Corporate Strategy Analysis & Development: Virgin Group Overview

This report provides a comprehensive analysis of the Virgin Group's corporate strategy, focusing on its successes and challenges over the past 5-10 years. The study examines the company's strategies, including market penetration, market development, product development, and diversification, and assesses their effectiveness. The report includes a case study of the Virgin Group, analyzing its organizational structure, human resource management, and leadership style, particularly the impact of Richard Branson. Furthermore, the report identifies the strategies used by the group to achieve their global presence and customer loyalty. The analysis also addresses the negative impacts of diversification on the company's brand image and customer satisfaction. Finally, the report proposes several strategies for the Virgin Group to sustain its market position and achieve its future goals. These recommendations include a focus on both short-term and long-term profits, adjustments to the ring-fenced policy, and a restructuring of the organizational structure to address the challenges of a flat management system. The report emphasizes the need for a strong succession policy and investment in a centralized structure to help the company overcome challenges associated with its expansive form.

CORPORATE STRATEGY
ANALYSIS &
DEVELOPMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Main body .......................................................................................................................................1
Case study...............................................................................................................................1
Strategies used by Virgin group in last 5-10 years.................................................................3
Proposed strategy for coming 5-10 years...............................................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................8

ILLUSTRATION INDEX
Illustration 1: Companies under Virgin group.................................................................................3
Illustration 2: Market strategy..........................................................................................................4

INTRODUCTION
Corporate strategy are those strategies that help firm in achieving there success and
sustain it for long time. It has becrialome crucial tool that help firm to focus all available
resource on single objective aim. Corporate strategy has become crucial part of corporation as
without it company loose there focus from main objectives and lack the focus and drive that
come with these strategies (Grinblatt and Titman, 2016). This practices help company in
retaining there competitive position in diverse market and help them in attaining good market
position. It also helps in resolving different issue.
In current time every organisation is accepting corporate strategy as there integral part as
it help them in getting measurable progress and long term success. In present study Virgin group
organisation is taken into account. It's a private group working in Conglomerate industry with
various and varied companies under its list such as virgin travels, virgin rail, virgin media, virgin
trading etc. The revenue generated by this company in year 2016 was approx 19.5 billion. The
study will give detail study on the corporate strategy used by Virgin group in last 5-10 year and
will critically analyse it. Furthermore, it will also propose some strategies that will help virgin
group to sustain in market in coming 5-10 years.
Main body
Case study
Virgin group is private Ltd. It runs separate business using the Virgin brand that is
created by Sir Richard Branson. It has more than 200 branded companies under its name
worldwide among this entertainment, lifestyle and travel are its core business. It has more than
50,000 workers working under it in 29 different countries. It has earned the image of world most
recognised and respected name in world.
It also works in partnership and may own complete business or some share for e.g. 51% of
Virgin Atlantic share is own by Virgin group and remaining shares are owned by Singapore
Airlines. It's a big organisation that many other companies franchise its name and pay the group
for the privilege of using there brand name (Quer, 2015)
Company has many goals that it wanted to achieve with it growth like making a global
presence, customer loyalty etc. The top executive realize that these goals can only be achieved
through the great workforce and proper management. The CEO of virgin stated that they know
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the people they want and also know how to recruit and retain them. They hire only those people
who can handle the stress that come up with different delegated responsibility and provide them
freedom and creativity so that they can be retained to company. The company recognizes the
potential of human resource and believe in bringing out the best of humanity, the leadership style
of Richard Branson falls in the category of transformational (Frederick, 2014). In year 2007
company goes through some loss and big changes at that time it was the leadership style of
Branson through which company was able to overcome its loss and move forward. The great
leadership style is one of the reason behind the success of Virgin group, the group has created its
own leadership style where much freedom is given to employees to present there view and
produce a cutting edge product that help firm in improving the value of customer. Special
emphasis is given on the creativity and doesn't prefer that employee work or totally depend on
higher authority thoughts. Human resource management of company work to enhance the
commitment of employee by providing them with bonus, profit sharing, stock option etc.
