Strategic Analysis of Virgin Group: Business Strategies and Models

This report provides a comprehensive analysis of the business strategies employed by the Virgin Group, a prominent player in the UK telecommunications industry. The report begins with an introduction to business strategies and their importance for organizational growth, followed by a PESTLE ana...Read More

BUSINESS STRATEGIES

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1.......................................................................................................................................1
1 PESTLE analysis of Virgin Group: .........................................................................................1
2 Ansoff’s growth vector matrix to analyze Strategic Position:.................................................2
TASK 2............................................................................................................................................4
1 Strategic capability:..................................................................................................................4
2 Applying VRIN/VRIO models to determine the strategic capabilities of Virgin Group:........4
3 Analyzing strength and weakness of Virgin Group:................................................................5
TASK 3............................................................................................................................................6
Porter's Five Force model to study to evaluate the competitiveness of Virgin Group:...............6
TASK 4............................................................................................................................................7
Bowman’s strategy clock model to analyze the strategic direction and options of Virgin
Group:.........................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

Illustration Index
Illustration 1: Anisoff's Matrix........................................................................................................3
Illustration 2: Bowman's Strategy Clock Model..............................................................................8

INTRODUCTION
Business strategies is the process which is applied by the organization to fulfil their aim
or objectives. These strategies are well examined and well planned. These strategies are made to
increase the growth of the company which helps it to develop better in the market.
Telecommunication industry in UK is expanding exponentially in the past few years. It has been
the largest and oldest telecommunication group which is serving the people. There is many such
companies in UK like EE, Virgin, Three and BT, Vodafone, BT, Giff-gaff, O2. In this report,
different business strategies applied by the Virgin Mobile Group has been explained. Virgin
mobile was the first mobile company which was launched in the UK as joint venture. PESTLE
analysis, Ansoff’s growth vector model of Virgin Group is also discussed analysing the
company’s strategic positioning in the market. This report will also include details of company's
strength and weakness, porter's five force model and in the last analysing the strategic direction
of the company using Bowman’s strategy clock model.
TASK 1
1 PESTLE analysis of Virgin Group:
PESTLE analysis is used to analyze the external macro-environmental factors related to
the Virgin Group. It generally evaluates various aspects which can affect company's business
growth. PESTLE analysis stands for political, economical, social, technological, legal and
environmental factors. This analysis helps company to in determining the coming opportunities
which can enhance its reputation in the market. PESTLE analysis of Virgin group is as follows:
 Political Factor: These factors are used to analyze the political impact on the Virgin
group. It examines the government rules and regulations and policies which the company
has to follow.
 Economic Factors: These factors also contributes a great part in the growth of company.
These macro economic analysis identifies the economic conditions of the market such as
inflation, increase in interest rates, exchange rates etc. which has great impact.
 Social Factors: Analysis of social factors for company is also important in order to study
social and cultural macro environment. These macro-environmental factors can be human
behavior, society values and beliefs, etc. In young generation, popularity of mobile
phones has increased a lot in coming years, as a result company starts coming up new
plans and services which attracts these people to buy Virgin mobiles (ubas‐Díaz, M. and
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Martínez Sedano, M.Á., 2018). Social factors also includes the effects of population
growth, age distribution, career attitudes, etc. on the company's growth.
 Technological Factors: Companies like telecommunication, technology plays an
important role. From the study of these factors, the company can analyze the changes in
the technological industries, as technology has a direct impact on the innovative features
and offerings by the company to their customers and improving their quality of service.
Today's world is electronic age, where every work is done by machines and with such
rapid change in the technology, the company has to cope up with this and should come up
new and innovative ideas for the customers to maintain the brand name in the market for
example, Virgin mobile group was the first company to come up with offering free Voice
mail services, Virgin Bites, etc.
 Legal Factors: These factors operates the legal matter of the company. This is also
related or linked to all other factors of the PESTLE analysis. If any of the factors is
changed it will automatically affect the legal factors. It can directly affects the laws like
competition laws, employment laws, consumer laws, etc.
 Environmental Factors: These factors generally includes rules and regulations which has
been made considering the environmental factors such as weather and climate change
(Dranove, D.S. and et.al. 2016). Recycling has become so much in trend these days, that
every person is concern about the environment because of vast changes in the climate due
pollution and global warming.
All these above mentioned factors has to be kept in consideration by the Virgin group company
to sustain in the market as these can affect a lot in many ways.
2 Ansoff’s growth vector matrix to analyse Strategic Position:
Ansoff's growth model is used to analyze the company's strategic positioning in the
market. It helps the company to make or plan strategic products and market growth. Ansoff's
Matrix is sub divided into four parts, i.e. market penetration, product development, market
development and diversification.
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 Market Penetration: From the above image, we can understand that market penetration is
the products which are already existing in the market to increase the market share of the
company. In this strategy, making necessary changes in the product through various ways
like organizing promotional events, giving better plans which can attract the customers,
etc. Virgin group can achieve this by coming up with new products better than the
previous one (Ghosal, V., 2015). Market penetration has the least risk factors compared
to all. By making frequent changes in the company's services will enhance the market
penetration.
 Market Development: Market development is process when a company tries to expand its
business in the market with their existing products. For this the company should have a
good resource. There are several ways through which the Virgin group company can
achieve this strategy, such as, by moving to new markets, applying new product
packaging, and different pricing policies etc. Settling up of new branches in the market,
adopting the franchise method is the best possible way for the company. This strategy
comes with many risk factors with it.
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Illustration 1: Anisoff's Matrix
Source:(Ansoff Matrix, 2018 )

