Case Study:
Strategy at Virgin Group
Under the strong and populist leadership of its chief executive, Sir Richard Branson, Virgin Group has pursued an opportunistic strategy to build a company with estimated annual sales of over US$10 billion by 2007. Starting from nothing in 1968, Virgin Group tried a series of strategies over the next 30 years. Its aim was to find opportunities to grow the business on the basis of what became the Virgin brand name and on the strong reputation of its founder and chief executive. The strategic trial-and-error process was essentially emergent, rather than prescriptive. This case outlines some of the main strategies with Virgin's successes, failures and continuing business developments.
Background to the early years
After an experimental launch of a student magazine, the young Richard Branson developed a small record mail-order business in 1969 to take advantage of the end of resale price maintenance in the UK. He opened his first record shop two years later and subsequently developed it into the Virgin Megastore chain.[1] At the same time, he was attempting to develop a record label by signing up various pop artists of the time. None of these businesses possessed any clear competitive advantage, though arguably contractual rights to popular musicians and the Virgin brand itself had some real value. He continued to seek business opportunities using the Virgin brand and, by chance, met up with an entrepreneur wishing to develop an airline business. This eventually led to the Virgin airline business with its first route to New York in 1984.[2] In later years, the company moved into a variety of business ventures - from Virgin Bride and Virgin Cola to Virgin Trains and Virgin Mobile telephones - see Table 2.2. In terms of its strategy, Virgin Group claims to examine business opportunities carefully, seeking an opportunity for ‘restructuring the market and creating competitive advantage'.
Virgin Group's underlying business strategy
The company has developed its strategy over a number of years. Essentially, Virgin takes the view that there are always opportunities available for the hungry business executive. The underlying business logic has been summarised by Branson thus:
Business opportunities are like buses . . . There's always another coming along.
In practice, what this means is that Virgin examines new opportunities to see if the group can offer something ‘better, fresher and more valuable' than existing companies. It looks particularly at markets where the existing customers are not always receiving value for money and where the existing companies have in some cases become complacent - trains, insurance and banking for example - and where the new internet might deliver a business opportunity. This means that the main thrust of the strategy has been to find new market opportunities where the company believes its brand name can create competitive advantage. ‘Contrary to what people may think, our constantly expanding and eclectic empire is neither random nor reckless. Each new business demonstrates our skill at picking the right market and the right opportunity,' says the Virgin website.
All the businesses in the Virgin group is strategically targeted towards a five pillar empire system that Sir Richard Branson is eager to create.
At the heart of Virgin's strategy to develop the five pillars of business strategy travel, leisure, mobile phones, entertainment retailing and personal finance.
Outcome of strategies: Virgin focuses on geographical expansion
In the last few years, Virgin has focused its strategy on geographical expansion of its existing product portfolio rather than adding products. For example, it has taken its highly successful concept of Virgin Mobile telephones to other countries beyond its UK base. However, it remains opportunistic in its main product areas - for example, its bid to rescue the failed UK bank Northern Rock in 2007. The strategy continues to emerge - both into new countries and into new product areas.
www.global-strategy.net/emergent-strategy-at-the-virgin-group/
(Or, you can research and analyse any organisation of your choice by using internet , trade journals, business magazines, books etc., and provide answers to all tasks given below.)
To achieve a pass in this unit you must successfully address the following tasks:
P1 Explain strategic contexts and terminology- mission, vision, objectives, goals, core- competencies.
P2 Review the issues involved in strategic planning ( Guidance : consider impact on managers in formulating strategic planning; targets; when to plan; who should be involved; role of planning).
P3 Explain different strategic planning techniques (Guidance- you should use any two of the following techniques: BCG growth-share matrix; directional policy matrices; SPACE, PIMS etc.,)
P4 Produce an organizational audit for Virgin or any other organisation of your choice (guidance : you may consider use of one or more the following techniques: benchmarking; SWOT analysis; product positions; value-chain analysis; demographic influences, Competitive advantage profile analysis etc.,)
P5 Carry out an environmental audit for Virgin Group or any other organisation of your choice (guidance- you may consider use of any one of different models such as PESTEL, Porter's 5 force analysis etc.,)
P6 Explain the significance of stakeholders analysis (Guidance: you may define the concept and importance of Stakeholder Analysis, tools & process of analysis, Stakeholders Analysis Matrix etc. You can link it with Virgin Group or any other organisation of your choice)
P7 Analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment A (You may define strategic choice available to a business unit and kind of alternative strategies available)
P8 Select an appropriate future strategy for Virgin group or any other organisation of your choice (You may be allowed to use any organization of your choice] ( You may do the analysis of existing strategies and alternative strategies available to the selected organisation)
P9 Compare roles and responsibilities of Senior Management towards strategy implementation ( You may reflect on the different levels of senior management towards strategy implementation)
P10 Evaluate resource requirements to implement a new strategy for Virgin Group or any other organisation of your choice (You may evaluate the resource requirements like Finance, HR, Marketing, etc., and the keys to implement a new strategy of the given or any chosen organisation)
P11 Discuss targets and timescales for achievements in a given organization to monitor a given strategy ( You may propose target and a plan to implement proposed strategy/new strategy based on some assumptions you have made)