Competitive Strategy and Innovation

Richard Branson
&
Virgin Group Case Study

By : Mohammad Sultan
 Introduction: introduction

• DIXIT, A. (2011) stated that “President Truman once said: “Give

me a one-handed economist. All of my economic advisers say ‘On
the one hand this, on the other hand that.’” Economists do
indeed recognize that there are multiple forces at work in most
situations, and it takes quite subtle analysis to understand their
interaction and balance” .
• Virgin is one of the famous brands across the globe. It was started
in 1971 and now dominates sectors of :
• camps, vineyards, restaurants, private members clubs, trains, and
tour operating services.
• Its financial services include credit cards, home loans, insurance,
savings, superannuation, fundraising services, and small business
funding.
• The company’s leisure businesses comprise balloon
rides, corporate gifts, competition prizes and
• events and photography/filming, advertising
balloons, book publishing, employee rewards, gift
cards, electric vehicle championships, wine
production, and online wine retail.
• Its health and wellness business includes health
clubs, fitness clubs, NHS and social care services,
health banks, and employee wellness services.
• The company also engages in entertainment
businesses, such as casinos, bingo, slots, and radio
stations
• Virgin Group Ltd., through its subsidiaries, engages in the
businesses of mobile telephony, travel, financial services,
leisure, music, holidays, and health and wellness in the United
Kingdom and internationally.
• Its mobile telephony business includes IP-VPN, Wi-Fi, phones,
phone plans, mobile broadband, TV phone, broadband
services, and SIM cards.
• The company’s travel business comprises airlines, leisure and
travel Websites, travel booking services, travel information,
flying clubs, commercial space line services, holiday services,
hotel services, holiday cruise services, hotels, private islands,
mountain retreats, game reserves, catamarans, lodges, tented
promotions, benefits, rewards and incentives, corporate
events and hospitality.
 Summary of the case study (1)

• The study started with introducing Branson's

enthusiasm and describing his ambition as
venture, and moved to narrate his decreasing
role after
• The appointment of co-CEOs in 2011 marked
the beginning of a more conventional
management structure and Branson’s
transition to a more peripheral role
 Summary of the case study (2)

• A detailed narration was mentioned about the

development of the Virgin Group between
1968–2015.
• Branson’s subsequent entrepreneurial
initiatives were severely affected by his first
business venture in “ Student “ magazine.
• It was mentioned that Virgin Atlantic Airways
business was highly capital-intensive and
heavily regulated;
 Summary of the case study (3)

• It also required a completely new set of business skills,

including collaboration with governments, banks, and aircraft
manufacturers.
• 1985 marked Branson’s unhappy few years as the chairman of
a public corporation —a role which ill-fitted his own
personality and leadership style.
• The era between 1988 and 2004 was the period where Virgin
Brand reached almost every business sector in every spot of
this earth.
• Sectors as travel, holidays, retailing, information and
communication technology, and leisure and entertainment
were the main sectors that Virgin was the pioneer in the
British market.
 Summary of the case study (4)

• Its International expansion outside the UK began with its

Megastores. After 2000, Virgin replicated several of its
successful UK businesses overseas, including Virgin Mobile,
Virgin Active, and Virgin Money.
• Moreover, the study stated that Virgin’s financial performance
is difficult to interpret.
• Moving to the concepts and the reasons that made Virgin a
Valuable brand
• Also, the study assured that Virgin brand was inseparable
from Richard Branson’s persona as entrepreneur, joker, and
the “acceptable face of capitalism.
 Summary of the case study (5)

• Branson’s strength as a businessman was in conceiving and

implementing new business ideas.
 Summary of the case study (6)

• Due to its philosophy, Virgin’s was particularly drawn to

markets where stodgy, incumbent firms resulted in
underserved customers and Virgin could offer a better
alternative.
• Virgin’s approach to business development has developed to
be more systematic in dealing with new business.
 What common resources and capabilities that
link Virgin companies? (1)

