Influencing Organisational Strategy

This report discusses the common resources and capabilities of Virgin companies, recommendations for business divestment, criteria for new diversification, recommended changes in financial, organizational, and management structures, how Virgin adds value as a corporate parent, and challenges faced by the successor to Richard Branson.

Influencing organisational
strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
1) Common resources and capabilities that link different Virgin companies.............................3
2) Business which should be considered by Branson for divesting............................................4
3) Criteria that should be applied by Branson in deciding new diversification..........................5
4) Recommendations for changes in financial structure, organisational structure and
management system....................................................................................................................6
5) How does Virgin adds value as a corporate parent.................................................................7
6) Challenges faced by the successor to Richard Branson and what can they do.......................7
CONCLUSION .............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Organisational strategy is sum total of all the actions which an organisation intends to
take to achieve their long term goals. It depends upon the mission of the company with which the
company is being established. All the actions are dependent upon the aim with which the
company is being established. On the basis of these strategy the policies and procedure of the
company is being decided. Businesses consider various factors while formulating their strategies
which sometimes can lead to failure of the business. In this report the case study of the Virgin is
taken into consideration for which various analysis is done. The common resources and the
capabilities among various company of the group are identified while businesses which can be
divested by the group are identified so that their profitability can be increased. Along with this
the challenges which can be faced by the successor of the company are analysed and
recommendations are made for the changes which can be made in the financial structure,
organisational structure and management system of the company.
1) Common resources and capabilities that link different Virgin companies
Resources of the company helps them to operate which can be done by utilising the
capabilities of the company. The most common resources which link all the Virgin companies
are the intangible resources. Such as the brand value that includes both how the people view the
brand and how the management perceive the brand (Gonzalez-Brambila, Jenkins and Lloret,
2016). Another common intangible resources which link all the Virgin companies are the
corporate culture of the organisation and their structure. As all the policies are formulated by the
Richard Branson for all companies, this makes the all the group companies follow the same
rules and regulations. Also the structure of all the companies are same as they are all organised
and managed on the basis of one red line developed by the owner of the group. The human
resource of the company is the another common resources of the Virgin group. The company is
managed by the common managers as they have the ability to manage the company as a whole.
Otherwise they had to use different managers for their different locations and offices. The other
tangible resources which are commonly used by the companies are the financial resources of the
company, innovations which is introduced in the businesses etc. Such resources are procure by
the management for the entire group which facilitate them in their operations. Also if the group

companies will procure them in isolation then it will increase their cost of procurement and
introduction (Igwe, Udeh and Nwafor, 2016).
The capabilities of the company helps them to execute their roles with a aim to achieve
the goals of the organisation. The common capabilities that are used by the group company is
that of innovative business and the innovating markets. Another capability which is common is
that of diversity. All the company are engaged into different businesses so they have different
types of people working with them that develop a wide variety of capabilities as people belongs
to different geographies and culture due to which they carry different capabilities. The customer
relationship is the capability of the company with which they focuses upon the satisfaction level
of the customers. The entire group offers services of the customers with the aim to continuously
keep up with the needs and wants of the customers. Due to this they are well known for their
better public relations. The management of the company is common for all the group companies
which develops a common structure in all the organisations. This also facilitate them to manage
their internal operations effectively and external operations in which they have to deal with their
stakeholders such as investors, suppliers etc. The Branson believes in hierarchical structure in
which the responsibilities are delegated to the people(Friday, 2019).
These common resources and the capabilities of the company helps them to make their
brand strong by satisfying all the customers from all their varied business, as they same message
and mission for all of their business operations.
2) Business which should be considered by Branson for divesting
Virgin group has so many company which they have to manage and control but not all
the companies are profitable. So a analysis is important for the group for all the company which
will help them to identify the loopholes in them. On the basis of such identification the Branson
will decide which business need to be divested by them. Out of all the businesses they need to
divest various businesses which are their transportation businesses, financial services, beverages
and cosmetics, apparels. The transportation business should be divested as the returns on the
investment is on the negative side in comparison to the other companies operating in the same
industry such as ITC. The Virgin rails has a terrific record of poor performance which impact the
other businesses also. The other business which the Virgin group should divest is that of their
financial services in which they are highly involved. This is because the grass roots of the
company is to have customers oriented model that has no coincide with the financial institution.