 Product development: Product development happens when the company plans to launch
or introduce a new product in the market. For this the company should come up with new
and innovative ideas to attract customers. This strategy can be successful if the company
has already established its name in the market (Grover, V.M., 2016.). Compared to
previous two strategy, this is more risky as the company is launching entirely a new
product in the market and its up to the customer whether they like it or not.
 Diversification: This is the last strategy of the Anisoff's matrix model to apply. In this
method, the company is marketing or selling new products to new markets at the same
time. This is the most risky factor for the company to follow.
So by applying this matrix method, company can grow its market and can make profits. This can
be a positive way in which the Virgin group can expand its business in other countries as well.
TASK 2
1 Strategic capability:
For any business to survive in the market, some or the other strategies have to be applied
by them. This capability of applying different strategies is referred to as Strategic capability.
These strategies help the company to increase its profitability margin. It mainly focuses on
company's financial resources and its current market position before applying any new plan or
strategies. Virgin mobile group has to come up with new plans and services to gain popularity
among people. Virgin group focuses more on increasing their offers by bundling offers of
products and services, for example, new internet plans like 4G plans, application and games,
music download, etc. They understand that change is must for them to stay in the line. Strategies
and plans must be unique and according to the customers interest. Strategic capabilities
implement strength (Gumusluoglu, L. and Acur, N., 2016). Virgin group should emphasis on
brand building rather than just making money. Virgin group also offers innovation and a sense of
competitive challenge for their competitors.
2 Applying VRIN/VRIO models to determine the strategic capabilities of Virgin Group:
VRIN models are applied to any business to check its competitive power of strategic
capabilities and resources of company. It is considered as a strategic tool by the Virgin group to
acquire the knowledge about whether their resources are able to compete with the market. VRIN
model basically focuses on four essential qualities; value, rareness, imitability and non-
substitute.
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 Value: Resources such as new technology can bring value to competitive advantages. To
attain competitive value, the resources which company is applying should contribute in
the overall strategic plans. For example, if company is applying new technologies like 5G
into their internet services which they are providing to their customer will increase their
popularity.
 Rareness: As the name suggests, resources should be unique and rare in the market. To be
rare in the market, Virgin group must have the resources which the competitors lack. For
example virgin group was the first to introduce free voice mail services in the
telecommunication market (Grover, V.M., 2016.).
 Imitability: To be inimitable in telecommunication industry, virgin group must have a
resource or capability that is hard for their competitors to imitate. Imitable competitive
powers help virgin group to maintain a market position and sustained profitability.
 Non-substitutable: Any kind of resource which can not be substituted by any other source
is known as non-substitutable resource. There is till now, no such type of resources are
there which are held by Virgin group that cannot be substituted by other competitors in
market. They have to make strategies to up with such resources which them unique.
Like any other factors, this helps the Virgin group to maintain a good balance in the
telecommunication industry. Following these factors will contribute to gain popularity.
3 Analysing strength and weakness of Virgin Group:
In today's world, mobile has become the most important way of communication. With the
enhancement in the technological aspect, new and improved technology has been seen in
mobiles, like audio/video conferencing, mobile broadband, GPS services and internet telephone,
etc. For Virgin group to sustain for longer period, they should analyze the internal as well as
external factors which affect them (Gumusluoglu, L. and Acur, N., 2016). These factors can be
analyses by different methods such as SWOT or PESTLE analysis. From this analysis we can
analyze the strength and weakness of company.
 Strength: These are some characteristics that gives the company advantages over their
competitors in the market. Strength of Virgin group includes, they have a very law cost
operating model, which means Virgin group has low investment and high return. They
have a strong dynamic Brand name popular in countries like UK, USA, and Australia.
Virgin group has lower tariff rates as compared to the other company. They have a huge
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range of products to buy from. It has different types of distributors in the market, one
which sells the product offline in the market and second which sells online. Customers
can choose any one of these option. They have a qualified IT professional's team in their
company which includes highly skilled software professionals (Scholes, M.S., 2015).
Virgin group has high budget to invest in the market.
 Weakness: There is no business which does not have any weakness in them. Virgin
