Virgin Group is the use of Virgin as a brand name and a number of enterprises Group; it is one of the UK’s largest private companies that founded by famous British businessman Richard Branson. The Group business start with music business, now it develops includes tourism, aviation, and entertainment and so on. Richard Branson holds the control power over the brand Virgin, but its subordinate institutions are different and complicated. Each of the virgin group company is independent, wholly owned by Richard Branson, but others are only part of equity. He also authorized the brand to the organization which purchase his subordinate company, such as virgin radio (now part Scottish media) and virgin music (EMI), also with some exceptions, all originally as a wholly-owned subsidiary of virgin.
2. Corporate Parenting style
There are two different corporate parenting style of the Virgin Group of companies, one is synergistic manager parenting style and the other is portfolio manager parenting style. In synergistic manager parenting style , the headquarters of the business unit management could directly share resources , management of the business unit has a common management skill or capacity, and be able to have a mutual cooperation will and mechanism, corporate headquarters also has the ability to do this together to add value. In synergistic manager parenting style, the cooperation with each other is highly promoted and there is large cooperate office. The Virgin Atlantic Airways Ltd is an example of synergy corporate parenting style of the Virgin Group. The Virgin Atlantic Airways company was founded in 1984, it is a British airways, provide consumers with UK intercontinental long air service. Virgin Atlantic is one of the subsidiary company of Virgin group, Virgin group owns a 51% stake, and Singapore airlines have a 49% stake. The relationship between Virgin Atlantic Airways and Virgin group is a co-operation with each other and make a joint effect more than work individually.
The History can be traced back to 1982. An American solicitor Randolph
Fields and a former laker airways chief captain Alan Hillary founded the Atlantic, to inheritance the completed laker airways business. After two failed airline management, they decided to raise more money before start business. 1984, Randolph Fields made a proposed to Richard Branson to form a partnership airway company to across the Atlantic. Richard Branson is interested in this proposal. Soon, the Atlantic changed its name to virgin Atlantic, become an affiliated company of virgin group. Besides the Virgin Atlantic Airways, the Virgin active is also a synergy corporate style of the Virgin Group. The Virgin active is a chain health club and was founded in 1988, as part of the Virgin Group. The Virgin active have many health clubs not only in UK but also in, Namibia, Portugal, ,Italy, Portugal, Australia ,Spain and South Africa.In Virgin active ,they have classes for health and fitness , different facilities are provided for people who need to exercise.
The synergy manager is likely to be diverse and emphasis to add value. There is a common value across the business. Resources and services are provided to promote the co-operation. In portfolio manager parenting style, the corporate office is small and the portfolio manager is more focus on the investment. Portfolio manager refers to the type of headquarters, on behalf of the financial markets and shareholders, through financial markets or more efficient way to improve the various business units to create value by the headquarters of the company. The different department is work independently but need to report the performance to the head office. This form of headquarters, mainly undertakes to identify good assets acquisition, selling off promising assets that do not have possibility to develop, and sell the obvious value-added business unit which is consolidated. Under this kind of management mode, the quantity of people in headquarters management is less, for the management of business unit ,it is through the determination of financial indicators and assessment, rarely interfere in specific business activities, with larger self-management space accordingly. In this case, Virgin media is a case of portfolio parenting style within Virgin Group. Virgin media is a company which provides broadband internet, television, landline and mobile services for consumers in United Kingdom.
The company was founded in March, 2006 with a merger of NTL and Telewest. After the merger with NTL and Telewest, the customer services are changed to the name of Virgin media. The manager of portfolio is act as an investor which represents shareholders and financial markets .The portfolio manager are likely to keep the cost low and improve the performance .The portfolio manager parenting style is more focus on short-term performance and make the company to operate individually more than co-operate with the group .The performance are need to be reported to the head office to keep the company in a high level achievement. 3. Strategies
Over the past 50 years, Virgin Group has become a well-known brand in UK and its growth are more rely on its successful strategy not based on opportunistic and emergent in nature. There are some strategies that help Virgin Group become a famous brand that has large influence on people’s life.
