Contents
Introduction ........................................................................................................................................ 2
The mission and vision statement ......................................................................................... 2
Ansoff’s Matrix ............................................................................................................................... 6
The major aspects of the Ansoff Analysis - Comparative Analysis of Virgin and
Tesco ................................................................................................................................................. 7
KOTTER’S
EIGHT-STAGE
PROCESS
FOR
SUCCESSFUL
ORGANISATIONAL
TRANSFORMATION .................................................................................................................... 10
COMPARISION BETWEEN VIRGIN MONEY AND TESCO............................................... 13
Conclusion ......................................................................................................................................... 15
Bibliography...................................................................................................................................... 16
1
Introduction
In this report the comparative strategic analysis of Tesco and Virgin is done.
Tesco PLC is a British multinational chain of grocery and retail. The headquater
of Tesco is at Chestnut, Hertfordshire in UK.
It is also amongst the most recognised brands of the world. The company was
conceived in the year 1970 by Sir Richard Branson. The company has now
presence in many countries across the globe (Business Case Studies, 2015).
The mission and vision statement
Virgin group’s vision statement- the vision statement of any company involves
the way in which any organisation attempts to affect its environment. Through
the vision statement, the business sets out its general long term aims. Through
the vision statement the company attains a general target on which it has to
focus upon. (Ward, 2012)
Virgin group’s mission statement- the mission statement of the virgin group is
quite simple, brief and to the point. The main purpose of the mission statement
of the virgin group is to convey the purpose with the organisation is established
to all its stake holders (Ward, 2012)
2
VIRGIN
Virgin Money: The virgin group operates in diverse consumer sector. Virgin
money was launched in the year 1995 as Virgin Direct. This was initially started
as an undertaking between the company and the insurance group, Northwich
Union. This venture was started by the Virgin Group with the objective of
targeting the UK retail market of consumers. It also then offered equity savings
products in the UK market. The company focused on mutual fund which had a
comparatively low fee structure and is one of the leading international
investment groups. In a joint venture between the Virgin Direct Personal
Financial Services and the Royal Bank of Scotland, the company launched the
One Account scheme. In the year 2002 Virgin Direct was rebranded as Virgin
Money. In collaboration with the Bank of America the company offered credit
card facility in America and later in the 2003 the Virgin credit card was launched
3
in Australia and then in South Africa. The Virgin Group Investment limited
acquired Virgin Money in the year 2004. In the year 2010 Virgin Group acquired
Church House Trust, giving the company banking licence in UK. This now helped
the company to work in the market without having to partner with any financial
institution. The company was initially conceived with index tracking unit trust
and has now diversified its operations. The purchase of North Rock helped the
company establish a strong foothold in the financial market in the UK. The
acquisition of the North Rock was beneficial to Virgin Money as all the 75
branches of the North Rock were acquired by the Virgin Money. This led the
company to expand its customer list to the tune of 4 million and 200 branches.
Virgin Money now offers a wide range of financial services such as travel cards,
prepaid cards, credit cards, other savings products and investment plans etc.
(Harrison & Estelami, 2014)
The virgin start up is another endeavour started by the virgin group which is a
not for profit organisation in order to promote start-up businesses. It has
partnered with the Starts Up Loan Company in order to provide loans to the
start-up companies ranging from £500 and £25,000. This endeavour is specially
designed for start-up companies which are up to 2 years old.
The Virgin Start up provides the businesses in the following ways:
The newly start-ups are rendered help of Advisors who help them to chalk-out
their business plans and in other financial matters
With the help of virgin start up loan, a personal loan is provided ranging from
£500 to £25,000 for businesses trading for a period of 12 months and in some
cases for those businesses that are trading for up to 24 months.
4
They are provided with mentors who are specialists in the local arena
The newly start-ups are also given a chance of getting featured in the Virgin
Group ad campaigns.
They also provide a facility to get mobile phone contracts at discounted rates
with o2 as well as legal advice from Lawbite, free of cost and a discount of 20%
on virgin trains. (Virgin Start up, 2015)
TESCO BANK
The Tesco Group initially started as a supermarket undertaking. It has entered
into the banking business in the year 1996 with the launch of Tesco Club Card
Plus; this provided an in-house debit card facility to the customers, thereby
offering discounts and loyalty points. In collaboration with the Royal Bank of
Scotland, the company launched the Tesco Personal Finance. Tesco acquired the
ultimate holding of the company for £950 million in October 2009; the other
products offered were credit card and car insurance facility. In the year 2013 the
Tesco Group became the largest Supermarket Bank in the UK and dealt with
majorly in personal loans, car insurance, and home insurance. Pet insurance,
travel insurance, mortgages insurance etc. the Tesco Bank has about 7 million
5
customers and the company is now preparing to launch its first PCA (Current
Account Product) (Harrison & Estelami, 2014)
Virgin’s Portfolio
Ansoff’s Matrix
In the year 1957 the Ansoff’s matrix was developed by Igor Ansoff also known
as father Of Strategic Management. The matrix enables the presentation of the
choices in the market that the organisation has. The matrix enables clear
representation of the products and the choices in the market that the customers
and the product have (Ansoff, 1957).
6
The major aspects of the Ansoff Analysis - Comparative Analysis of
Virgin and Tesco
This matrix enables the presentation of the objectives of the organisation, the
processes and the directional policy of the organisation. The matrix presents four
strategies that the organisation can adopt in order to be able to adjust in
according to the changes in the market needs and demands.
MARKET PENENTRATION
This strategy is adopted for the organisation to access the recent services and
products in a market. This strategy is apt for the existing customers of the
