Virgin – Is the Brand More Than Richard Branson?
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[pic 1]Higher DiplomaSupply Chain Management Student Number: C00210943Student: Philip Kearney30 March 2018Strategic ManagementAssignment 2Table of ContentsCase Study 1: Virgin – Is The Brand More Than Richard BransonIntroduction 41. Directions of Strategic Development 42. Corporate Parenting Role 63. How the virgin group as a corporate parent adds value and to what .,extent are these skills relevant to the different business units? 84. Future Corporate Strategy 10Conclusion 10Case Study 2: China Goes to Hollywood – Wandas Move Into………………The US Movie Industry Introduction 111. Drivers of Internationalisation 122. 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 166. In the light of the cage framework, what challenges may Wanda meet as it enters the US market? 167. Conclusion 19Bibliography 7List of Figures1. Vertical Integration 52. Ansoffs Matrix 63. Virgin Business Groups 64. Types of Corporate Parenting Role 75. Virgin by Numbers 96. Drivers of Internationalisation 127. Porters Diamond 148. Market Share of Chinese Film Makers in 2014 169. The CAGE Framework 1710. Hofstede Model 1711. Average Income 19[pic 2]1. IntroductionSir 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 Bransons 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 DevelopmentVirgin have implemented a variety of directional strategies. Figure 1 illustrates examples of a vertical growth strategy, evident from the very beginning through forward integration thatseen 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[pic 3](Source: The Author)However, a great deal of Virgins strategic development has included diversification. According to Johnson et al. (2017), Ansoffs growth matrix is corporate strategy framework for generating four primary directions of organisational growth. Figure 2 shows the Ansoffs 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 Ansoffs Matrix[pic 4] (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).