Virgin Mobile Company Analysis

The assignment involves analyzing the Virgin Mobile company using various frameworks such as PESTLE and VRIO to understand its macro environment, strategic capabilities, and competitive advantage. The analysis provides insights into the company's market position, customer base, and strengths and weaknesses.

BUSINESS STRATEGY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. PESTLE model for Virgin Mobile..........................................................................................1
2.Ansoff's Vector matrix of Virgin Mobile.................................................................................2
TASK 2............................................................................................................................................4
3.Strategic Capability.......................................................................................................................4
5.VRIO/VION Model.................................................................................................................5
6.Strength and Weaknesses of Virgin Mobile.............................................................................7
TASK 3............................................................................................................................................9
Porter's five forces Model of Virgin Mobile...............................................................................9
TASK 4..........................................................................................................................................10
Bowman’s strategy clock model...............................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Virgin Mobile is a well known part of Virgin Group Limited, which was founded by Sir
Richard Branson. It was known to be first virtual Network operator which is a joint venture of
Virgin groups and T-Mobile. They tried to follow niche marketing and targeted those consumers
which were between the age group of 18-35 years. They promoted themselves by creating
various attractive advertisements and opening attractive outlets. They firstly focused o the
prepaid customers and then started including post paid customers also. To evaluate their
performance company has to perform various analysis such as PESTLE, determination of
strength and weakness etc. for the macro environment which are discussed in this report.This
report has also covered the strategic capabilities of the company which has lead them to sustain
in the market economy and helping them to earn profits.. Also the Bowman clock strategy of the
company has been depicted in which the firm uses the differentiation strategy that has helped
them to create a sense of different image in the mindset of a customers which provide them a
break even point (Armstrong and et.al., 2015).
TASK 1
1. PESTLE model for Virgin Mobile
Political Factors
These are policies which are ruled by the government or some political groups in an area.
For example, degree of intervening of various political groups in a country's economy, good and
services which governing bodies are promoting, level of subsidiaries provided to different firms,
tax policies, tariffs and restrictions in trade ,environmental law and stability of political scenario.
Virgin Mobile is focused on the prepaid customers; it has enjoyed benefits related to mobile
subsidies. Many suitable regulations applied by the government have helped to increase the
profitability of company.
Economic Factors
Identification of various movements like interest rates, inflation, disposable income,
exchange rates in an economy is identified through macro-economic analysis, which can have an
immense impact. Virgin mobile has already enjoyed the large consumer basin the particular
phase of time. They grabbed the opportunity of increasing the customer for the pre pay segment
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by providing them offers such as simplified tariff structure which was cheaper, as compared to
other operators in UK.
Social factors
Macro social and cultural environment identifies various trends in values in society,
beliefs, norms and behaviour. It also considers about its effect on the firm due to societal factors
such as age distribution , emphasis on safety aspects, rate of population growth , career attitudes
etc. GSM mobile set products were having a great sale and it was increasing rapidly which had a
great impact on the mobile handset usage and prevalence related to it.
Technological factors
The analysis in the aspect of technological factor changes the way of application of
certain technologies in the industry. In the current scenario, there is a tremendous change in the
technology and industries are changing their strategies accordingly. It has a direct impact on the
reduction of cost and has features which are innovative along with certain offerings, resulting in
improving the quality of services. Virgin Mobile is the first company which has provided free
voice mail services to their customer (Cascio, 2018).
Legal Factors
This factor is related to the legal rules and regulation of a nation through which it
operates. Legal factor has the ability to affect consumer law, laws related to competition,
employment laws and legislation related to health and safety. These changes can affect the
operations and strategies of Virgin mobile and is considered to be one of the critical factors.
These laws shall be predicted earlier so that one can tackle their effects on the company.
Environmental factor
Environmental factor is related with the analysis of climatic al and weather changes. With
any change in the climate due to factors which has a direct or indirect result such as pollution
and global warming. These are regarded as key factors that influence the working of Virgin
Mobile. Virgin mobile has taken certain actions to minimise these impacts of their marketing
activities directly on the surroundings. Activities such as marketing and communication are
needed to be sustainable for achieving great success in economics as well as environmental terms
2.Ansoff's Vector matrix of Virgin Mobile
The Ansoff matrix defines the strategies which are related to the choices of product and
market that are available to Virgin Mobile. In markets, it can be related to the customers and
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their services which are sold to them. It helps to examine every strategy which can be beneficial
to organisation and help them to sustain in market by providing a great competition to the
competitors mainly EE and Vodafone. It helps them to reduce the gap between where they are
operating and the strategies which are being developed for the effective selling of their services
where choices or strategies are define as the particular processes which are selected for
implementation against some changes in the marketing atmosphere (Utami, 2017).
