BSBI MBA Strategic Management Report: Virgin Group Strategic Analysis

This report presents a strategic analysis of the Virgin Group, examining its operations and market position within the context of its diverse business ventures. It begins with an introduction to the Virgin Group, followed by a detailed PESTEL analysis that assesses the political, economic, social, technological, environmental, and legal factors impacting the organization. The report then applies Porter's Five Forces model to evaluate the competitive landscape, followed by a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats. The report explores potential scenarios for the future, offers strategic recommendations for the company, and concludes with a summary of the key findings. The analysis highlights the challenges faced by the Virgin Group, including competitive rivalry, the threat of substitutes, and the bargaining power of buyers, while also considering the company's social responsibility and technological advancements. The report also references the challenges faced by Virgin Airlines, a subsidiary of the Virgin Group, within the European airline industry. The report utilizes the Harvard referencing system.

Running head: STRATEGIC MANAGEMENT
STRATEGIC MANAGEMENT
Name of the student
Name of the university
Author note
Table of Contents
Introduction to Virgin Group...........................................................................................................2
PESTEL framework.........................................................................................................................2

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Porter’s 5 forces analysis...............................................................................................................12
SWOT analysis..............................................................................................................................19
Potential scenarios for the near future...........................................................................................25
Strategic recommendations............................................................................................................26
Conclusion.....................................................................................................................................27
References......................................................................................................................................28

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Introduction to Virgin Group
The Virgin Group was incorporated in the year 1989 by Companies House but the
organization has been undertaking the operations since 1970s (Bartleby.com 2007). There are
200- plus companies under the organization and thereby the Group aimed at maximizing the rate
of procedures of the business while holding businesses in the different markets. The growth of
the organization are specifically based on the values that are followed by the same for
safeguarding the interests of the different stakeholders (Bartleby.com 2007). However, it has
been noted that the relatively opaque management structure and the value based procedures of
the business enabled in improving the operations. Therefore, the research will examine the
issues in the organizational operations through assessment of the macro and the micro
environments while suggesting sets of recommended activities. The assessment of the market
position and environments would enable in identifying the opportunities and threats that are
being faced by the group. In this relation, the research will enumerate the assessment of the
different issues that are faced by the venture and the manner in which the same might be
mitigated.
PESTEL framework
 The political factors that are being
faced by the organization are related
to the direct control of governments,
government policies and regulations.
Virgin group was affected by the strict
imposition of labor laws, taxation
policies and trade restrictions which

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Political
greatly affected its operations. The
additional restrictions to licensing
bureaucracies that are imposed by the
foreign governments and political
instability in most of the nations
including Australia has affected the
rate of procedures of the business
while making dynamic expansion in
the different markets (Meyer, Neck
and Meeks 2017). On the contrary,the
higher rate of taxation and legal
impositions relating to trade tariffs
have affected the smooth expansion of
the venture in the different nations.
For an example, the import customs
and tariff that are imposed by the U.S
federal government incapacitated
Virgin Group in the US markets
(Certo et al. 2016).
 The stern European standards and the
application of Brexit affected the
profitability and growth of the venture
(Borland et al. 2016).

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 The new restrictions that are imposed
by the U.K. government in 2006 on
the air transport industry affected the
operations of Virgin Airlines, a
subsidiary of Virgin Group (Joshi
2016). On the contrary,the influence
of British Airways on the government
due to its brand value and volume
again affected the growth related
concerns of Virgin Airlines of Virgin
group.
 The strong influence of UK
Government on the activities that are
undertaken by the group through
Airways and Rail minimized the
revenue streams and profit ratio
(Baptista et al. 2017). It has been
noted that the Virgin Rail, which is
another subsidiary of Virgin Group,
encountered significant issues in
complying with the strict regulations
and policies that are imposed by the
UK Government (Antón et al. 2018).

