Role of IT in Virgin Group: Analysis of Competitive Environment and Value Chain

This report discusses the role of IT in Virgin Group, analysis of its competitive marketplace, its inbound and outbound logistics, Porter's five forces model, and key value adding activities.

Virgin Group

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Introduction to company.............................................................................................................3
Background information of company.........................................................................................4
Products and services of company..............................................................................................4
Analysis of competitive environment of company.....................................................................4
Inbound and outbound logistics and operations..........................................................................7
Analysis of support activities in Porter's value chain..................................................................7
Determination of key value adding activities..............................................................................8
How IT and innovative ideas assist to increase business processes............................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Information technology is the use of computers and software to manage information so
that it can help businesses in becoming more competitive in market which results in its higher
financial performance. IT help businesses to foster innovation which help in creating smarter
applications, improved data storage, faster processing and distribution of information etc. so that
businesses can run more efficiently and their productivity can increase (Rohitratana, 2017). IT
also help business managers and workers in faster problem solving, making easy the complex
work processes and generating new products and services so that high profits can be made by
company. In this report Virgin Group is taken which is a British multinational venture capital
conglomerate which was founded in 1970 by Richard Branson and Nik Powell. The company is
headquartered in London, England and provide venture capital to a large number of industries. In
this report the role of IT in Virgin Group, analysis of its competitive marketplace, its inbound
and outbound logistics, Porter's five forces model etc. will be discussed along with the key value
adding activities of company so that a competitive edge can be gained in market.
MAIN BODY
Introduction to company
Virgin Group Ltd is a British multinational venture capital conglomerate which helps in
providing venture capital to a large number of businesses dealing in different industries by taking
equity stake in new and innovative start-ups or small businesses so that they can efficiently grow
and survive in the market. The company was started by Richard Branson and Nik Powell in the
year 1970 as a family owned growth capital investor which has now become a globally
recognised and respected brand. Virgin Group has about 53 million customers worldwide with
71,000 employees working for the company and making about £16.6 billion annual revenue
which has helped in its tremendous growth. The company has a strong network of investors,
management teams and alumni which helps it in gaining an expertise knowledge about each of
the sectors in which it invests (Castillo, 2016). Also the company has a good experience and
understanding about their consumer behaviour, brands and marketing which help it in making
investment in profitable businesses. The company also uses technology actively to invest in
ventures and has a portfolio of about 35 companies which help it in making correct decisions
about investment.

Background information of company
Virgin Group arose when Richard Branson and Nik Powell formed a record shop and
called the business virgin as they were new to business. The 'V' in the logo of company is an
expressive tick which represents the Virgin seal of approval. Virgin Group has its headquarters at
the battleship Building in the Paddington district of the City of Westminster. The company
invests its capital in various sectors such as travel and leisure, telecom and media, music and
entertainment, financial services and health and wellness related businesses. The Virgin Group
companies have a complex with being both a conglomerate and a keiretsu along with licensing
its brand. There are more than 60 virgin companies worldwide which help businesses to become
successful in their areas by providing them with sufficient investment capital and its expertise on
creating new ideas and grabbing market opportunities (Liu, Kimree Technology Co Ltd, 2016).
Products and services of company
Virgin is a leading international investment group which invests mainly in leisure,
tourism, mobile, TV, radio, music, finance and health sectors and is one of the world's most
recognised and respected brands. The company was started by Richard Branson in 1970 and has
diversified in about 200 businesses leading to its spread in investment services in a diverse
business sectors which benefits both the company and the businesses in which it invests. The
company is a family owned growth capital investor which helps in making business start-ups and
small businesses excel in their sectors and deal with competition in an efficient manner. The
company provides financial advices and expertise through its strong network of investors,
management teams and alumni so as to deal with the business needs of its customers. The
company is also an active technology-focused venture investor and has a portfolio of 35
companies ranging from internet, fintech and sharing economy sectors (Avgerou and Walsham,
2017).
Analysis of competitive environment of company
The Porter's five forces model was developed by Michael E. Porter in his book “
Competitive Strategy: Techniques for Analysing Industries and Competitors" in 1980. The
model help businesses in determining the competitiveness of market in which they deal which
also help in evaluation of attractiveness of industry for other businesses. As per this model there
are mainly five external forces which create an impact on business and affects the
competitiveness of business in market. These factors must be analysed so that their negative