First of all, make good use of brand ambassador. Virgin Group is different from the traditional brand in UK.A general brand often enable stars as a brand ambassador and rarely uses corporate leaders directly to be an ambassador. It is dangerous to tie a brand image over only one person, but Virgin Group is bold to make the brand Virgin and Richard Branson tightly together and use this strategy to the extreme. It is Not only that Richard Branson himself personally created most of the virgin brand assets, but also become the indispensible and important part of brand Virgin. So in essence, the brand symbol of dimensional inspection is Richard Branson.
Secondly, make an innovation on brand value, a cancellation of first-class cabins services in Atlantic airways. A company use traditional brand strategy always maintaining and expanding customer base for growth, which usually through market segmentation, a more complete customization of products to meet some special needs. But virgin follow different logic, they seek effective common features through the features customers are care about, rather than merely focus on the differences between customers.
The core value “Quality, innovation spirit, rich appeal and value” of Virgin makes difference with traditional industry competitors. When virgin challenge the industry’s convention and logic , all the investment in formerly used for the first class are all changed to invest in business class, the installation of the large size of the chaise lounge has transformed business class level become much higher than other airlines business service standards, and through the innovation on services, not only attracted a further dimension rare of business travelers but also attracted the first class and economy class passengers of their competitors. Virgin is not only the use brand value innovation logic applied in the aviation industry, and also applied to insurance, music, entertainment and other industries. Virgin has been a brand value innovator who conducted on assets beyond its ability level and emphasis to provide creative and high added value service for the customer .Not on the traditional way, but rather try to become a rich emotional appeal and humanized company by creating an atmosphere to provide customers easy and humor feelings of s first-class service. Maybe that’s Virgin rapid rise in the brutal competition in the root cause.
Thirdly, dare to rival with big brands. In the traditional brand competition concept, a new brand should try to avoid the positive competition with a leading brand, it is better to focus on the customers that ignored by big brand. One of the successful secrets of Virgin is to surpass their own assets and ability to think and constantly challenge and compete to the big brand openly and directly. One of the examples is the Atlantic airways fighting against British airways in the early period, but it is only an approach that Richard Branson demonstrates that a small brand could also compete with a big brand. As a member of the new age business leaders, Richard Branson intentionally exploited selected a market that lack of competition as a target. He likes to portray Virgin as a cheeky dog and this cheeky little dog run very fast, able to follow the large heels rob things. This is a marketing strategy caused ten million people to focus their attention upon. He is dissatisfied with the in Coca Cola and Pepsi who owns supremacy in cola market and launched the Virgin cola which quickly accounted for 20% of the market in Europe. Except those strategies above, the spirit to against the traditional brand essence determines the virgin uninhibited, humor and dared to challenge the authority and the pursuit of excellence brand personality. So the advertisement of Virgin is always surprised people and does wonders and often makes adventure for brand.
And in the aspect of public relations activities, Richard Branson often have unexpected ideas. He drove tanks ran over on The Times square of Coca-Cola, declared Virgin Group formally enter the beverage industry, was highly attention by the media. To please the media, he has appeared in the “virgin” wedding dresses company opening ceremony and dressed like a women. Virgin has a distinct and unique brand personality and it provides a basis for brand extension. When most consumers see the virgin as quality, value, innovation, entertainment, synonymous with challenges, they can feel the virgin is not just an airline, CD or insurance anything, but a kind of spirit or some kind of cultural symbol. Virgin’s strategy is that the brand is not equivalent to a certain product or service, so there is no restrict for Virgin’s extension of cross-industry. Because of the different strategies and the break of traditional ideas, Virgin Group could develop so fast over the past few years and not been based on opportunistic and emergent in nature. 4. Ansoff, BCG and GE/McKinsey matrices
The synergistic manager parenting style and portfolio manager parenting style had been illustrated above. Strategies that support Virgin Group to develop fast are clearly demonstrated .Now I will use Ansoff, BCG and GE/McKinsey matrices to support the essay .The future development direction and pattern of investment that the Virgin Group will be talk about below. Ansoff matrix use as the two basic dimensions of products and markets to distinguish the four market portfolio and the corresponding marketing strategy is one of the most widely used marketing analysis tools. Ansoff matrix is 2 X 2 matrices one behalf of the enterprise in an attempt to make four options of revenue or earnings growth, its main logic is the enterprise can choose four different growth strategies to achieve revenue goals.