This matrix is mainly used by the marketing department ofany company for increasing
sales among customers. It is further used in marketing audits of Virgin Mobile .It provides four
possible combinations of marketing strategies to the specialists, which is as follows: market
penetration, market development, product development and diversification. These combinations
are used by the marketers of the company fir increasing their growth in the market and creating a
competitive advantage
Market Penetration
Market penetration is done with the existing product in the particular market in order to
increase the company's share in the market. This strategy possesses minimum risk as the firm has
to focus on strategies only that would result in increased market shares. Virgin Mobileis an
established telecommunication operator in the industry they do not require much strategy to
penetrate in the market as they are a strong position holder and has a large consumer base.
Market Development
This strategy is implementing when the firm wants to expand into a new market with an
existing products and services. This can be applied when the company has enough resources and
capabilities to enter into completely new market in order to grow more. It is considered to be a
risky strategy as one has to perform many researches and plan various strategies to enter and
promote themselves with no consumer base and to compete with the established rivals in that
particular market. For an example for entering into Asia's telecommunication market one has to
fight with their local competitors who has a large consumer base .
Product development
This includes introducing new services and product in the market which facilitates the
process of product development. This strategy can only be successful when the company is
already settled and has a huge base of consumers. Product development in the telecom market is
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the introduction of new services apart from the existing one. Virgin Mobile can bring something
new into the market economy like free video calling etc.
Diversification
Virgin group does not need to implement this strategy as the group has already
diversified products and services in the sector of banking, commercial aviation, consumer
electronics, films, health care, internet, mobile phones, retail and travel (Johnson, 2016).
TASK 2
3.Strategic Capability
Strategic capability is define as the framework of concepts of the organisation which
comprises of their ability for implementing and developing new strategies through various
dynamic capabilities including identification of appropriate visions, realistic intentions and
motives, resources and present position of the company. Accomplishing the objectives is an
important aspect for maintaining the strength of this firm for achieving profits.
Sustainability in terms of future aspects of an organisation is completely dependent on
identifying capabilities and assets which can be used fro promoting competitive advantage. No
firm has unlimited resources. For tackling problems which are associated with the potential
resources, they must have definite strategic markets. Expansion of any company depends upon
the ability of using available resources optimally.
Virgin group has diverse products and a wide portfolio with stakes in the markets of
mobile, airline, publishing, leisure, transportation, food and entertainment industry. It is very
important to maintain sustainability in every market which would ultimately affect them in a
positive manner. Competitive advantage is achieved by proper exploitation of their capabilities
to stay in particular market. Identifying these factors which are very crucial helps to understand
the changes which are occurring in an business environment and forming several new strategies
for the development. Developing strategic capabilities is considered to be important because it
helps to maintain the pace of the company with the movement of market. One has to keep focus
on the dynamic capabilities in opposite to the strategic capabilities for the competitive
advantages. Dynamic Capabilities are defined as the sub part of the organisation's core or other
various different competencies which helps to build its competitive position with respect to the
changes occurring in the market by making products and services and other processes as a
response to these changes.
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It is not possible for any company to ignore opportunities for entering into a market and
avoiding the effects of the new ideas which are being introduced by the competition in the
current scenario. Strategic capabilities of this firm facilitate the process of creating their
recognition in the market along with various dynamic capabilities. The positions of every firm in
the market is not permanent as one who was once ruling the market can see decline in their status
due to various changes in the scenario. One has to strategically implement their product and
services which could lead them to maintain their position efficiently.
These strategic capabilities of organisation provides an advantage in the market fro
generating more profit and provide a great competition where as in their strategy there is a
competitive advantages which requires contribution to the firm's potential as they are not rigid
towards the change and these capabilities can easily be achieved and implemented for gaining
reputation in market.
5.VRIO/VION Model
For sustaining the competitive advantages every company must possess four attributes of
the resources which are valuable, rare, cannot be imitated and not at all substitutable. This model
is known as VRIO model which every company makes to identify the features of their product
that would lead them to maintain their position in the market and helps to face a strong
competition with competitors (Klettner, Clarke and Boersma, 2014).
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Valuable
This aspects is regarding the resources which the firm procure from the surrounding. It
helps to identify whether these resources adds value by helping them to exploit every
opportunities or defending them against potential threats. If resources succeeds to full fill these
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Illustration 1: VRIO Analysis
Source: (VRIO: From Firm Resources to Competitive
Advantage,2016)

criteria then the resources are valuable. It is implied by increasing the level of differentiation of
the price of their services and products. As they are VNMO model which has resulted in the low
tariff plans as compared to other competitors. Thus enabling them to gain more stronger position
as compared to other rivals. It is also important to continuously review the value of these
resources as several external and internal factors affects it.