impact can be minimised which can help in continuous growth and expansion of business. Virgin
Group needs to analyse its competitive environment so that the forces which can affect its
sustainability can be analysed which can help it in formulating strategies so that it can remain
successful in market and continue to earn profits through its business. Following are the forces
which work on the company: Rivalries: Virgin Group is an investment company which help small businesses and start-
ups by providing them with venture capital so that they can sustain in market. As the
company has a strong brand image and is highly recognised in market of investment
sector the threat of rivalry in this sector is less. The company provide venture capital in a
variety of industries which means that it has a large market base and also the company
has strong recognition in all of these sectors (Rowley and Hartley, 2017). Though the
company face competition in its airline sectors from companies like Delta Airlines, Spirit
Airlines etc. The competition in other sectors is less as investment companies find it
difficult to gain trust of customers which makes it easy for Virgin Group to efficiently
grow and expand in market. The company provides its service in a large number of
sectors which benefit it in dealing with its rivalries efficiently so that a competitive
advantage can be gained in market. This help the company to expand and develop rapidly
in the global market leading to its high profitability thereby leading to its high revenue
generation. Bargaining power of customers: It is the power with which buyers can get products and
services in market at comparatively lower prices. If the suppliers of similar goods and
services are more then the buyer have strong bargaining power as they can easily switch
their companies which offer low price else vice versa. The company is customer-centric
which helps it in dealing with their demand in an efficient manner and provide them with
financial assistance and advice which can help in their growth and development in market
(Ellwart and et. al., 2015). Through an efficient management team and use of technology
the company is able to build a strong customer base while also dealing with their
requirements in an efficient manner. As the company deals in many different sectors like
telecom, travel, TV, radio, health etc. it face different type of response from customers in
different industries. In the case of airline and telecom industries the bargaining power of
buyers is high as there are a large number of companies which provide the same services

to customers however this power is not more in other sectors like financial services as the
company has high expertise in this sector. Bargaining power of suppliers: Suppliers help in providing raw material to companies so
that they can use them in their processes which help in manufacturing final products and
services. More the number of suppliers less will be their bargaining power as companies
can easily switch to other supplier who can make available the same quality of products
at lower price. The Virgin Group deals in a diverse range of business sectors which
means that the bargaining power of supplier in each sector is different which can affect
the cost of company products and services. In the aviation sector the bargaining power of
suppliers is less as there are not many companies which deal in aviation industry which
makes the number of buyers less and also decrease their bargaining power. In financial
sector the bargaining power of supplier is moderate as they affect the investments of
company in businesses which affect their profits. In the telecom sector the bargaining
power of suppliers is moderate as there are many companies present in market which deal
in this sector which makes the purchase of these services expensive for company (Lee,
Lanting and Rojdamrongratana, 2017). Threat of substitute: It is the threat of presence of other similar products or services in
market which can help in satisfying customer needs. Virgin Group provides investment
facilities to a large number of businesses so that they can grow and develop in market.
The company is a British conglomerate venture capital investor which is a globally
recognised and respected brand which deals in a number of companies which means that
the threat of substitutes is less for the company. In the air travel industry the company
provides low priced services to its customers which lowers the threat of its substitutes.
Also in the financial service industry the company is well known for its image and
reputation which helps in acquiring the trust of its customers and also the risk of loosing
its clients to its substitutes is less. In the telecom industry there are various companies
dealing in the same industry and providing the same quality of services which means that
in this industry the company can face a moderate threat due to its competitors. Overall
Virgin Group do not face threat of substitutes as it deals in a large number of industries
and the balance in one industry is managed by other (Jenkins And et. al., 2015).

 Threat of new entrants: It is the threat posed by new companies which can enter in
market thereby increasing competition for already existing companies. Virgin Group
deals in a variety of business industries and provide cost efficient products and services to
its customers which help it in gaining a competitive advantage in market. The threat of
new entrants is low for Virgin Group as it is a conglomerate venture capital investor
which invests its capital in a large number of businesses to help them grow in market. It
is difficult for a new entrant to invest a huge capital and give competition to Virgin
Group which makes the company less affected by new entrants in market. Also as the
businesses and industries in which the company deals in vary from telecom, travel and
leisure, entertainment, health etc. it becomes hard for new companies to enter in the
diverse range of businesses quickly. Thus the threat of new entrants in the investment
market is less which gives a competitive edge to the company and helps in its growth and
expansion worldwide (Demirezen, Kumar and Shetty, 2016).
Inbound and outbound logistics and operations.
Logistics refers to the procedures that aids organisations in coordinating with supply
chain operations in order to monitor that how raw materials are acquired, its storage as well as
further transportation in business. Inbound and outbound logistic refer to design solution,
research and development as it is essential for the management of Virgin Group to manage both
the logistics so that they can be able to maximise the efficiency of distribution networks.
Products and services of Virgin are of better quality as company has various websites for all
activities which facilitates different services to their potential customers. Whereas, Outbound
logistic defined as a distribution system which is used for distributing offerings to the customer.
The offerings of Virgin reach the customers with value, success and fun and they empowering
workers and attempts to innovation services and offer it to buyers. In this, the market and sales
operation of company attain competitive edge by focusing on research and market analysis and
offered products and services at competitive prices. Also, Virgin Group provides better quality
goods and services through organising training session for their employees, conduct techniques
of innovation along with the follow up customers feedback (Lundin And et. al., 2015).
Analysis of support activities in Porter's value chain.
There are numerous activities which are to be considered within a business organisation
in order to perform different functions like designing, manufacturing, marketing as well as