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Economic
 Higher rate of disposable income
among the different customer groups
of Virgin Group enabled the venture
in finding prospective buyers for the
products and services that are
proposed by the venture (D’Souza,
Sigdyal, and Struckell 2017).
However, it has been noted that the
rate of unemployment in the different
nations might affect the profitability of
the venture.
 The economic factors relating to the
inflation rates, fluctuations in the price
of propositions and differences in the
foreign exchange rates have restricted
the growth of the organization in
continuing with the efficiency of the
operations. Tyson (2017) opined that
the increased economic turbulence in
the world and the Brexit has affected
the economic growth of Virgin.
 Slowed economic growth of the
different nations due to the influence

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of US-China trade war and the post-
Brexit phenomenon affected the
growth related objectives of the
venture while holding businesses in
the different markets (Oliver and
Parrett 2018).
 The higher rate of personal debts in
the different markets affected the rate
of procedures of the business while
holding businesses in the different
markets (Min and Joo 2016).
Social
 The organization developed a social
responsibility of proposing improved
quality services to its customers along
with the consideration for its
employees. The organization
prioritized the welfare of the
employees over the profitability and
interest of the shareholders which
enabled the entire in gaining over the
trust and confidence of the same
(Larsen et al. 2018). On the
contrary,the different employee

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centric policies that are framed by the
venture contributed to the
uninterrupted functioning while
expanding in the different markets.
 The changing preferences of the
customers are a growing concern for
the organization. GenY expects
experience along with the value of the
service. On the contrary,most of the
customers prefer quality products as
they are ready to pay the price for the
proposition (Midler, Killen and Kock
2016). In this relation, the lack of
quality monitoring operations and
maintenance of superior quality of the
propositions might degrade the loyal
customer base of the venture.
 The organization aimed at improving
the quality of the services that are
proposed by the venture as per the
needs of gaining a competitive edge in
the markets (Aversa and Haefliger
2016). However, it has been noted that

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Virgin’s lack of punctuality affected
the quality of the services that are
proposed to the customers. For an
example, the lack of punctuality of the
airline services affected the loyalty of
the customers through which the
organization encountered a huge loss
of customer base (Muthee 2019).
 The organization, Virgin, offered
different promotions with the
objective of making the customers
conscious towards the offerings. The
offers are proposed by the
organization based on a thorough
social analysis.
 The development of IT systems in the
organizations enabled the same in
identifying g the specific needs of the
customers and thereby bring forth
modifications in the offerings (Baxter
2019). On the contrary,the higher
accessibility to the internet services
enabled the venture in diversifying the

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Technological
promotional activities. It has been
noted that more than 78% of the
residents in the developing economies
have greater access to networks
(Bucci, 2016). On the contrary,the
improvements in the IT sectors have
supported the uninterrupted growth of
the organization while holding
businesses in the different markets.
 The active presence of the
organization in the social media
platforms enabled the venture in
making most of the target audience
conscious of the different propositions
that are made by the same. It has been
noted that more than 92% of the
people from varied populations are
indulged with the social media
platforms (Carette 2017). It has been
noted that the younger generation of
the customers prefer mobile
applications for better experience.
Therefore, the active presence of the

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organization in the different social
media platforms enabled the venture
in maximizing the customer base.
Environmental
 The increased consciousness among
the customers on the global climate
change has affected their approach
while choosing a product or service
that is being proposed by the
organization (Gelbort 2018). The key
changes in the organizational
operations are reliant on the effective
understanding of the environmental
norms and the application of the
regulations in the processes.
 The organization faced significant
issues in adhering to the regulations
that are forwarded by
the Environment Agency (EA), which
is a non-departmental public entity
sponsored by the United
Kingdom government's Department
for Environment, Food and Rural
Affairs (DEFRA) (Rao and

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Choudhury 2017). The stringent
policies that are imposed by the non-
departmental entity affected the
procedures of the business while
holding businesses in the diverse
global economies. The major
modifications that are planned by the
organization are completely related to
the stringent policies and procedures
that are imposed by the entity on the
organizational operations (Genovese
et al. 2017).
Legal
 The organization encountered
different trade barriers while
expanding their venture in the
different global markets. On the
contrary,the imposition of the
Computer Misuse Act 1990, Data
Protection Act 1998, Freedom of
Information Act 2002 and Regulation
of Investigatory Powers Act 2000 by
the US government restricted the free
procedures of the business (OriAde