• All the markets in which Virgin operates tend

to have features in common:
• They are typically markets where the
customer has been ripped off or under-
served,
• Virgin is able to break into the market and
shake it up.
 What common resources and
capabilities that link Virgin
companies? (2)
• In the markets where Virgin operates,
there is confusion and/or where the
competition is complacent
• Virgin is considered to be the consumer
champion, and this is done by all the
companies by delivering its brand values.
 What common resources and
capabilities that link Virgin
companies? (3)
Depending on the following values makes Virgin’s
brand value:
• ●Value for Money.
• ●Good Quality.
• ●Brilliant Customer Service.
• ● Innovative.
• ● Competitively Challenging.
• ● Fun
 What common resources and
capabilities that link Virgin
companies? (4)

• What distinguished Virgin from the typical private

equity firm was the central role of the Virgin brand.
• All Virgin companies rely on the brand in reaching
the customers directly.
 Which business should Branson
consider divesting? ( 1)

• According to the study, Virgin has divested

businesses, either wholly or partially, in order to
release equity for other business ventures
 Which business should Branson
consider divesting? ( 2)

• Simply to take advantage of the high valuations that

others placed on Virgin businesses
 Which business should Branson
consider divesting? ( 3)

• The third criterion should be depending on the

financial success.
What criteria should be considered in
deciding what new diversification
strategy to pursue? ( 1)

• Lim, E., Das, S., & Das, A. (2009) summarized that

diversification strategy severely affects financing
decisions.
• This leads us to say that the first criterion could be
the availability of training staff to be skillful in this
new business.
What criteria should be considered in
deciding what new diversification
strategy to pursue? ( 2)

• The second criterion could be the access to the

related resources needed to operate the business.
What criteria should be considered in
deciding what new diversification
strategy to pursue? ( 3)

• The third criterion could be the real need of the

market to this new product of service.
What criteria should be considered in
deciding what new diversification
strategy to pursue? ( 4)

• The fourth criterion could be the availability of

market development.
 Suggested changes in Virgin
organizational structure ( 1)

• First of all, overcoming the complexity of the legal

and ownership structure of the Virgin Group will be
the main change that should be taken into
consideration.
 Suggested changes in Virgin
organizational structure ( 2)

• Hiring experienced Senior executives in Virgin group.

• This is due to the fact that most of them have no
related experience in similar positions.
 Suggested changes in Virgin
organizational structure ( 3)

• Assign each senior management team member with

specific board positions in specific company in Virgin
companies.
• This is to avoid being assigned on board positions in
multiple Virgin companies.
 Recommended changes in Virgin
management systems ( 1)

• First, create an independent department with clear

responsibility to provide consolidated accounts of
the group.
• Its important to provide clear financial results for the
group as a whole and for individual companies of
Virgin and tracking those results to set the
appropriate action plans.
 Recommended changes in Virgin
management systems ( 2)

• Disconnect the brand from Branson’s approach to

management especially in international business.
• This due to the fact that Branson willingness to
appear in outlandish attire would raise questions as
to the appeal of the Virgin brand outside of Britain
 Recommended changes in Virgin
management systems ( 3)

• Virgin’s diversity presented several risks to the Virgin

brand: overextension, entry into businesses where
the Virgin/Branson identity offered limited
differentiation appeal.
 Recommended changes in Virgin
management systems ( 4)

• the danger that customer dissatisfaction in a single

business might contaminate the entire brand. There was
also the risk that Branson’s popular appeal might be
waning.
• Some of the contradictions in Branson’s image and
behavior: flying his private jet to climate change
summits, lecturing on transparency and accountability
while presiding over an impenetrably opaque business
empire, promoting the interests of the underprivileged
while protecting his own wealth in offshore family trusts.
 References
• Chevalier-Roignant, B., Trigeorgis, L., & DIXIT, A. (2011). Competitive
Strategy: Options and Games. MIT Press. Retrieved from
http://www.jstor.org/stable/j.ctt5hhbmq
• Lim, E., Das, S., & Das, A. (2009). Diversification Strategy, Capital Structure,
and the Asian Financial Crisis (1997-1998): Evidence from Singapore
Firms. Strategic Management Journal, 30(6), 577-594. Retrieved from
http://www.jstor.org/stable/20536063
• “Company Overview of Virgin Group Ltd.,” http://
www.bloomberg.com/research/stocks/private/snapshot.
asp?privcapId=36312, accessed July 14, 2017.
• “About Us,” https://www.virgin.com/about-us, accessed July 12, 2017.
• “Virgin Group: Brand it like Branson,” Financial Times (November 5, 2014).
Questions