Diversification is often seen as the last evolution for a company. However, there are ways and options to adapt your strategy after you diversify in order to make it more efficient to this new change. Virgin is, as we’ve seen in the previous parts, a well-diversified company. There are usually 4 paths a diversified company could use after it diversified, and we can use them to analyse the potential future of Virgin.
1 Broaden the diversification base
Virgin’s essence since its creation is to explore new businesses and try to be a part of them. The company has a real thirst and desire to diversify and no one doubts that the Virgin Group will enlarge his portfolio. On its website, the Virgin Group says that in order to find new business, they just “put their selves in the customer's shoes to see what could make it better.”
In order to diversify more, the company is trying to find or create some businesses that will:
* Reinforce its market position. For instance, Airlines are clearly a business that Virgin wants to strengthen. The “Media & Mobile” division also seems to be a business where Virgin wants to invest, as evidenced by the recurrent creations of mobile companies in recent years. * Build positions in new industries. The company’s new “Green Vision” is clearly showing that Virgin’s new favourite Industry is the “clean energy” industry. More concretely, the company is investing the profits and dividends from its transport businesses into the development of alternative fuels for instance. Moreover, the “Virgin Green Fund” focuses on “middle market growth and expansion investment opportunities in the renewable energy and resource efficiency sectors including water” with the objective of helping companies realize their full growth potential, says the company.
2 Divest some businesses and retrench to a narrower diversification base
* The company has no intention to narrow its...