market. This strategy enables the organisation to increase its sales without
changing the original strategy of the company that is product and market
oriented (Ansoff, 1957).
Tesco
7
This strategy should be adopted by Tesco and Tesco maintains ad keeps its
market share on increase as it has a competitive strategy of pricing. Tesco
heavily invests in ad campaigns and also promotional activities.
PRODUCT DEVELOPMENT
This strategy enables the development of new products by the firm by targeting
the same market. This strategy includes major breakthroughs and new products
that are developed to cater the needs and the demands of the market and not
just few minor changes in the existing products (Ansoff, 1957).
Virgin
Virgin actively follows product development strategy as it keeps moving in to
different sector such as entertainment, music, airways etc and develops new
products and caters to markets that are in need of new products. The customer
base of virgin includes the people belonging to the rich and the upper class. The
introduction of new products enables marketing them to the exiting customers of
Virgin. This enables relationship marketing for Virgin.
Tesco
Tesco uses this strategy as it keeps venturing from retail to banking and then
also in pharmacy and attract new customer base by offering products at
discounted price.
MARKET DEVELOPMENT’
This strategy includes the movement of the company beyond the customers that
it has already existing. It enables the company to search new end customers for
the products and the services of the company that already exist. In this strategy
new segment of the market is searched in order to attract new customers or
different users for the existing products and services that the customers have
(Ansoff, 1957).
Virgin
This is also a strategy that Virgin should focus upon as it enables the expansion
of Virgin in new geographical arenas, the flights and the services that are offered
8
by virgin and British Airways have huge gap between each other. Virgin despite
of being the second largest airline of the United Kingdom has flights for 26 major
destinations only but BA has flights running for more than 150 destinations. So
as a strategy for market development Virgin needs to increase their flight
destinations in comparison to British Airways.
Also there is a need for Virgin to focus on the countries that are developing such
as the Asia Pacific countries. China and India being the countries with high
population can be the new target market for Virgin. The manufacturing costs in
these countries are comparatively lower which a favourable option is for Virgin.
Market development also includes the strategy of selling the products and the
services of the organisation to new markets internationally. For example Virgin
which is originally a British firm has now assessed to global markets by the
strategy of new market development.
Tesco
This strategy has been adopted by Tesco as it has ventured in new geographical
markets and exported their products in countries that are new markets for
Tesco.
DIVERSIFICATION
In the modern world, there is the existence of a common market wherein people
all over the globe are in need and demand of products and lifestyle that are
similar in nature. International trade is in rapid increase owing to globalisation
(Ansoff, 1957).
Virgin
The strategy of diversification enables Virgin to move their current portfolio of
products and services to markets that are new. Virgin is one of the best
examples for diversification as it has ventured in new markets and new products
such as Virgin Cola, Virgin Airlines, Virgin Telecommunications, and Virgin
Megastores are some of the new products that the Virgin group has created to
leverage the brand of the group. Owing to this strategy it has entered in new
markets.
Tesco
9
Tesco has shown diversification by operating financial services and banking apart
from retailing.
KOTTER’S EIGHT-STAGE PROCESS FOR SUCCESSFUL ORGANISATIONAL
TRANSFORMATION
The eight step model of Kotter suggests the achievement of changes in an
organisation by 8-step model.
The steps are as follows;
Step 1: Creation of urgency for change - Change can happen only if the
organisation really wants and understand the urgency of change. Virgin’s
changes are a result of both necessity and opportunity. In Australia Qantas are
the biggest player and the market leader (By, 2005). The Jetstar is a low cost
airline that is giving tough competition to Virgin. This is a market need enabling
Virgin to take measures for change (Business Case Studies, 2015).
Step 2: Formation of a powerful coalition - this is involvement of the key
people in the organisation and creates coalition for change. The time when Sir
Richard Branson planned to take the organisation back to the scheme of private
ownership. This philosophy enabled the formation of a powerful coalition in
which short term profits were overlooked to achieve gains for long- term. This
led to the internal organisational changes. In order to reduce risk virgin needs to
have international coalition as well (By, 2005). Example Virgin Australia needs to
form international coalition and alliances with international players (Business
Case Studies, 2015).
Step 3: Creating a vision for change - In organisational contexts values are
the essence, having a vision for change enables creation of values leading to the
management of changes. Virgin trains have a vision and culture that keeps the
customers and customer experience at the priority. The employees of Virgin are
stressed on having just not the technical skills but also having the commercial
10
awareness needed to make a difference in the way the services are delivered
(Business Case Studies, 2015).
Step 4: Communicating the vision - the communication of the vision is very
essential as it involves educating the employees and everyone involved about
the vision of the organisation.
Virgin encourages the front-line staff to interact with the customers of the Virgin.
It communicates the vision to improving the experience of the customers.
At Virgin the employees discuss the relation of the vision to the personal values
and beliefs and also the company objectives (Business Case Studies, 2015).
Step 5: Removing obstacles - there are many challenges that need to be
dealt. Virgin hires staff that are efficient change managers and enables changing
the structure of the organisation and rewarding the people, changing the
structure of the organisation and rewards people who contribute to the success
of the organisation (By, 2005)n. Virgin is planning on providing business class
service this vision includes training the staffs accordingly and provide them new
dresses and uniforms, and training them for service behaviour that is refined
(Business Case Studies, 2015).
Step 6: Creation of wins for short terms: there is a need to create targets
for short term rather than long term targets. This enables giving the
organisation and the employee’s early taste of success without waiting for long
(By, 2005).
Step 7: Building on the change: As change is a process of long term, there is
a need for the organisation to build success for long term (Cummings & Worley,
2008).
11