Rarity
This aspect depicts that particular valuable resource which are possessed by very few
organisation and are considered to be very rare. Resources which are valuable and rare provides
competitive advantage to the firm. Virgin Mobile are regarded as the pioneer providing
innovative services and various offerings with the latest technology which is acquired by very
few of them in the industry. They are the first operators that has provided flat rates of tariff
without any other hidden cost, has abolished peak rates and also has offered free voice mails.
They have also launched an information services portal which is known as Virgin mobile bites
which provides the latest news and other information with a 4G service network for faster access.
Costly to imitate
In this aspect it is checked that whether the resources can be imitated or not and how
costly it can be. The services and products which are provide by these firms are very easy to
imitate as there is the more availability of substitute in this telecom market. Every other
competitor are providing the same services in the same way. Also the ideas of each others are
very often copied which results to easy imitation but the cost which is associated with imitating
is very much high as the Virgin mobile handset has the ability to use 4G LTE network which
requires a high cost for implementation.
Organisation
The resources itself do not possesses all the advantages for the company until it
successfully captures the value from them. A firm must be able to organise the management
system, processes, various strategies , policies and organisational structure.
6.Strength and Weaknesses of Virgin Mobile
Strength
There are various features of this group which provides them advantages over other
competitors which are discussed below
1.Low cost operating model
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Virgin Mobile entered in the Telecom market of UK as lost cost VMNO which means
low investment at initial phase which in turn resulted in having quick and high returns on the
amount of investment.
2.Brand Image
It has very strong and dynamic brand image , which was branded under the Virgin group
and T- mobile. Both these brands are already established in the market in their respective
businesses which gave a sense of credibility to them.
3.Low tariff
Their tariff rates were very low as compared to other organisation. Being a VMNO has
saved their lots of investment. It has also saved their recurring cost on various aspects such as
technical infrastructure, regular up gradation of it and innovation, searches and development
department and also developing new technologies (Leonidou and et.al., 2017).
4.Diverse product range
Their product range is very broad. They possess the maximum depth of product line.
They have diverse product and services which are in aviation, mobile handsets, films , banking,
health care , music etc.
5.Distribution Network
They have a wide distributive network which is very effective. They have the ability to
utilise availability of multiple channels for the product of their services and products in the
market.
6.Quality Services
They provide the first class experiences to their customers. They are heavily focused on
their intangible services which are offered to large consumer base.
Weakness
1.Market Segmentation
They have a very unclear market segment. They majorly focuses on the customer of age
group 18 to 35 years. However after few years of their operations it was surveyed that the
majority of the customers were of the age 40 years. This was regarded as the biggest weakness
because this was contradiction to their operating strategies.
2.Lack of technological infrastructure
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Virgin Mobile were dependent for their technical infrastructure on T- Mobile which is the
main reason why they suffered delays in implementing latest technology for their customers.
3.Lack of focus on Post-Paid and corporate customers
Virgin Mobile prioritised their pre paid customers above others providing them various
offers and advancement in the services whereas does not concerning in those segments where
the customer used post paid services. Corporate customers were also untapped who were he
important customers of them.
4.Lack of efficient pricing strategy
They lacked in developing an efficient strategy for pricing as compared to their
competitors such as Easy Mobile and TESCO-Mobile. After the entrance of more new rivals in
the UK telecom industry their tariff plan were lesser as compared to Virgin Mobile which
resulted in huge loss of customers and a potential to attract new customers (Scholes, 2015).
5.Loose Supervision
As it is a group which comprises of various companies and they have their own
managers, the supervision of the collaboration group becomes very tough and sometimes goes
out of the control due to lack of coordination .
TASK 3
Porter's five forces Model of Virgin Mobile
a. Bargaining power of buyers
This is regarded as the threat which which is related to the buying power of customers.
This force forces on every aspects which are related to the buyer. In the telecom market
consumers are powerful when their concentration is less as compared to the company's market
share which result in buying fair share of the output. Buyers are considers to be weak when
particular company takes the distribution of products or services on its own. Here bargaining
power of the Virgin Mobile is stronger as the switching cost to another competitor is very less so
they want more services while paying less.
b. Bargaining power of suppliers
It possess a moderate threat to the company as there are many suppliers which can
supply to any company who is presented in the industry and they are limited in numbers.
Therefore they demand more amount of supplying as compared to actually what is required.
