Case Study: Strategic Analysis of the Virgin Group's Business

This case study analyzes the Virgin Group, a diversified investment group founded by Richard Branson, focusing on its product diversification strategy and competitive advantage. It examines the company's resource capabilities using the VRIO framework, highlighting its strengths in innovation and unique techniques. The study applies the BCG matrix to evaluate the performance of various product segments, categorizing them as Cash Cows (e.g., telecommunications), Stars (e.g., music and entertainment), Question Marks (e.g., Virgin Pulse), and Dogs (e.g., railway industry). The analysis reveals that while telecommunications and media contribute to profitability, the railway industry underperforms. Recommendations include strategic adjustments in the railway sector and continued investment in successful sectors to secure brand identity and enhance profitability. The study concludes by emphasizing the importance of strategic adjustments for long-term growth and consistent performance within the Virgin Group's diverse portfolio. The case study also highlights the importance of product diversification and the application of theoretical models such as the BCG matrix in achieving competitive advantage.

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Case Study Analysis of Virgin Group
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Table of Contents
Introduction......................................................................................................................................2
Case Background.............................................................................................................................2
Resource Capabilities of Virgin Group: VRIO Framework............................................................3
Application of BCG Matrix.............................................................................................................4
Recommendation.............................................................................................................................7
Conclusion.......................................................................................................................................7
References........................................................................................................................................9

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Introduction
The extensive competition in the post globalised era is driving the company towards
excellence and innovations. Developing the suitable strategic view is necessary in establishing
the future path (Torquati et al. 2018). The study focuses on the case scenario of Virgin Group
Ltd. which is the renowned investment group in UK. Richard Branson, “the face of the brand” is
the founder of the company. He has been leading the brand with over 200 companies and has
been operating across 29 countries. The case study is highlighting the scenario of the diversified
product segments that create the unique brand value. The study would reflect on the development
of the theoretical model to create the ‘product diversification” strategy and achieve competitive
advantage.
Case Background
Richard Branson, the founder of Virgin Group has been much concerned about the
development of brand image and extensively spread the product and service values among the
customers worldwide. Aiming such target, he has paid the attention in implementing product
diversification strategy. In the year of 2015, Mr. Branson launched the Virgin Cruise Line and in
the launch party he expressed his interests in launching the Virgin electronic automobile
(Virgin.com 2018). His motif was to beat Tesla, which is the biggest competitor of Virgin Group
in the market. In fact, going forward, the company has opened the first US chain of Virgin Hotels
and invested in the OneWeb, which is a satellite internet company. Virgin Group has remained
as the highly diversified company by investing highly in new ventures. However, the case
intends to identify the development of the product diversification strategy to achieve competitive
advantage in current business ground. The complex infrastructure and the emergence of the

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innovative industries are quite challenging for the company to strengthen the competitive
position. The application of the BCG Matrix would create the sustainable position for the
company for the long run.
Resource Capabilities of Virgin Group: VRIO Framework
VRIO framework suggests the resource capabilities of a firm that develops the
understanding of the firm’s capability in participating in the competitive scenario. This section of
the study would identify the resource capability of Virgin Group for managing the competitive
edge. The VRIO framework concentrates on the four major aspects of the resources that is shown
below:
RareVirgingrouphasbeenconcentratingontheservicediversificationsandengagingtheuniquebusinesswiththesubsidiariespresentallacrosstheinternationalmarket(AversaandHaefliger2016).Theservicesofferedbythecompanyarequiterarethathelpsinparticipatinginthecompetitivelandscape.Organised

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Figure 1: VRIO Framework
(Source: Andersén and Samuelsson 2016)
The obtained idea from the above VRIO analysis indicates that Virgin Group has the potentiality
to acquire competitive advantage. The company is more focused on developing unique
techniques with the help of advanced technological tools. Therefore, the resources used by the
company are quite valuable, rare, inimitable, and organized. In addition to this, the organisational
structure of Virgin Group is quite commendable to retain the competitive position in this
dynamic business world.
Application of BCG Matrix
BCG matrix is a theoretical framework that analyzes the current functions of the diverse
product segments managed by the organisation. The organisations mainly make the adjustment
in their market share to develop their standards to achieve competitive advantage (Shanbhag,
Dutt and Bagwe 2016). For example, a high market share shows the sign of profitability ensuring
future growth of the products or services. The application of BCG matrix on Virgin group is
presented further:

