I. Internal Audit
The Virgin brand name is highly respected, nonetheless, and the core constituent that drives the success of all the operating companies. Motivated by the group’s underlying focus on quality, innovation and differentiation efforts, the Virgin group has been very successfully in diversifying its businesses. However, at this moment, we are asked to pinpoint when diversification is too much. A brief core competency analysis shows that the Virgin group boasts core competencies that span across all the operating companies. Most remarkable, of course, is the influence of Mr. Branson’s unconventional management style, business philosophies, strategies and values. According to Mr. Branson, during his speech to the Institute of Directors in 1993, the key to success is “Staff first, then customers and shareholders.” This is the foundation of Virgin’s employees. Given creative freedom, full authority and motivation to build enterprises, all Virgin employees can run to become the next millionaire at Virgin. As always, a concise mission statement will guide the company in fulfilling its vision. This excerpt is taken from Virgin.com: “We believe in making a difference.”
“In our customers' eyes, Virgin stands for value for money, quality, innovation, fun and a sense of competitive challenge. We deliver a quality service by empowering our employees and we facilitate and monitor customer feedback to continually improve the customer's experience through innovation.”
From this mission statement, Virgin sets the stage on what the brand want to provide for the customer – value for money, quality, innovation, fun and competitive challenge. Performance – Financial and Non-financial
With the complexity of Virgin group of companies and the habit of creating ad hoc financial reports, it is quite a task to summarize the financial performance. Each operating business is treated as a “stand-alone” entity and should be analyzed individually. For EBIT, Net Cash Flow and EVA for all included businesses, please refer to Table 1 in Appendix A. It is evident that some businesses are huge cash generators while others incur heavy losses. The following are a few highlights both financial and non-financial of the period of 1995 – 1997. •Virgin Travel
oSales increased 16.7%
oProfits increase to 40%
oStrongest profit generator!
oNet borrowings have amounted to $500 ₤ millions reaching debt equity of 4:1 (200%). This is higher than the main competitor, British Airways, who sits at 145%. oIncrease transatlantic market share and Virgin garnered...