Power of the supplier is more when they are less in numbers and the customers are more which
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means demand is more and to cope up with the demand they have to increase the supply which
can only be possible through acquiring resources through suppliers. Therefore company has to
choose those suppliers whose dependency on them is very high.
c. Threats of new entrants
It is regarded as the less threat to the Virgin Mobile as they have a huge customer
number and a strong position in the market which has resulted them a great establishment in an
economy. While providing the high class of experience to the customers , they are attracting a
large number of potential customers from other operators. In this scenario the entrance of the
new competitor would not affect the company until it has an unique or effective plan which can
attract those customers. It is easy to enter in this particular market but establishing themselves
against such type of rivals becomes very tough (Leonidou and et.al., 2015).
d. Threats of substitutes
It is considered as a great threat to Virgin Mobile because the services in this sector can
easily be imitated which results in the great competition provided by other competitors providing
substitutes to their products and services. Substitutes are those other products which provides the
similar services and can satisfy the customers in other way mostly. This provide an easy option
to the customers to choose from and their loyalty gets affected.
e. Rivalry within the market
In a particular market if the rivalry between two companies increases then it would lead
to zero profit margins which is not all good for any firm. They try to overcome this by creating a
competitive advantage over them. Therefore there is an immense pressure on the Virgin Mobile
to conduct a regular research to introduce something new in the market which can help to create
a break even point above all.
TASK 4
Bowman’s strategy clock model
Bowman's Strategic clock is a model which identifies various options for the strategic
positioning of the company which includes certain aspects like how their products and services
should be positioned to provide the most competitive advantages in the market. The purpose of
this model is to provide illustration for a business that will have a variety of choices for
positioning the particular product on the basis of two dimensions which are pricing and
perceived value. There are eight strategical positions which are low price and low value
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added,low price, hybrid, differentiation,focused differentiation, risky high margins, monopoly
pricing and at last loss of market share.
Where Virgin Mobile uses strategic positions such as differentiation in which they offer
products and services of high perceived value. Their brand plays an effective role in this as well
as the quality of their offerings. They provide a product of high quality with a strong brand
awareness and loyalty of customers which results in the formation of huge customer base, that
can be achieved by relatively differentiated prices and other added values. They majorly focuses
on high- use retail, contract phone. Their main emphasis is on building their brand by attracting
more customers and adopting various strategies such as market development, market penetration,
product development and also diversification which would help them a lot to stand above the
competitors and provide them a stiff competition that would result in providing effective
telecommunication services to the customers. It provides an unique identification to the
company in the industry which is highly valued by the customers. Differentiation can be
achieved in the various aspects of its functional units such as sales, distribution, marketing,
services, innovation. They are also considered very stylish brand preferred majorly by those who
are fashionable in every senses (Nan and Tanriverdi, 2017).
CONCLUSION
It has been concluded that the Virgin mobile company is a well established firm in the
telecom industry of UK which has to maintain and sustain their position in the market which is
facilitated by various analysis done on the macro environment such as PESTLE which includes
all the external factors that affects the functioning of the company and also they have
implemented certain strategies such as market development, product development and
diversification which has helped their marketing department in promoting the brand across the
world which in turn has resulted in the creation of good customer base which is very essential for
every organisation in the market. They have certain strategic capabilities which has been an
important aspect of the company to withstand with the changes that are occurring in internal as
well as external environment that affects their value of resources directly or indirectly also their
strength and weakness has been analysed which provides them various advantages and
disadvantages in the market economy.
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REFERENCES
Books and Journals
Armstrong, G. and et.al., 2015. Marketing: an introduction. Pearson Education.
Cascio, W., 2018. Managing human resources. McGraw-Hill Education.
Johnson, G., 2016. Exploring strategy: text and cases. Pearson Education.
Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
Empirical insights into the development, leadership and implementation of responsible
business strategy. Journal of Business Ethics.122(1). pp.145-165.
Leonidou, L. C. and et.al., 2017. Internal drivers and performance consequences of small firm
green business strategy: The moderating role of external forces. Journal of business ethics.
140(3).pp.585-606.
Leonidou, L. C. and et.al., 2015. Environmentally friendly export business strategy: Its
determinants and effects on competitive advantage and performance. International
Business Review.24(5).pp.798-811.
Nan, N. and Tanriverdi, H., 2017. Unifying the role of IT in hyperturbulence and competitive
advantage via a multilevel perspective of IS strategy. MIS Quarterly.41(3).pp.937-958.
Scholes, M. S., 2015. Taxes and business strategy. Prentice Hall.
Utami, W.N., 2017, July. ANALYZING COMPETITIVE STRATEGIES AS BUSINESS
PRACTICE. Seminar Nasional Akuntansi dan Bisnis (SNAB), Fakultas Ekonomi
Universitas Widyatama.
Woerner, S. L. and Wixom, B. H., 2015. Big data: extending the business strategy toolbox.
Journal of Information Technology.30(1).pp.60-62.
Online
VRIO: From Firm Resources to Competitive Advantage.2016.[online].Available
through<http://www.business-to-you.com/vrio-from-firm-resources-to-competitive-
advantage/>
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