The Virgin Group in 2012
Duarte Lopes Pinto
Duarte Lopes Pinto
Contemporary Strategy Analysis- Robert M. Grant
I. What common resources and capabilities link the separate Virgin companies? II. Which businesses, if any, should Branson consider divesting?
III. What criteria should Branson apply in deciding what new diversification to pursue?
IV. What changes in the financial structure, organizational structure, and management systems of the Virgin group would you recommend?
V. What are the advantages and disadvantages of having an umbrella name for all companies of the Virgin group?
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In an era of corporate refocusing, when the majority of diversified companies had either divested some businesses or broken up altogether, Virgin Group was an exception due to their range of businesses. Their major concern is to maintain coordination, accountability and strategic control of their empire. But Virgin´s brand represented a major vulnerability. With such broad business coverage it risked becoming overextended and its integrity damaged. Virgin started with Virgin Records, this company consisted in mail-order records. It had no fixed investment and little working capital. In 1971 they opened their first retail store in Oxford Street. And during the 1980s Virgin Records grew rapidly. This first adventure was followed by a completely new brand, Virgin Atlantic Airways. In association with Randolph Fields, Richard Branson founded a transatlantic and cut-price airline. The inaugural flight was in 1984 in a second-handed plane from an Argentine Airline. This business required a huge capital investment, was heavily regulated and required a new set of business skills.
Between 1998 and 2011 Virgin launched continuously new businesses, and the diversification process was on. Some examples were: * Launching of other airlines (following the low-cost carriers business model)(But with Virgin´s distinctive approach to differentiating