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Figure 2: BCG Matrix
(Source: Bolisani and Scarso 2017)
Cash Cow
It is notable that some of the products in the market have the higher potentiality to
generate revenue for the longer time. If the market share is higher, the company would receive
the stable sources of the earning. The products identified as the cash cows do not have any
insignificant impact on the industry development. However, high stability of the income helps in
stabilizing the financial aspects of the firm. Similarly, Virgin Group has featured some of the
products that signify the stable source of earning. The wider product portfolio contributes much
commendably to strengthen the financial ground of the company. For example, the company
ensures the stable profits from the telecommunication industry. The media and

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telecommunication industry is saturated with different market players. Therefore, Virgin Group
has the opportunity to ensure growth in this competitive market.
Stars
The star products have the higher potentiality for the growth in the market by making the
significant contribution to the organisational earnings. According to Lindgardt and Ayers (2014),
the star products signify the expanding business market that has the considerable possibilities for
the future profits. The matured market for the star products generally maintains the higher
market share with huge adjustments (Vecchi and Brennan 2015). Virgin Group invests the
capital in the music and entertainment sector that denotes the star products. This categorization
of the company is much significant in increasing the profitability rate. However, it still requires
the continuation of the investments for maintaining the earning flows.
Question Marks
It has been observed that some of the products launched by the companies are not able to
perform as per the expectation level. In BCG matrix, these products are referred as the ‘question
marks’ (Niederstrasser and Frick 2015). The greater ambiguity attached to the future prospects
are the main reasons for such classifications. The Virgin Pulse falls under this category since the
service is not an extraordinary one to achieve the higher profitability parameter.
Dogs
The final category of the BCG Matrix is Dogs that symbolizes the products bring low
profitability. Sometimes an organisation invests on this product for long term or short term
perspectives. However, it does not ensure the higher profitability in the market (Aversa and

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Haefliger 2016). As per the statistic data shown in the case study, it is highlighted that the
Railway industry of Virgin group has the lower profitability consistently. Therefore, it can be
inferred that the railway business of the company is considered as the dog products in this
aspects due to the consistent lower profitable rate.
Recommendation
The above analysis identifies that Virgin Group does not make the profitability in railway
industry due to which it is categorized under the category of Dog in BCG matrix. On the
contrary, the telecommunication industry and the media industry have the stable growth that
contributes to the increasing rate of the profitability parameter. However, it can be recommended
that if the company can make the considerable adjustments in the railway infrastructure, it would
help in providing the better services to the travelers. Moreover, if the company can prepare for
the new routes that connect the most convenient places in the locations, it would be better for
attracting the passengers. In fact, making most of the investments in the media and
entertainments and telecommunication industry would help the company to secure the brand
identity and develop more profits.
Conclusion
The study explores the case scenario of Virgin Group that invests in different industry to
make profits in business. The application of academic model, such as BCG Matrix identifies that
the company mostly make profit in media and entertainment and telecommunication sector. On
the contrary, the railway industry ensures the lowest profits for the business. Hence, the company
requires making changes in these investments to ensure the long term and consistent growth.

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References
Andersén, J. and Samuelsson, J., 2016. Resource organization and firm performance: How
entrepreneurial orientation and management accounting influence the profitability of growing
and non-growing SMEs. International Journal of Entrepreneurial Behavior & Research, 22(4),
pp.466-484.
Aversa, P. and Haefliger, S., 2016. Building Business Model Portfolios: Implications for
Strategic Diversification.
Bolisani, E. and Scarso, E., 2017. Knowledge-Based Selection of Customers: The
Opportunity/Profitability Matrix. In 18th European Conference on Knowledge Management
(ECKM 2017). Academic Conferences and publishing limited.
Lindgardt, Z. and Ayers, M., 2014. Driving growth with business model innovation. BCG
Perspective, The Boston Consulting Group.
Niederstrasser, C. and Frick, W., 2015. Small launch vehicles–a 2015 state of the industry
survey.
Shanbhag, M., Dutt, M.L. and Bagwe, S., 2016. Strategic Talent Management: A Conceptual
Analysis of BCG Model. Imperial Journal of Interdisciplinary Research, 2(7).
Torquati, B., Scarpa, R., Petrosillo, I., Ligonzo, M.G. and Paffarini, C., 2018. How Can
Consumer Science Help Firms Transform Their Dog (BCG Matrix) Products Into Profitable
Products?. In Case Studies in the Traditional Food Sector (pp. 255-279).

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Vecchi, A. and Brennan, L., 2015. Leveraging business model innovation in the international
space industry. Handbook of Research on Global Business Opportunities, p.130.
Virgin.com, 2018. Virgin. [online] Virgin. Available at: <https://www.virgin.com/> [Accessed
25 Mar. 2018].