RICHARD BRANSON’S VIRGIN GROUP —Problems— Although certainly notorious, Richard Branson’s Virgin Group has experienced several problems. In the short-term, brand overextension has become a threat since the company has entered multiple markets. Brand overextension leads to damaging the comprehensive Virgin brand. Since the Virgin brand itself is the company’s greatest asset, protecting the brand image is critical. The Virgin brand image has a connotation of value and lifestyle. Due to many joint ventures, licenses, and alliances with other companies, the objective of the “Virgin experience” could be destroyed. Furthermore, as Virgin becomes more global and more adaptive to individual cultures, the customer experience will certainly vary, again leading to brand overextension. For example, although the United Kingdom may condone Virgin’s racy and edgy advertisements, other parts of the world, as our group testifies, views such material quite explicit and even shocking. Thus, while Virgin enters different markets, negative impacts can arise, hindering Virgin’s brand. A second short-term problem is Virgin’s financial information that is fragmented, hard to locate, and even interpret. With the company’s different alliances and joint ventures, questions about the financial health of the Virgin group were being asked. Thus after examination, Virgin faced financial challenges that led to negative cash flow. This was mainly due to the Branson’s approach of stand-alone basis where the most profitable company’s revenues financed new market entrances. Despite some profitable areas of Virgin, many did not generate cash. Therefore, as Virgin grows, a more systematic approach must be implemented to create synergies between businesses. Long-term problems also exist for Virgin. First is Branson’s close affiliation to Virgin. What happens if the public tire of his exploits? What will happen to Virgin when Branson 1
leaves? An implication of these questions is that Virgin needs...
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