Case study -The Virgin Group
1. Directions of Strategic Development
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Market Penetration: Virgin has focused on increasing its share of existing markets
with its current offerings. This is evident in its efforts to provide value for money
and excellent customer service in sectors like health clubs and airlines.
Product Development: Virgin has also introduced new products and services to
existing markets. Examples include expanding into online sales of music, cars,
and financial products, as well as launching Virgin Mobile in response to the
deregulation of the telecommunications sector.
Market Development: Virgin has entered new markets with existing products. This
is illustrated by its expansion into different geographical areas, such as Virgin
Blue in Australia and Virgin Galactic for space tourism.
Diversification: Virgin has significantly diversified its operations, moving into
various sectors often unrelated to its core businesses. This includes conglomerate
diversification into areas like financial services (Virgin Money), health and care
services (Virgin Care), and space tourism (Virgin Galactic).
2. Corporate Parenting Role
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Synergy Manager: Virgin seeks to enhance the value of its businesses by
leveraging the Virgin brand and applying its core values across different sectors.
The group aims to create a "2+2=5" effect by ensuring that the combined effect of
its businesses is greater than the sum of their parts.
Parental Developer: Virgin uses its resources and capabilities to add value to its
subsidiaries by providing strategic direction, expertise, and resources that
individual business units might not possess. This is evident in how Virgin
identifies market opportunities and nurtures new ventures.
3. How Virgin Group Adds Value
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Brand Strength: The Virgin brand is a significant asset, providing a competitive
advantage and customer recognition across diverse sectors.
Entrepreneurial Culture: The group fosters a spirit of entrepreneurism,
empowering managers and employees, and promoting innovation.
Financial Support: Virgin provides financial backing and strategic guidance,
although each business unit is financed on a stand-alone basis.
Identifying Opportunities: Virgin excels at environmental scanning and
identifying strategic windows of opportunity.
The relevance of these parenting skills varies across business units. For instance, the
brand and entrepreneurial culture are highly relevant to start-ups and consumer-facing
businesses, while financial support and strategic guidance are crucial for larger
ventures and those in regulated industries.
4. Future Corporate Strategy and Richard Branson's Role
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Balancing Diversification: While diversification has been a key growth driver,
Virgin should focus on ensuring each business aligns with the overall strategic
objectives and contributes to the group's value.
Strengthening Core Competencies: Emphasizing the core values of the Virgin
brand (value for money, quality, customer service, innovation, and fun) across all
businesses to maintain a strong identity.
Managing Portfolio Effectively: Utilizing portfolio management tools to assess
the performance and potential of each business unit, and making strategic
decisions about investments and divestitures.
Richard Branson's Role:
Richard Branson is currently crucial to Virgin Group's strategy. His entrepreneurial
flair, brand image, and ability to identify opportunities have been central to the
group's growth. However, the group needs to transition to a structure that is less
reliant on him to ensure long-term sustainability.