people. Buyer have different power
to bargain and hence this has to concern about.
The threat of new entrants
The Virgin group consists of different services that are price-cut due to the
economic recession. The threat for the Virgin group is very low as it is
always a established organization in the minds of the consumers. When the
new entrants enter within the market they consists of modern technologies
and strategies to compete and hence this become the threat for the
company.
The bargaining power of suppliers
The Virgin group is one of a growing business organization with continuous
growth in the last few years. The Virgin group has to maintain a good
relationship with the different suppliers. The virgin group would try to
transfer all the products of them to the different stores and this would help
the suppliers to increase the prices of the products.

Cont….
The threat of new substitutes
The Virgin group offers different types of services to the customers. The
Virgin group always competes with the other rivals like British airways
and Rtl group. The Virgin group provides the best customer service in this
industry. There are more customers attracted to this Virgin group as
compared to others. Substitutes may provide competitive as well as less
pricing and this would distract the existing customers and would be
hinder for the company.
Increased rivalry between competitors
The Virgin group is one of the rapid growing and developed organization.
The Virgin group would try to increase more of their customer base so
that it increases their profit. The Virgin group has developed a wide
range of services and products which is flourishing in the market. It has
developed strategies like lowering of costs so that it attracts more and
more customers. There is strong competition of the Virgin group with
other competitors like British airways and other companies like Rtl group.

BCG Matrix
Market penetration
The Virgin group has penetrated the market with the different products
that they offer to the customers. These include the Virgin cola, Virgin
megastores etc. The Virgin group has attracted more customers by
innovating new ways of advertising to the consumers.
Product development
The Virgin group develops their products by bringing innovative types of
products in the society. It helps to increase the overall brand image of the
organisation.
Market development
The Virgin group tries to introduce their established products to the
different customer segments in the country. It helps to earn them more
revenue than the other competitors.
Market diversification
The Virgin group has shown unrelated growth in diversification of their
products. They have diversified their products like Virgin Cola, Virgin
megastores and also Virgin airlines. The Virgin group has also created
new products in U.K. to increase their brand loyalty.

Ansoff MatrixCash Cow
Some products have high chances of generating high revenue in the organisation. This high
market share helps to earn more revenue for the organsiation. There are some Virgin
business units which has made tremendous contribution in telecommunication and media
sector. It has increased the market share of Virgin group to more than 35% in the society.
Stars
The products which have a huge growth and make a great contribution towards the
earning of the overall organisation are described as stars. The products of Virgin group
like the entertainment and music group together constitutes as a star. It helps the Virgin
group to bring in more money for the organisation.
Question marks
There are some products which do not have the capability to perform well. These products
are called as question marks. These products do not perform according to the
requirements of the organisation and do not contribute to the profits of the organisation.
The Virgin pulse which is a wellness and health division of the Virgin group needs more
financial support to transform them in a more business profit organisation.
Dogs
The products which do not contribute to the overall profit of the organisation are termed as
dogs.
In the Virgin group, the products which are offered by them in the railway industry are a
risk and it does not add to the profit of the business. It has not been provided a profit to
the Virgin group.

VUCA Leadership
VUCA (Volatility, Uncertainty, Complexity and
Ambiguity) LEADERSHIP
Richard Branson retains clear vision against the
judgments that are to made for responding to
solutions rapidly
Branson seizes the chance that gives an opportunity to
innovation
He anticipates the risks without investing much time
in the long-term strategic planning
Decision is taken based on the intuition as analysis
Branson encourages network instead of hierarchies.
Interdependency collaboration and interconnection
among the employees yields better than competing

Emergent strategies taken by Richard
Branson
Strategic approach of Virgin Atlantic
Understanding institutional market: The management
team of Virgin Group have identified complacency within
the market very well, which helped the group got through
complacent business industries
Overcoming the barriers for entry with brand name:
The brand name of Virgin Group is very high and
respected by all customers that it becomes very easy for
the management team of the organization to make a new
entry
Limiting risk in the joint ventures: Any other
organization gets a benefit of limiting the risk in the joint
venture in market place working with Virgin Group

Drawing on resources such as FT.com, update your audience on any new
Virgin Group activities since the case, commenting on whether or not
subsequent major investments fit in with your findings from Q2 above, or if
there was any other strategic rationale. Conclude with recommendations on
the future of the group.
 A change in the organization structure
can lead Virgin Atlantic to arrest the
slide that has lead them to a loss of
around 82 million in the past few years
 The way of amalgamation and merging
of different sectors into a single zone
thereby reducing the number of
companies and also the loss inflicted
 to sacrifice the short-term profits in
order to provide a long-term
investment

Contd…
 Expansion of the company will
require a deep analysis of the
internal and external factors that can
influence the international business
 equally important to analyze if there
is a higher chance of business in
those countries
 it is also important to find any
complacency within their rivals so
that they monopolize the customers
by offering them more in fewer costs

Conclusion
A new strategy must be envisaged in such
a way that it must follow all the PESTEL
factors, and also firmly analyzing the
situations before taking any final
decisions. The PESTEL analysis should be
done in connection with SWOT tool so that
the strength and weakness of the company
can be identified. The main job of the
management is to prepare a simple
strategic structure so that the organization
can easily diversify its plan and business in
accordance to the structure.

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