delivering in an effective manner. As value chain analysis assist company Virgin group in
analysing activities so that company can be able to get competitive market positions. In this
model, there are two types of activities as primary and support that assists in operating business
functions smoothly but not directly linked with the offerings of company. Some of the support
activities of Virgin group that help company to run their operations smoothly are considered as
follows:
Firm infrastructure: As Virgin Group is operating in around 25 nations with the 300
companies in a group as its owning several buildings, plants, equipments and lands as well as it
gets across large number of various industries like airline, financial, music etc. Infrastructure of
Virgin Group makes it simple and easy for clients in order to placed or positioned their orders
that assists them in getting better quality of goods and services from the websites at a better
speed (Finn and Gupta, International Business Machines Corp, 2017).
Human resource management: Virgin Group moves successful brand name over the 43
years due to the high intellect, skills, talents, experience as well as desire to outperform along
with the specific style of management culture with nominal hierarchy as well as management
levels. Besides, Virgin Group mainly credit to human resources for the company success.
Human resource management activities as well as functions of Virgin Group assist in
coordinating their work so that they can able to get appropriate results. These HRM practices
aids in encouraging employees confidence so that the image of company can developed
positively and services and quality also be improved.
Technology development: The quick and speedy development in digital technologies
creates a new opportunity for Virgin group as it is extremely admired for their innovative
application of IT in order to professionally supply their products and services to the customers.
Procurement: In this, Virgin sets their price in right direction as well as obtain goods and
services at low cost that allows to keep customers satisfied. This is liable for sourcing as well as
procuring a broad range of products and services which influence business to make differences in
their offerings.
Determination of key value adding activities.
Value adding activities refers to that kind of activities that is in used by the businesses to
increase the customer satisfaction as well as experience so that the positive and strong brand
image of firm can be developed within the market. In this, the raw materials are converted into

finished products through which the customers expectations can be easily satisfied and added
more value to them. Virgin group used same distribution channel across their business at global
level and provides better services in order to create better value for customers. In addition, the
operational efficiency assist company in getting competitive advantage in market along with the
high performance.
How IT and innovative ideas assist to increase business processes.
Information technology plays an important role in businesses as it helps in increasing the
process through automation that results in the efficiency as well as accuracy with which
information and data of company is to be stored and computerised. This help in reducing the
error cost and make speedy procedure for businesses that is required to accomplish competitive
edge within the market. It is essential to integrate the IT in Virgin Group's operations so that
work can be done with accuracy in real time and provide accurate information in business so that
all departments can be able to work effectively and efficiently. IT innovation helps Virgin Group
to integrate with the human knowledge in order to develop creative and innovative concepts that
will assist in satisfying the customers requirements and accomplishing more satisfaction of
customers by creating value for them (Susanto, 2017).
Information technology helped Virgin Group to expand their operations within the
market by using online applications that assists customers to buy their offerings according to
their convenience in respect of international presence. They accomplished competitive
advantages by the use of IT and obtain valuable information and knowledge about the market,
customers requirements etc. so that company can be able to facilitate such products and services
which can aid in meeting them and getting maximum satisfaction. Virgin Group has
progressively used information technological in developing their brand image and attaining huge
customer base. Also, by using IT, Virgin Group is able to manage large database of all customers
who belongs to the different cultures, countries, religion etc. which helps in tracking their likes
and dislikes in order to effectively positioned their offerings. This, It is necessary for businesses
as it is related to the technological advancements that helps in expanding their operatiosn within
the market place.

CONCLUSION
From the above report it can be concluded that IT plays a crucial role in the growth and
success of business and also help it in being more competitive in market. With the use of
technology companies can efficiently store a large amount of information and can use it in such a
way that a competitive advantage can be gained. With the help of Porter's five forces model the
company can examine the external forces which work on it and can pose threat for its existence.
The inbound and outbound logistics of company can be efficiently managed and monitored with
the use of IT which help in creating an efficient supply value chain which is important to remain
competitively active. Also innovation can be brought in company which can help it in profitably
surviving in market and dealing with changing market needs and demands.

REFERENCES
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