First of all, market penetration consolidation, use existing products to face existing customers, with its current products market portfolio as the focus of development, makes every effort to increase product market share. Take the market penetration strategy, by promotion or improve the quality of service and some other ways to persuade consumers to switch to different brands of products, or to persuade consumers to change habits, increased purchases. In Virgin Atlantic airways, the company use business class to replace the first-class and make improvement in the business class to persuade the first-class consumers switch to Virgin Atlantic. Second is new products and services, launch new products to existing customers, to take product extension strategy, uses the existing customer relationships to make the force. Usually in expand the depth and breadth of existing products, launched a new generation or related products to existing customers, raise the share of the vendor in consumers’ pockets. After found the Virgin Atlantic airways, Virgin develop the new business Virgin holiday and Virgin insurance .These two business are an expand with Virgin Atlantic, it perfectly use the existing customers who take Virgin‘s airplanes to promote their new business and the new business are related to the existing business. It is an effective way to persuade customers to accept the Virgin holiday and insurance because of the loyalty and satisfaction with Virgin Atlantic.
The third one is market development, it provide existing products to open up new markets, enterprises must find the same product in different Market demand for customers, including product positioning and sales methods tend to change, but don’t have to change the core technology of the product. In this case, the cola that Virgin had launched is an example. The cola is an existing product in the market, but there are nearly two brands Pepsi and Coke cola who takes a hegemonic status. Virgin cola find the customers who drink cola and provide a new strategy to promote their cola make a success to share the cola market with Pepsi and Coke. The last one is diversification, provide new products to new markets, as companies here with both specialized knowledge ability may be worthless, so it is the most risk diversification strategy. The Virgin Group moved from the original business music to travel and mobile phones. It takes a risk in use diversification strategy. The old business is helpless in this case and it is unpredictable that the new business could get success. BCG matrix is also called the market growth rate. The essence of BCG is through the optimum combination to achieve the balances of cash flow in enterprises.
In BCG matrix, the Virgin Group occupies different market share and market growth. There are 4 business mix pattern in BCG matrices. The first one is stars, it refers to the high growth, high market share. This is the business the company will input technologies for it .In Virgin Group, the case of TiVo, which is an innovation of Virgin media; it is the stars in the BCG matrices. Second is question marks, refers to the high growth, low market share. In this case, the mobile in Virgin group is the question marks. And then it is cash cows, refers to low growth, high market share. This is refers to the broadband business for Virgin which has a low growth but high market share. Last one is Dogs, refers to low growth, low market share. The dogs in Virgin group are the representative of landlines.
Because of the increase of mobile phone, the landlines do not have high growth and the market share is also low in this part. GE matrix is also called as Mckinsey matrix; it is one of the most commonly used tools in strategic planning. GE matrix can be used according to the business unit in the market’s strength and market appeal to evaluate these units; it could also describe a company’s business unit combination judgment of its strengths and weaknesses. In the need of industry attractiveness and business strength, it could make the definition of generalized and flexible, can be based on the GE matrix for strategic planning.
There are four main strategies in GE matrix, first is invest, which the company will invest resources to build a long term business. The Virgin media is an example of invest that the Virgin Group are willing to invest for it .The second one is protect, the company will distribute and resource and take actions to protect its market place, this is the Virgin Atlantic airways. After merger with the former laker airways, Richard Branson takes actions to protect the airways and compete with other companies. The third one is harvest, this is a action to enlarge its revenue and make the investment resource decreased to get a achievement.
And the last one is divest, the company sell some business in order to emphasis on other resources, Virgin record is an example of divest in Virgin group. In the future development, Virgin Group should invest in entertainment market, like build up a cinema and provide some other entertainment resources. Virgin is different and dare to compete with traditional styles, it is helpful for them to open a business in entertainment market and the continue innovation of Virgin could bring Virgin entertainment new life to the public. As it has been mentioned above, Virgin has their Virgin holiday and health clubs, it is useful if Virgin could provide entertainment resources that Virgin could allocate and co-operate its affiliated company to make a successful business.
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Cliff Glover,Unit 7 ,Moodle ,Coventry university , 206LON – Business Management and Decision-Making Process – D01