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Are there any relationships of a strategic nature between businesses within the virgin portfolio

Corporate rational is the way in which a corporate parent envisages the way that it can add value to its strategic business units.

However they vary from the portfolio managers because they also set about trying to identify restructuring opportunities within their businesses and have the skills and expertise in order to intervene and introduce these changes where necessary.

The Virgin Group have a huge range of about two hundred strategic business units ranging from airways to cola, and makeup to publishing. Part of Virgin's corporate rationale is that it tries to invade 'static' markets in which there are few competitors and where consumers don't get value for money because of this.

  1. To do affairs worse deregulatings increased the competition in the market topographic point and this caused all most rivals were sing losingss.
  2. However since rivalry is high in the travel industry, Virgin is able to benefit from their competition.
  3. The fact the trade name name is good established and accepted by the populace it has helped with acquiring into certain markets and to spread out into countries where the Virgin Group believes it can do a difference and offering something different to the consumers and a good monetary value.
  4. This means that The Virgin Group is an organisation which moves out of its own industry or market and pursues new opportunities wherever they become available.

By doing this if they manage to produce the product or service for a slightly lower price than all other competitors within the market then they should, along with their strong Virgin brand name, gain a big market share fairly quickly because they have undercut everyone else. So Virgin Airways gained a big share of the market very quickly.

I think that although The Virgin Group seems to have many businesses in as many different fields, there are probably some strategic relationships between the business units.

With these strategic relationships Virgin can achieve some benefits for example, economies of scale when buying supplies or with their logistics, more control over the market, access to more consumer information across several related companies or by making it easier for the corporate parent to understand and manage each strategic business unit if they are all in similar fields.

However on the whole Virgin follows an unrelated diversification strategy. This means that The Virgin Group is an organisation which moves out of its own industry or market and pursues new opportunities wherever they become available. It exploits its current competencies and sets about diversifying in ways which can make use of these competencies which may otherwise be under-used.

This splits each company up into either stars, question marks, cash cows or dogs dependent on their market share and the market growth. It is important to spread your companies within all four of these areas so that high risk companies are balanced with low risk companies. However Virgin being a company who focuses on high diversification and we know it is willing to invest in companies, I think Richard Branson may focus slightly more on stars and question marks where the market growth is high.

I feel one of the main reasons the Virgin Group is so 'randomly' diversified is also due to Richard Branson's personal objectives and his entrepreneurial spirit. He is a very well known figure who is known for taking huge risks. However he now has a solid background of income in order to take these risks but still have security to fall back on if they fail.

VIRGIN STRATEGIC MANAGEMENT ANALYSIS INTERNATIONAL BUSINESS

This is a very enviable position because he is doing what many other entrepreneurs would love to do, but he has the ability due to his money and knowledge rich business base.

I believe the Virgin Group, as a corporate parent, does add value to its businesses. The main way in which it adds value to the strategic business units is by the use of their brand name and image.

This is very prominent and well recognised world-wide, and therefore gives each business unit instant recognition within their industries and therefore gives each business a strong external image to benefit from.

Examination of the Virgin Group corporate strategy

The brand name is also known for a huge variety of different businesses which shows the name has proved to be very versatile and can probably be put with most fields and brings an element of success. I think the corporate parent has done very well to keep the Virgin brand well maintained, it started out as being about value and I think this belief still stands. However the name Virgin also brings about images of quality and of them being trustworthy. It is absolutely vital that when a brand name is used so widely it is portrayed in the right light.

Any big stories in any of Virgin's strategic business units, if it portrays Virgin in a bad way, could affect all the other companies with the name Virgin attached to it, and consumer trust in them could.

  1. It makes perfect sense for Virgin Group to ease its way into such a difficult industry. Each company makes its own business decisions separate from the other companies.
  2. History shows this is one of the most common means of exiting an industry for the group and the decisions made add value to the Virgin brand.
  3. Looking at virgin Atlantic which is an air hose industry it indicates that the Virgin Group relied on this air hose to do the net incomes and when deregulating increased the competition within the market topographic point caused Virgin Atlantic to do some Losingss.
  4. Its barriers are high with economies of scale and scope highly elaborate while containing high fixed and investment costs that are required.