The long term change strategies of vision;

Giving constructive feedback and giving feedbacks too

Dealing and welcoming change in the organisation

Including challenging ideas in a constructive manner (Business Case
Studies, 2015)
Step 8; Anchoring changes in the corporate culture of the organisation This involves making changes a part of the corporate culture of the organisation
that enables the successful management of the change (Cummings & Worley,
2008).

Virgin has included workshops that enabled the sharing of ideas and
opportunities
influencing
the
workers
and
creation
of
a
relaxed
atmosphere

In Virgin different employees are brought together including the senior
managers and involving them in different tasks (Business Case Studies,
2015)
12
COMPARISION BETWEEN VIRGIN MONEY AND TESCO
1 The Virgin Money aims at ‘offering a new kind of bank in the UK in order to
benefit everyone’ whereas on the other hand Tesco aims at focusing upon ‘being
straightforward, simple and also to reward loyalty.
2. Looking into the SOWT analysis of the Virgin money and Tesco
STRENGTHS
WEAKNESS
1.The
Brand 1.deficiency
Value
skills
2.Diversified
2.small
business
operations
strategies
comparatively
of
3.Innovative
product line
4.Customer
trust
in the brand
OPPORTUNITIES
THREATS
1.Dissatisfied
1.
customer
opportunities.
2.
Government 2.
guidelines
ready
Lack
of
EC sector
State Aid Rules.
The
growth
experience in the
regarding
3.
Slow
3. competition
market
to
be
tapped in
(Harrison & Estelami, 2014)
13
VIRGIN GALACTIC (Space Travel)
This is one of the undertakings of the Virgin Group that aims towards offering
space travel to customers. The company was registered in the year 1999 after
the announcement of Ansari X-Prize. This was announced in order to felicitate
the first non-governmental organization to fly people into space with an award of
$10 million. Virgin Group sponsored Burt Rutan’s Scaled Composites. The Scaled
Composites flew people into the space via Space Ship One winning the X-Prize.
The company then announced that it would launch space travel package at the
rate of $200,000 per seat for ordinary. The endeavour has however been
delayed due to the occurrence of certain fatal accidents including the 2007
explosion and the 2014 test-flight crash. The company has planned to operate
through the Spaceport America complex situated in New Mexico and has also
planned to open a spaceport in Abu Dhabi. Till date, more than 700 customers
have signed on for space travel. However due to the tragic happenings the
endeavour has been seriously affected. (Howell, 2015)
14
Conclusion
The strategic analysis of firms enables the firm to take strategic decisions
important for the firm’s health. The strategic analysis and the comparative
analysis of Virgin and Tesco shows that Virgin needs to adopt strategies of
market penetration and diversification whereas Tesco needs to adopt strategies
of market development and penetration. These firms have been successful in
operating in many businesses as they have made correct strategic decisions at
the right time.
15
Bibliography
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pp. 113-124.
Business Case Studies, 2015. Implementing a new vision at Virgin Trains.
[Online]
Available
at:
http://businesscasestudies.co.uk/virgin-trains/implementing-a-
new-vision-at-virgin-trains/sharing-the-vision-and-values.html#axzz3rj3IO6sr
[Accessed 17 November 2015].
By, R. T., 2005. Organisational Change Management: A Critical Review. Journal
of Change Management , 5(4), pp. 369-380.
Harrison, T. & Estelami, H., 2014. The dynamic Financial Service Marketing
Environment. In: T. Harrison & E. Hooman, eds. The Routledge Companion to
Financial Services Marketing. s.l.:Routledge, pp. 30-50.
Howell, E., 2015. Virgin Galactic: Richard Branson's Space tourism company.
[Online]
Available
at:
http://www.space.com/18993-virgin-galactic.html
[Accessed 17 Novemmber 2015].
Virgin
Start
Available
up,
2015.
Home:
About
at:
Virgin
Start
up.
[Online]
http://www.virginstartup.org/about/
[Accessed 17 November 2015].
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Objectives. In: Marketing Finance. Cranfield: Routlegde, pp. 65-68.
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