Virgin Group – Case Study
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What are the key strategic questions that the Virgin Group asks when starting a new business venture?
Virgin Group started their new businesses with the keyword: “Enthusiasm”. The main question they asked themselves was “What would be the real value that Virgin can add to the customers”. So they always (at least according to the case) started to walk ahead for creating unique and valuable position which will meet the needs of the customers. The company tried to look at from customers side and tried to see the basic needs of the customers. They havent tried to touch all the customers; however they tried to reveal the competitive advantage of reaching to some clusters. According to Michael Porters “What is Strategy” article we can classify Virgin Groups positioning as access-based positioning. Virgin Group asked several fundamental questions to themselves in order to add value to specific business sectors. Some examples empowering those arguments are:
Is this an opportunity for restructuring a market and creating competitive advantage?
Is the customer confused or badly served?
Positioning in different areas is not always easy (I can say it is too difficult). Virgin Group was aware of the difficulties so they had to think about the Virgin brand name. They have never entered in a business before doing solid researches and analysis. They have reviewed the industry and tried to look from customers eyes. They were aware of the trade-offs they had to think before entering a new business venture and they have never underestimated the risks behind new entrance. So they always asked the basic questions of:
Is this an opportunity for building the Virgin brand?
Will it interact with our other businesses?
Is there an appropriate trade-off between risk and reward?
So we can summarize the key question before entering a new business as: “Can we create a competitive advantage that will add value (and fun) to customers and our brand name?”
How has the Virgin Group established a competitive advantage?
Virgin Group has established a competitive advantage among its competitors by serving good value and service to the customers in different ways. They havent followed the competitors business or they havent imitated their ways of doing it. The basic and the core competence of all Virgin Groups business ventures are to do things just a little bit differently from the rest. And also they always tried to add value by adding a little fun to the business.
By differentiating in strategy itself the fit of the activities and the ways of doing business have also differentiated from the rivals. So they have settled their business to an untouchable position. (At least it is difficult to imitate Virgins strategy)
How would you characterize the corporate strategy of Bransons Virgin Group?
The answer to that question will not be so different from the ones above. However to better understanding we can characterize the corporate strategy of Virgin Group as “Making difference and creating uniqueness” in any kind of customers service. They are not stuck to any business field so that makes them flexible of thinking and creating new ideas for their customers and the whole consumers around the world who need (or will need) Virgins service.
Virgin Group aims to create a competitive challenge in their customers eyes by creating fun, adding value for their money and providing quality. To do that they are following a direction of finding / inventing of new business ventures to add value and fun to customers. Their business is not only to create value to customers by finding / inventing new ways of doing it but also to go ahead for re-inventing / re-designing the businesses for specific needs of customer segments.
What are the main advantages and disadvantages associated with Virgins solicitation of business proposals from the public to help grow the business?
The ultimate reason of Virgin Groups for existence is to create uniqueness and excellently serving customers in any field. So Virgin Group is not stuck to any specific field of business. (except production, they only exist for services) But it is not easy to know all the cultural aspects, the needs of customers on different geographical areas etc. So Virgins solicitation of business proposal from public all around the world may help them to find out new needs and so new business ventures globally. The ideas of public may be the reflection of what customers really need and how they will be satisfied.
However too many proposals from different places of the world may lead to getting far away from the main focus and think about them. So that they say, they werent accepting the proposals that are not seriously handled and analyzed. Also too many perfect proposals may lead to failure because Virgin Group may lose the sense of fun and adding value when it follows all the proposals. They should check all the proposals with their ultimate strategy. (Im sure they are doing that)
On the other hand, assume that a proposal from a creator is too good to innovate about it. Who can guarantee the success? Virgin Group should always think above the frames that the proposal provided. The proposal itself can see the problem in a correct way but can ask the wrong questions and can solve the problem wrongly. The biggest disadvantage of getting proposals may be framing the problems according to the proposals. Virgin Group should deploy a different and new group to assess the problem and the environment to see the ice below the sea.
Examine the range of businesses that fall under the Virgin Groups corporate umbrella. Does investment in these different businesses make sense from a business strategy perspective? Why or why not?
Under Virgin Groups corporate umbrella there are more than 200 companies in different business fields clustering under travel, entertainment and lifestyle sectors. The group has entered businesses varying from balloon flights to drinks and beverages.
It is not easy to hold such a structure and sustain the success in all fields. If one of the companies fails to serve to customer, the whole brand name can suffer from the consequences. So normally it can be seen as a risky strategy to get into too many fields. The conglomerations are suffering from these kinds of consequences. They are getting far away from their