STRATEGIC MANEGMENT

MBA
Case Study: Virgin Case Study

Instructor: Dr. Mohamed Abdelaal

Submitted By

Hany Rashad Ali

 Virgin Case Study

Q1. What is the corporate rationale of Virgin as a group of

companies?

Answer

* (Ring –fenced) businesses- lenders of one company did not

have rights over another. This refers to provision of financial
protection as well as on business ethics aspect(e.g. Supermarkets
selling cheap CDs).

* Shakes up institutionalized markets by being innovative

* From being comprised of private companies Virgin become

group where some of companies are publicly listed.

The Virgin Group is a parental developer because of mainly

two reasons.

*Firstly as the envisioning of value-adding activities, the Virgin

Group is developing a strategic mission, and provides clear
external image.The group provides the mission that the Virgin
Group challenges the institutionalized market to give good value
to customer by innovative way and this mission penetrates all
businesses of the group. In addition, the group creates strong
image by using the name of the brand “Virgin”.

According to Branson, the chairman of the group, said ”the

brand is the single most important asset that we have” and
Director of Corporate Affairs for Virgin, Will Whitehorn said, “
at Virgin we know what the brand means and when we put our
name on something we are making a promise.”

The group expands by adding its brand name which promises

the innovativeness and good value on each business the group
enters.
*Secondly the Virgin Group doesn’t develop strategic
capabilities and achieves synergies. The group organizes many
kinds of businesses which are not related with each other.
Because their value-adding activity is focusing on the
envisioning by using the brand name of Virgin which create
strong image, the group doesn’t manage strategic capabilities or
synergies among its business units.To sum up the virgin group
full fills the task of a parental manager by identifying and
acquiring undervalued businesses...
Q2. Are there any relationships of a strategic nature between
businesses within the Virgin portfolio?

Answer

* Initial idea was to be virgin in every business they enter

having brand as the most important asset.

* In joint ventures Virgin provided its brand name and other

partners contributed with their capital.

* “Keiretsu” organization- form of loosely linked, independent

units controlled by self-managed teams that use a common
brand name.

** Several strategic relationships exist within the Virgin Group .

One of the most recent of these strategic relationships involves
its offer to customers of digital and mobile phone services as
well as broadband internet service . Virgin Digital UK offers
digital music to a wide variety of customers in mediums that are
compatible with a wide range of software and digital hardware .
The company boasts a high preparation for this market as it has
deep roots in the music industry , beginning with its record
company Virgin Records . Because of Virgin 's Records
previous ownership and rights to many music tracks , the Virgin
Digital company has benefited by its having already at its
disposal thousands of tracks to make available to the public
2005 Further aiding this is the partnership involved with the
mobile phone service company under the Virgin label .
Downloading music to mobile phones is an advantage that can
be offered to Virgin mobile customers as an incentive to
subscribe or switch to the Virgin mobile service providers . This
is also an advantage for the Virgin broadband provider , as it
allows the Group to further integrate its digital services
toinclude internet service and offer such packages and exclusive
deals (such as Radio Free Virgin ) that have the potential to
draw even more customers Another strategic relationship exists
among the Virgin transportation companies . The Group of
airlines (Virgin Atlantic ) have the distinction of offering the
lowest fares for packages in the Atlantic and other parts of the
world . The ability to offer flights to and from more obscure and
less-travelled destinations is granted to Virgin because of
partnership between and among the Virgin airline companies of
the different regions . Furthermore , the privilege is extended by
the existence of a partnership with Virgin Rail that offers
extended service via railway farther into more..
Q3. How does the Virgin Group, as a corporate parent, add
value to its businesses?

Answer

There 3 main ways for adding value besides brand name;

a) Company’s understanding of the opportunities presented by

“institutionalized” markets (market dominated by fewer players
that are not provide good value to customers due to inefficiency
or preoccupancy with each other)

b) Public Relations and marketing skills

c) Experience with Greenfield start-ups

Q4. What are the main issues facing the Virgin Group at the end
of the case and how should they be tackled?

Answer

The biggest problem faced by the Virgin Group though was the
strategic Rail Authority review in 2000 because it was the most
public. Virgin Rail was voted as the unpopular rail operator and
it was ranked 23rd and 24th out of 25 operators.

* Possible failure due to negative association of brands that

failed to satisfy customers with others.

* Entrance into fuel business that is maybe not so attached to

brands