In case of financial services the opinion of the public is that they ten to focus on that company
which has a strong track record and a solid financial background (Johnson, 2016). But the
company does not have such background which is why they have to put on various extra efforts
to make their customers satisfied. Beverages and the cosmetics are the products which extend
their brand but it increases the chances of the loss of the brand value. The brand is a prestigious
one which is why it is expected that they do not offer any such product which can adversely
affect their image. Such product could be Virgin Wine. The another business that they should
divest is of the Virgin Galactic need to be divested by the group. The purpose of the Virgin
Galactic was to provide the brand name 'Virgin' which will be a halo effect. This business is
related to the spacecrafts in which the company is not at all performing well. It can be evidenced
with the fact of the failure of the Galactic's Space Ship Two which also affected the brand image
of the Virgin. On the basis of this analysis it is identified that a group operates with various
companies under them but it is not necessary that every business performs well. So in order to
protect the profitability and the brand image of the group the business which is not performing
up to the mark need to be divested.
3) Criteria that should be applied by Branson in deciding new diversification
When any organisation plans for the expansion or for diversification they need to
consider various factors. The criteria that can be used by the Branson in deciding for new
diversification is Porter's essential test. This test helps to evaluate the diversification option of
the company on the basis of three criteria. The first criteria is attractiveness test. It helps the
organisation to identify that whether the structure of the industry choose for the evaluation is
attractive or not or has the capability to make it attractive. But the sufficiency in the
attractiveness is not sufficient for diversification (King and Fitzgerald, 2016). To justify this in
addition to this sufficiency the cost of entry test need to be conducted by the company. In this
cost of entry test it will be identified that whether the company will be able to capitalise the cost
of entry from the future profits of the company. If the cost of diversification or entry is high and
could not be recovered by them then the idea of diversification must be dropped. Further the
decisions of diversification will be dependent upon the the Better Off test. This test will help to
identify that whether the new business or the diversification will be able to bring the competitive
advantage for the company or has the ability to synergies with the existing products and services
of the organisation. The Branson must consider the option which can easily work with the

existing products and services of the company. For example they identified to diversify their
business of phone and mobiles which can easily work together hand in hand. Apart form the
factors of the Porters the Branson must consider various additional factors in their organisation
which can be brand image. The image of the brand is one of the most crucial factor which will
get influenced with the diversification. The aim of the subsidiaries of the Virgin group is to build
a brand structure and this is important for the new company which they can establish to
contribute to the brand value (Kuznetsova and Markova, 2017).
4) Recommendations for changes in financial structure, organisational structure and management
system
It is importance for the businesses to consider various structures of the organisation
which has to managed by them effectively. As the Virgin group has a number of companies
working under them so it b becomes important for them to understand and analyse their
financial, organisational and management system. Various recommendations are made to the
companies for the changes that they cab bring in their specific structure are :
 Recommendations for Financial structure : The recommendations to the group for the
financial structure are to identify various new sources of financing. This will make them
efficient in procuring the funds on time and this will not affect their operations. The
reports of the company are not consolidated which is why they are recommended to
consolidates their financial reports. Also they are recommended to franchise their brand it
will open as sources for them to get the funds.
 Recommendations for organisational structure: The recommendations to the group for
the organisational structure are that they lost their alliances and the structure of the
company is more hierarchical. There are no board of executives, the line of
communicatio0n is not that effective along with this the entrepreneurial spirit is missing.
So to cope with all such issues they are recommended to centralised their headquarters
which will help them to have an effective control on them. Further it is recommended that
they should continue with the interlinked network company which are small in nature.
This will bring efficiency in there operations(O’Brien and Gowthrop, 2016).
 Recommendations for management system : The way Branson motivate their
employees similarly the employees need to motivated by the mangers who are managing
them. Recommendations for the management systems are that they should centralised

their top management and it should identify the systematic way in which the Virgin group
can manage their operations well.
5) How does Virgin adds value as a corporate parent
The Virgin group is a strategic business unit which has a variety of diverse businesses.
The aim of the company is to satisfy the customers by associating with the fun, innovation and
daring. Virgin group adds values to its business by investing and developing real expertise. The
group adds various values to the companies as a corporate parent, some of such values are :
 Offer better quality : The aim of the group is to offer the better quality of all the
products then their competitors. They promote the same in all their companies which
will make them brand strong. By quality they does not mean longer life of the products
or the designs of the products (Folorunso, 2016).
 Add value : The organisations add value to the life of the people by providing various
goods and services to the customers. The Virgin group focuses on providing various
differentiated services as the common services become basic minimum. But as a
corporate they motivates other companies of the group to provides such goods and
services. For this they try to provide innovative products and improved packaging or
services. This motivates the others in the industry to follow the same (Ogwude,
Nwaogbe, Pius,, Ejem and Idoko, 2018).
 Increase convenience : The organisation has to focus upon the convenience for the
products and the services, Virgin group efficiently does so which helps them to influence
the others in the industry and the group companies too. The Virgin group helps the
subsidiary company to adopt innovation in their services which will make them
convenient for the customers to reach.
6) Challenges faced by the successor to Richard Branson and what can they do
 Dynamic marketing situations: As he is operating their business functions in a vast area
due to which he has to face different market situations. In case, while operating business
activities and operations if he will not consider different market situations then it will
hindrance their success and growth chances. The consideration of market situation of
different nations is essential for him to conduct all the operations of their business in a
most effective manner. But in while undertaking the different countries market situations
a range of hurdles come on the way like lack of interest of subordinates, consideration of

