Strategic Management – Virgin Case Study Essay

1) What are Virgin mobile Group’s unique resources/capabilities?

The Virgin BrandFirstly, the Virgin mobile brand is valuable in the proper execution of brand collateral, where ‘Virgin’ is one of the many recognised brands in the UK, and it is also famous in other significant markets including Europe and the U. T. A. Based on 1990s exploration, the Virgin brand was recognised by 96% of UK buyers (Case, g. 685). Secondly, it is exceptional for a company to have these kinds of positive buyer perceptions; which include value-for-money, entertaining, innovation, success, and trust across a number of Virgin businesses (Case, p. 685). Thirdly, Virgin has built up their good reputation over time, and is as a result path dependent and difficult pertaining to competitors to imitate.

Finally, competitors simply cannot substitute resources that provide the same capabilities as manufacturer equity and company reputation. Richard BransonThe personal reputation and image of Richard Branson is usually outstanding. He’s well highly regarded for his unconventional method of business, is often cited being a role style, nominated to get enterprises, the very best the most-popular businessman and named working in london polls because the preferred decision for mayor despite never putting call him by his name forward (Case, p. 697). Branson offers distinctive features, including his ability to successfully use the multimedia to raise open public awareness of Virgin mobile, his outstanding negotiation abilities and his exceptional charisma.

Furthermore, as an ‘international celebrity’, he is quickly able to get access to the proper people and have partnerships or alliances when necessary. Therefore , Branson’s reputation, and the rare tacit knowledge that he possess, makes value to get Virgin Group and is imitable and non-substitutable by rivals. Innovation, business structure and cultureVirgin Group’s innovative environment creates value for the organisation since innovation helps bring about employee determination and can bring about more efficient/effective processes, thus improving performance. Additionally , Virgin’s organisational structure involves very little hierarchy, the company view hierarchies as obstructive, and “impede rapid decision-making” (Case, l. 688).

Absence of hierarchy, along with their promotion-from-within policy generates opportunities for employees that “their gender, deficiency of experience, or perhaps training would have precluded much more conventional companies” (Case, l. 694).  Indeed, Virgin’s framework and confident culture appeals to and maintains quality staff that squeeze into the ‘Virgin People’ category, whose commitment and skill have offered immensely to the organisation’s accomplishment. Moreover, Virgin has created a powerful culture that emphasises “praise rather than blame, and friends and family rather than alienation”, and informality and ‘fun’ are also prompted (Case, p. 688).

2) In what methods are Virgin Group trying to create synergies across all their various businesses? Virgin controlled the profits coming from a range of existing businesses towards Virgin mobile record labeled byinvesting in “new artists and to continue financing existing artists which [Virgin] believed wouldeventually always be profitable” (Case, p. 682). Furthermore, Virgin mobile engages in portfolio planning simply by balancing progress with maturity, cash flow with investment needs such as money new projects through divestments. E. g. Virgin Group was bought from 1992 allowing Branson to expand the airline organization (Case, s. 684).

After, Virgin also sold the united kingdom and Irish cinemas it happened in 1999 to repay the loans taken away to buy again Virgin Each of our Price (Case, p. 700). ParentingVirgin creates synergies through applying basic management capacities across their very own businesses. Virgin has developed powerful HR procedures, corporate structure and culture that can be used on all Virgin businesses. ‘The Virgin way’ and ‘building Virgin people’ is regularly applied, my spouse and i. e. “human resource equipment such as assessment centres, character profiling, and employee advancement are commonly used” (Case, s. 685).

Synergetic effects are created achievable businesses mainly because instead coming from starting kind scratch, they will adopt the Virgin platform to improve efficiency and effectiveness. Economies of ScopeVirgin’s diversity has also created synergies throughout their related businesses by added worth that rate of interest cap create individuals, and therefore raising the possibility of attaining competitive advantages. E. g. in the travel around industry, Virgin Holidays ‘grew on the back’ of Virgin mobile Atlantic simply by sharing operational resources just like promotion to lower unit costs (Case, s. 689).

Several Virgin companies are also related in terms of getting “ideally fitted to e-commerce and in which development is anticipated to occur – travel, financial services, publishing, music, entertainment” (Case, p. 687). Virgin exploited this probability of create synergies by writing activities across these businesses to lessen unit costs. i. e. the distribution of various products from distinct businesses may be shared through the use of “technology to provide all Virgin mobile customers a small mobile gadget form that they could buy any Virgin product coming from a rail or theatre ticket to a CD… and streamline on-line service with a single Virgin web address: Virgin mobile. com” (Case, p. 687).

Furthermore, Virgin tries to make differentiation by bundling services together so that consumers obtain more value from your bundled support than each service independently. E. g. Virgin retail stores and Virgin mobile Cinemas inside the entertainment sector were included together to create ‘Megaplexes’, which in turn also included extra supplies; taking layers, serving refreshments and extra space (Case, s. 689). Synergy is created through sharing consumers across businesses, and the increased consumer willingness to pay for a combined services.

3) In light of your solution to Q2, what threats do you really see to Virgin Group’s corporate technique? I. electronic. what could undermine the success of the group in general? The Virgin corporate strategy is centered on the brand and the business has diversified into a large number of unrelated areas to power the brand, at the same time achieving company synergies across their different businesses. Even so one danger of this would be that the underperformance of 1 Virgin business can challenge the identified quality and/or value of other businesses. For example , the failure with the Virgin rail company has encouraged bad press (Case, p. 698), and therefore the negative perceptions can also escalate to other Virgin mobile products.

In addition , investors are questioning the idea of financial groupe and profile planning due to the external capital market progressively more efficient and sophisticated as time passes. Investors will probably have all relevant information, and Virgin’s superior access to internal information is usually diminishing. Consequently investors might prefer to diversify themselves than invest in an previously diversified organization. Furthermore, Virgin’s strategy of utilising Rich Branson within the company’s identification has additional implications.

First of all, compromise costs are involved, Branson’s core competencies are compromised as he must divide his attention between many businesses, plus the effectiveness of his administration may suffer because of this. Secondly, you will find questions encircling the long lasting performance of Virgin Group without Branson, as “his persona is indeed closely connected in the eyes of the general public and traders with Virgin mobile and its ethos…If Branson moves, would the business lose the impetus for innovation and the ‘can-do’ traditions that has for so long recently been its hallmark? … [would it] build a crisis of confidence therefore severe as to endanger the actual survival of Virgin? ” (Case, g. 699, 701) References Dess. (2007).

Strategic Management: Creating competitive positive aspects (3rd Male impotence. ), The McGraw-Hill Firms. Case: Sobre Vries, G. R. K. & de Vitry d’Avaucourt, R. (2004) “The home that Branson built: Virgin’s entry into the new millennium” In: B. De Wit & L. Meyer Strategy: Process, Content material, Context, Thomson: London, pp. 680-701.