mobile also has some weakness like, as it is a group of company which operates together
it sometimes becomes hard to supervise all the department. They have to work with other
companies for their technical infrastructure. Virgin group only concentrated on Pre-paid
customer which makes them to lose customer’s interest in them. They have to focus on
post-paid customers as well.
TASK 3
Porter's Five Force model to study to evaluate the competitiveness of Virgin Group:
Porter's five force model is used to analyze and understand the competitiveness of the
company's environment and identifying the strategic potential of it. These helps to evaluate the
overall status of them. Porter's five force includes, threat of new entrants, supplier power,
customer power, threat of substitutes, and rivalry, discussed below:
 Threat of new entrants: Any new company entering into the same business creates a
threat to the existing company. It is easy for any new company to enter because there is a
huge demand of products. To over come such issues Virgin mobile should bring some
new and innovative ideas in the market to survive.
 Bargain power of the supplier: Supplier are usually powerful when there are more
customers and less number of supplier. Virgin group should take advantage of this
opportunity and make as much as they can. Because if the number of supplier increases in
the market, then the supplier will become weak (Welford, R., 2018).
 Bargain power of buyer: This is mainly considered with customers of the market. Buyer
is powerful if the customers are less and can purchase the product in a fair price amount.
Customers have many choices of MNO's and MVNO's to choose, if they are not satisfied
with the current service they are using. Service quality plays an important role in the
telecommunication industry. Virgin mobile should update there services from time to
time in order to retain their customers.
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 Threat of substitutes: Threat of substituting product or services is always there for the
business. These substitutes can affect the existing services of the Virgin group in the
market. Foe example, Voice over internet protocol (VoIP) has a great impact on telecom
industry. Services like Skype and Google Talk has led to gain interest in the customers
mind. Virgin group should update their system with the coming new technologies.
 Rivalry: For the majority of industry, existing rivals is the major issue. Virgin mobile has
rivals like vodafone, BT, Giff-gaff, O2, etc. which are giving a strong competition to
them. To stay in the market, they should introduce new technologies which is better than
their rivalry's have.
By applying all these factors into the company's management system, Virgin group can compete
with other organizations efficiently and can increase there profitability qoutient.
TASK 4
Bowman’s strategy clock model to analyze the strategic direction and options of Virgin Group:
Bowman's strategic clock model is used to analyze the competitive position of the
organization in the market as compared to their competitors. It helps in strategic positioning of
company. In Bowman's strategic model, eight factors are responsible, which are described
below:
 Low Price and Low Value added: This factor is less competitive in the business.
Customers perceives very little amount/value because the product is not differentiated
properly. This strategy is widely used by Virgin group to stay in the market because
goods does not cost very much in this segment and are very cheap to buy.
 Low Price: Whenever a company intend to sell high volume of their product for very low
margin, low piece marketing is used by the organization (Woerner, S.L. and Wixom,
B.H., 2015). Virgin group should make a strategy of cost minimizing to generate high
overall profit margin.
 Hybrid: as the name is already suggesting, it is a combination of low price related to
competition and differentiation. The main of this factor is to convince the customers that
there is combination of both reasonable price and product differentiation.
 Differentiation: Providing customers with the highest level of added values is the main
objective of differentiation. This strategy requires high quality product to achieve high
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relative prices and added value of the product (Welford, R., 2018). This strategy will help
the Virgin group a lot to compete with their rivalries.
 Focused Differentiation: This strategy applies when company sells the product at highest
pricing level and the customer is willing to buy that product just because of its high
perceived values for example, products of company like Apple, Sony are highly in
demand because of their value in the market.
 Risk High Margins: In this strategy, company sets high pricing of their products without
offering anything in terms of perceived values. Profit will be high if the customers are
still buying these products. In other terms it can be called as noncompetitive strategy.
 Monopoly Pricing: There is only one business which is offering the product if there is a
monopoly in the market (Ghosal, V., 2015). In these factors the monopolist can set any
price range for the product. Its customers choice to buy it or not.
 Loss of Market share: For disaster in any competitive market, this strategy serves as a
recipe for them.
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Illustration 2: Bowman's Strategy Clock Model
Source: (Bowman Strategy Clock. 2018)

