Virgin Group: Finding New Avenues for Growth
Virgin is a leading international investment group and one of the most respected and recognized brands in the world. It has been one of the fastest growing companies in the world since its inception. Conceived in 1970 by Sir Richard Branson as a music mail-in service, the company has gone to grow as one of the largest companies in UK. Today, Virgin group has more than 400 companies worldwide in 34 different countries and with global revenues of $21 billion, as of 2011. How the group grew so fast has intrigued many analysts. While there are many factors that contributed to the rapid growth of the Virgin group, it is its company structure and company culture that has powered and sustained its growth. The company started as a mail order service which sold records to customers who placed orders through Virgin Magazine. The business was so successful that it quickly expanded into Virgin Megastore (Corsi, pg. 1). Although there were already many established record stores during the founding of Virgin Megastores, the company differentiated themselves by focusing on the customers’ need which was delivered through low prices, friendly staff and welcoming environment (Corsi, pg. 2). The profits of the stores went back to the company for reinvestment. This later led to the creation of Virgin Records. Just like the record store industry, there were also a lot of established recording companies during the creation of Virgin Records. Despite that, Virgin was able to thrive in the saturated industry because of its willingness to commit to unique and sometimes controversial artists who included Sex Pistols and Phil Collins, who catapulted the Virgin, records to becoming a major player in the music production business (Corsi, pg. 2). The success of Virgin records opened a lot of doors for Richard Branson as he started receiving invitations to fund start-ups which he took advantage of and made several investments in different sectors. A lot of Virgin group’s companies and investment decisions mentioned above reflect the company’s vision and culture. All of its companies focus in five areas when delivering the products or services: value for money, quality, innovation, fun and sense of competitive challenge (Corsi, pg. 8). This is most evident in Virgin Atlantic which was the first to offer in-flight entertainment with a first class experience at business class price. Parallel to Branson’s personality, Virgin group takes a lot of risk as they like to challenge the status quo and have fun. Although a lot of risk comes with this attitude, the company has been able to make big innovations because of it. As Richard Branson said "every risk is worth taking as long as it's for a good cause and to a good life." One of the pillars of Virgin group’s success is in its sustained growth. Every year Virgin group makes about 5 investments (Corsi, pg. 12). Today, the group has grown to have more than 400 companies. But despite its size, Virgin group is able to maintain their investments’ growth because of its simple yet efficient company structure. Virgin group is not structured as a single corporate entity but rather a loose network of holding and operating companies (Corsi, pg. 9). Virgin has a decentralized approach to management. Instead of dictating the actions of the 400+ companies, Virgin allows its companies’ management teams to make independent decisions. This empowers each company to focus on their area of expertise which enables it to concentrate their resources to wherever needed. The structure also allowed the companies to make flexible response because it does not have to ask permission from the group. Consequently, the flexible responses allow the companies to achieve high market orientation which ultimately promotes innovation to the companies. With its innovations, Virgin is able to charge higher premiums for their products and services which finally results in higher...
Please join StudyMode to read the full document