Organisational culture or management is another reason through which the company is
able to achieve such a great success. Virgin group is such an expansive organisation settled in
more than 25 countries and operating more than 100 companies which are not related to each
other. Company follows flat structure which help them in handling there expensive business
portfolio easily. Through this structure transforming of information become quite easy. Various
company within the organisation work to achieve common goal by higher authority (Walker,
2015) The beneficial strategy that is used by company is that every goal in corporation is
communicated to every single employee of firm this provide employee with a task through
which they contribute in entity goals.
Having so many companies that also diverse in nature create heavy burden on each
department or division that represent the brand. This was the reason why company faces many
crisis in year 2007. This structure creates heavy pressure on the workers to maintain positive
image of company and come up with quality and innovative product. Having flat structure the
employee have to follow hierarchy where the employee at lower level never get chance to
present there view and take part in any decision making which demotivated them Working
pressure hindrance the efficiency of workers which not only affect the overall performance but
also loyalty of employee and customer satisfaction.
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The above case study shows that human resource of company are consider as the priority
of company. Company provide much freedom to there employees so that they can come up with
innovative ideas and put there views forward which will be in benefits of organisation and help
them in achieving customer value. The organisation structure of firm is creating hindrance to the
working of employees as flat structure and expansive form of the entity put lot of pressure on the
workers which affect the efficiency and productivity of organisation
Illustration 1: Companies under Virgin group
(Source: Virgin group, 2017).
Strategies used by Virgin group in last 5-10 years.
In last 5-10 years company have adopted many strategies to achieve there goal of global
expansion and earning customer loyalty for this company has adopted four strategy.
 Market penetration,
 Market development,
 Product development and
 Diversification.
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Illustration 2: Market strategy
(Source:: Marketing strategy, 2015)
To extend the brand name of Virgin in global market company introduces there product
in market at such a low cost that it can attract customer at fast rate. It relied upon stature to
reduce the barriers that stops its entry in static market. Other than this there other plan was to
diversify in as many as market feasible that is possible (Baker, 2014). For there diverse industry
it chooses Ring – fenced business where every entities work separately from others and are also
financed on stand-alone basis.
The company try to identify there complacent market and work to come up with strategy
that can help them in entering this market. Through proper research lack of innovation and
underserved customer were two things that come forward which this market lack. So they
decided to come up with more innovative product with low cost that not only shake there
customer but also rivals.
Company depend upon acquiring innovative partner that are pioneer in their field.
Having extensive network of partners and contracts help the firm in getting better visibility and
support to stand in global market. Firm to achieve there long term benefit also decided to
sacrifice there short term benefits. There main objective was that to offer quality product to
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market at much lower cost and also provide brilliant services to there client which not only
increase there satisfaction but also help them in gaining there loyalty. It offers value for money.
Through the above strategy Virgin group was easily able to penetrate global market and
was able to achieve the brand image globally. Having so many diverse company working under
them make it difficult for company to maintain their quality of product. In year 2012 the cited
firm receive many complains from there customer regarding Virgin media and Virgin Rail. Even
Virgin rail is consider as weakness in company's portfolio (Johnson, and et. al., 2013). The
diversification strategy used by organisation is raising the finger against the quality of firm. In
handling so many industry together the entity is loosing its image among this. Other than this the
major change which company has gone through is departure of there CEO Richard Branson
which has created a big hole in the firm many have shown there concern regarding its working
and there position without the guidance and idea of Branson.
Virgin group has adopted great strategy to penetrate the global market introducing there
product at lower cost has helped them in attaining the attention of customer and also help them
in gaining good partners. Having pioneer people backing them up in new market has been quite
favourable for the business entity as it help them in gaining great visibility in new market (Wood
and et.al., 2016). Creative and innovative idea and product also help them in creating separate
image from there rival. Although many of the strategy used by organisation was spot on
company need to look over there strategy of diversification as it having negative impact on the
customer satisfaction and the brand image of company.
Proposed strategy for coming 5-10 years.
Virgin group has been successful in penetrating the global market and creating a brand
image for its company. With there aim achieved company has come up with new goals and
objectives that will be helpful to them in gaining more success. The main goal of organisation is
to sustain in global market and have strong hold on there position in market. For this company
cannot use there same old strategies and its essential for them to make change in there existing
strategies and also come up with new strategy that will help them in attaining there goals. Some
strategies are recommended below that will be great aid to them.