CONCLUSION
From this report, it has been concluded that strategic capabilities of Virgin group
company are strong enough to compete with their rivalry industries. Different measures have
been taken by the company to check their strength and weakness like PESTLE. This analysis
helps the Virgin company to overcome the issues of macro environmental factors. Virgin mobile
has great follower in the industry which makes them to come with new and innovative ideas
constantly to gain profit. All these can be achieved by the Virgin group by applying Bowman's
strategy model. Virgin managed to increase their share in the market over the last few years. A
strong brand name and providing good service to its customers makes Virgin Company to top
position in the future.
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REFERENCES
Books and Journals
Cubas‐Díaz, M. and Martínez Sedano, M.Á., 2018. Measures for sustainable investment
decisions and business strategy–A triple bottom line approach. Business Strategy and the
Environment. 27(1). pp.16-38.
Dranove, D.S. and et.al. 2016. Economics of Strategy.
Ghosal, V., 2015. Business strategy and firm reorganization: role of changing environmental
standards, sustainable business initiatives and global market conditions. Business Strategy
and the Environment. 24(2). pp.123-144.
Grover, V.M., 2016. Alignment of Business Strategy and Innovation Strategy: Strategic Benefits.
Imperial Journal of Interdisciplinary Research. 3(1).
Gumusluoglu, L. and Acur, N., 2016. Fit among business strategy, strategy formality, and
dynamic capability development in new product development. European Management
Review. 13(2). pp.107-123.
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.
Scholes, M.S., 2015. Taxes and business strategy.
Spender, J.C., 2014. Business strategy: Managing uncertainty, opportunity, and enterprise.
Welford, R., 2018. The launch of a new journal, Business Strategy and Development. Business
Strategy & Development. 1(1). pp.4-5.
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
Ansoff Matrix. 2018. Available through: <http://www.ansoffmatrix.com/>
Bowman Strategy Clock. 2018. Available through:
<https://www.toolshero.com/strategy/bowman-strategy-clock/>
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