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Virgin - Is the Brand More Than Richard Branson?

Essay by   •  December 27, 2018  •  Case Study  •  3,754 Words (16 Pages)  •  142 Views

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Higher Diploma

Supply Chain Management

 

Student Number: C00210943

Student: Philip Kearney

30 March  

2018

Strategic Management

Assignment 2


Table of Contents

Case Study 1: Virgin - Is The Brand More Than Richard Branson

Introduction        4

1. Directions of Strategic Development        4

2. Corporate Parenting Role        6

3. How the virgin group as a  corporate parent adds value and to what

....,extent are these skills relevant to the different business units?        8

4. Future Corporate Strategy        10

Conclusion        10

Case Study 2: China Goes to Hollywood - Wanda's Move Into

........................The US Movie Industry

 Introduction        11

1. Drivers of Internationalisation        12

2. What national sources of competitive advantage might Wanda draw from

,,,,, its Chinese base? What disadvantages derive from its Chinese base?        14

          2.1. Advantages        14

          2.2. Disadvantage        16

6. In the light of the cage framework, what challenges may Wanda meet as

    it enters the US market?        16

7. Conclusion        19

Bibliography        7


List of Figures

1. Vertical Integration        5

2. Ansoff's Matrix        6

3. Virgin Business Groups        6

4. Types of Corporate Parenting Role        7

5. Virgin by Numbers        9

6. Drivers of Internationalisation        12

7. Porters Diamond        14

8. Market Share of Chinese Film Makers in 2014        16

9. The CAGE Framework        17

10. Hofstede Model        17

11. Average Income        19


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1. Introduction

Sir Richard Branson is the ostentatious founder of the Virgin Group who has a  charismatic, care-free personality that has seen him become the peoples champion (Dearlove D., 2010). Winning a bitter public court case against British Airways for their dirty tricks campaign further enhanced Branson's image as the underdog businessman who took on traditional big businesses.

Branson is known for taking risks, but a core part of his business philosophy is always to protect the downside (Johnson et al., 2017), a lesson learned from his father as a 15-year-old. A combination of these business techniques has allowed him to oversee approximately 500 companies in the current lifetime of the Virgin Group. Growing the company to be one of the biggest in the United Kingdom, Virgin now employs approximately 50,000 staff in 50 countries globally, with revenue in excess £15 billion.

In this essay, the author will take a look at the directions of strategic development taken by Virgin and examine the type of corporate parenting role that best portrays the Virgin Group. Furthermore, evaluation of added value to the businesses within the Virgin Group because of corporate parenting and the relevance of these parenting skills to the different businesses within the group. Finally, looking at what the future corporate strategy should be.

1. Directions of Strategic Development

Virgin have implemented a variety of directional strategies. Figure 1 illustrates examples of a vertical growth strategy, evident from the very beginning through forward integration that

seen initial growth from mail order to the Virgin Stores. Backward integration is evident from the launching of Virgin Records to record and publish music. An example of horizontal integration was the introduction of Virgin Digital to the group.

Figure 1 Vertical Integration

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(Source: The Author)

However, a great deal of Virgins strategic development has included diversification. According to Johnson et al. (2017), Ansoff's growth matrix is corporate strategy framework for generating four primary directions of organisational growth. Figure 2 shows the Ansoff's growth matrix about Virgin, with the diversification category, broke down further into related and unrelated columns, otherwise known as conglomerate diversification.

Market penetration was achieved with the opening of Virgin Records, with market development coming through the merger of Virgin records with EMI to create Virgin EMI (Flanagan, 2013). Virgin Digital introduced new products and services by allowing purchasing of music by electronic means. The initial move from the music industry to the airline industry would be considered conglomerate diversification. It was a strategical move that seen Virgin launch a business in a competitive industry that they did not already operate in or have any business relationships. Using the learning curve to obtain experience and build relationships, Virgin further diversified into related businesses such as Virgin America and Little Red.

Figure 2 Ansoff's Matrix

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                               (Source: The Author)

Initially focused on travel and music, Virgins strategic development of conglomerate diversification has continued with the move into other industries as shown in figure 3, with all Strategic Business Units (SBU) financed separately to each other as stand-alone.

Figure 3 Virgin Business Groups

[pic 5](Source: Johnson et al.)

At the corporate level, there are also examples of retrenchment, such as the divestment of Virgin Media to Liberty Global in 2013. With losses of £2.6 billion, Virgin had to reduce its corporation tax bill and decided to divest Virgin Media to Liberty Global for £15 billion while maintaining royalty rights for the use of the Virgin name (The Guardian, 2013).

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