demand and needs of diverse customers, develop the understanding of different nation
culture and language etc. these all are the main issues or conflicts which he has to face
successfully operating its business activities (Thompson, Strickland and Gamble, 2015).
 Alliances of businesses: This refers to delimited of a agreement with equally
opportunities and risk share between all parties which are involved in that. In regards to
the Virgin Group, as it contains number of the business organisations within so in this
case if an entity of their group is suffering from loss and management tries to remain its
regulate in any condition then it might become as a challenge for them. As it will lead the
negative impact on their overall activities of their business which will reduce the
succession chances of their company. Herein, the Richard Branson needs to take an
initiative for that company which are suffering huge loss. In order to cope up, he requires
to take merge concept into its consideration in which he will give their focus on merging
the company with another profitable company so that loss can be converted into profit
and success and growth of the business can be assured (Dyllick, 2015).
 Over expectations: This also considered as a big challenge for him, as it refers to the
expectations of Richard Branson which he makes from his employees. As in the present
scenario, the Virgin group is able to performing in a well manner but due to this,
expectations of their clients is increasing day by day which become a biggest challenges
for them. Because adoption of frequently changes is not possible for a big kind of
organisation which hindrance the path of their success and growth. In order overcome
from this challenge, he needs to organise its all the activities in an effective manner and
make their structure more flexible so that changes as per the market situations can be
adopted in an ease manner and the succession of the business can be assured (Rugman
and Verbeke, 2017).
 Management: It refers to that situation when an organisation is not able to manage its
operations and activities in an effective manner. As in the previous stage, economy
condition remain stable for a longer period of time which enables him to operate all their
business activities appropriately. But in the present modern era, changes are taking place
in a rapid manner that becomes a biggest challenge for Virgin group. In order to
overcome from this challenge Virgin Group requires a proper management of all the
operations by influencing the behaviour of employees to do their higher efforts so that the

business activities can be operated in a systematic manner so that all the desired
objectives and goals can be attained.

CONCLUSION
From above report it can be concluded that there are very commonly available resources
which can be used by companies is that their operations can take place in a better manner. There
is a option of divesting which is available with business which they can use by consideration of
various business. There are some specific criteria which can be considered in deciding new areas
of diversification by companies. Such areas help in choosing strategies. There are many
recommendations which are related to financial structure, system of management and
organisational structure. lastly overall value addition as a corporate parent will help in
understanding of diverse business areas. Apart from that there are some challenges which are
faced by companies which cane be overcomes by using effective strategies. Such strategies help
in overcoming barriers which occur while execution of various plans by company. These play a
very effective role in smooth functioning of operations of companies.

REFERENCES
Books and Journals
Dyllick, T., 2015. Responsible management education for a sustainable world: The challenges
for business schools. Journal of Management Development. 34(1). pp.16-33.
Folorunso, M.A., 2016. The Party Machine: The Strategies for Taking Charge. AuthorHouse.
Friday, E.O., 2019. ORGANISATIONAL SOCIALIZATION AND EMPLOYEE
SPONTANEOUS BEHAVIOUR OF NIGERIAN AIRLINE OPERATORS.
International Journal of Applied Research in Social Sciences. 1(1). pp.29-40.
Gonzalez-Brambila, C., Jenkins, M. and Lloret, A., 2016. Challenges for scholarly business
research in Latin America. Journal of Business Research. 69(2). pp.383-387.
Igwe, N.N., Udeh, S.N. and Nwafor, M.C., 2016. MANAGING RESISTANCE TO CHANGE
MANAGEMENT IN THE NIGERIA MANUFACTURING SECTOR: IMBIBING
GLOBAL BEST PRACTICES. GOUNI Journal of Management and Social Sciences.
4(1). pp.72-88.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
King, R. and Fitzgerald, L., 2016. 10. Challenges facing the accounting profession: maintaining
relevance in a changing environment. Perspectives on Contemporary Professional
Work: Challenges and Experiences. 187.
Kuznetsova, S. and Markova, V., 2017. New Challenges in External Environment and Business
Strategy: The Case of Siberian Companies. In Financial Environment and Business
Development (pp. 449-461). Springer, Cham.
O’Brien, D. and Gowthrop, L., 2016. Organizational structure. The Sage handbook of sport
management, pp.39-61.
Ogwude, I.C., Nwaogbe, O.R., Pius, A., Ejem, E.A. and Idoko, F.O., 2018. Performance
Appraisal of Nigerian Airports: Stochastic Frontier Analysis. The International
Journal of Transport & Logistics. 18(44). pp.1-14.
Rugman, A.M. and Verbeke, A., 2017. Global corporate strategy and trade policy. Routledge.
Thompson, A., Strickland, A.J. and Gamble, J., 2015. Crafting and executing strategy: Concepts
and readings. McGraw-Hill Education.
1