Virgin Group Strategy

Topics: Virgin Group, Richard Branson, Virgin Atlantic Airways Pages: 8 (2263 words) Published: April 17, 2010
Introduction
With the foundation of Virgin Records in 1970, the first step was taken towards what is today Virgin Group, which in 2007 comprised 215 companies under its structure, in businesses as diverse as space travel, mobile telephony and fitness centers. Ever since the start, the image and culture of the Virgin Group have been so tightly linked to the personal image and personality of its founder, the high-profile entrepreneur and multimillionaire Sir Richard Branson, that it is almost senseless to dissociate one from the other.

This paper aims at providing a critical view over the Virgin Group’s corporate strategy, in terms of strategic thinking and diversification, as well as a closer look at the business strategy of one of the Group’s businesses, the Virgin Atlantic airline.

Corporate Strategy

Virgin Group is defined in their corporate website [4] as a “branded venture capital organization”, the Group’s values being “value for money, quality, innovation, fun and a sense of competitive challenge”, and its mission to “deliver a quality service by empowering our employees and we facilitate and monitor customer feedback to continually improve the customer's experience through innovation”. The essence of Virgin Group’s business is to operate as a venture capital firm based on the Virgin brand. We will analyze the structure of the Group and its corporate strategic variables at a later point in this document. For now, we will focus on the strategic thinking behind the Group’s modus operandi. At the age of 60, Mr. Branson continues to lead the Group as a privately-held enterprise, with the same entrepreneurial and adventurous spirit that has become his personal trademark. As an illustration of how much of the persona of Richard Branson is embodied in the Virgin Group, Mr. Branson has his own page, “About Richard Branson”, side-by-side with the section “About Virgin” on the Group’s website. Despite is personal high profile and flamboyance, Mr. Branson’s leadership style is very much based on trust and accountability. Virgin Group has been historically managed by himself and a trusted team of expert senior managers [3], some of which have been with Virgin for more than 20 years. The approach to management is largely decentralized, with emphasis on autonomous business-level decision making. Despite the name, Virgin Group does not operate as such: financial results are not consolidated for external communication (neither for internal use, according to Virgin). All levels of the Group’s hierarchy are invited to participate in the process of developing the business. This invitation is extended to the public at large, through a number of initiatives intended to capture entrepreneurial ideas with business potential. For example, the section “Got A Big Idea?” in the company’s website, and the newly launched PitchTV, an area where anyone can upload a video pitching a business idea to Virgin, and where ideas are voted on for their business potential. Although this entrepreneurial approach looks as if strategic thinking has more weight than strategic planning in Virgin’s overall corporate strategy (which would also be in line with Richard Branson’s exploring and intuitive profile), the fact is that Virgin, before entering any new business, conducts a thorough market analysis based in specific criteria and aimed at deciding whether Virgin can offer something truly different. The objective is to leverage on the brand name to extend into selected business areas where a stagnant market exists. Virgin defines such markets as “institutionalized”: dominated by few competitors, not providing good value for customers because of inefficiency or too much focus on competition. These are markets where the company can use its brand equity to overcome barriers to entry and offer more for less, contrasting its dynamic image with the market’s perceived complacency (examples of such markets...

References: 1] Robert M. Grant, “Richard Branson and the Virgin Group of Companies in 2007”
2] Johnson, Scholes and Whittington, “Exploring Corporate Strategy” Eight Edition
3] Chris Blackhurst, “At the court of King Richard”, Management Today, May 1998, http://www.managementtoday.co.uk/search/article/411417/uk-court-king-richard/
4] http://www.virgin.com/about-us/
5] http://www.virgin-atlantic.com/en/gb/allaboutus/missionstatement/index.jsp
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