In early time company were focusing more on the long term profit to sustain in market.
Its high time that firm also start focusing in short term profit which can bring them lot of
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profitability. For this company need to accommodate there policy so that they can rely upon both
independent and joint venture which will be in the benefits of corporation and will also increase
its sale.
Organisation is working on ring fenced policy but for better working company should
release this policy. Dis regarding this policy will bring lot of benefit to firm as firm will able to
recognize there high revenue making companies and will be able to save and support this
company at the low times (Baaij, 2016).
Company should put more focus on there strategy of diversification as instead of
bringing profit it's creating negative effect on the brand image of company, company should take
immediate action from diluting there image any further by becoming less diversified.
Company has achieved its brand image and also able to gain the loyalty of there
customer. To sustain in global market and also earn high revenue company need to increase
there prices of product as loosing there customer is no more a threat (Xue, Choi and Ma, 2016)
The brand appeal and public image of the business entity is associated with the name
Richard Branson, with its departure problems like lack of formal structure, financial situation is
emerging at rapid pace. To overcome this issue its necessary for the cited firm to have powerful
succession policy that can help it to stand on its own.
Company should also pay attention to there organisational structure company need to
restructure there organisation which will aid the organisation in there survival. The flat
management will not help them in sustaining in this ever-changing market. For this they need to
adopt more formal structure which have centralized decision making body. This structure will
help new person in the place of Branson to adjust easily. This will also help in efficient and
smoother working of organisation (Walker, 2015).
Company need to invest in having centralized structure this will help them with problem
that arises with expansiveness of firm. Company can create a corporate headquarter where they
can have centralized way to form policies and financial decision.
CONCLUSION
The above study discusses the importance of corporate strategy that how it helps firms in
gaining long term benefits and competitive advantages. In present report corporate strategies of
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Virgin group are taken into consideration and analyse how it helps the entity in entering the
global market and achieving global brand image. It also discusses some negative effect this
strategy had on firm. Moreover, some recommendation are made that can help firm in gaining
the strong position in market and also overcome different issue that has come forward with the
implementation of existing strategy
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REFERENCES
Books and journals
Armstrong, G. and et. al., 2015. Marketing: an introduction. Pearson Education.
Baaij, M., 2016. Comments on'Diversification strategy and the roles of the centre. Long Range
Planning, 2016(First online)). pp.1-3.
Baker, M. J., 2014. Marketing strategy and management. Palgrave Macmillan.
Frederick, P. R. H., 2014. Organisational Behaviour and its Role in Management of
Business. Global Journal of Finance and Management. 6(6). pp.563-568.
Grinblatt, M. and Titman, S., 2016. Financial markets & corporate strategy.
Johnson, G., and et. al., 2013. Exploring strategy text & cases (Vol. 10). Pearson.
Purce, J., 2014. The impact of corporate strategy on human resource management. New
Perspectives on Human Resource Management (Routledge Revivals), 67.
Quer, D., 2015. International Corporate Strategy and Management. Unit 5: International Strategy
in Different Contexts. Estrategia y Dirección Internacional de la Empresa.
Stark, J., 2015. Product lifecycle management. In Product Lifecycle Management (Volume
1) (pp. 1-29). Springer International Publishing.
Walker, A., 2015. Project management in construction. John Wiley & Sons.
Wood, J. M. and et.al., 2016. Organisational behaviour: Core concepts and applications. John
Wiley & Sons Australia, Ltd..
Xue, W., Choi, T. M. and Ma, L., 2016. Diversification strategy with random yield suppliers for
a mean–variance risk-sensitive manufacturer. Transportation Research Part E: Logistics
and Transportation Review. 90. pp.90-107.
Online
Greg satell, 2017. Marketing strategy. [Online]. Available Through :
<https://www.forbes.com/sites/gregsatell/#7ad4d0f05c3a>. [Accessed on 16th October 2017].
Virgin group, 2017. [Online]. Available Through : <https://www.virgin.com/>. [Accessed on
16th October 2017].
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