Introduction
The Virgin Group is a chain of businesses that are run separately under the aegis and leadership of Sir Richard Branson. The Group has vast interests in various fields such as entertainment, travel and lifestyle among other key fields. Indeed, the company’s most distinctive resource is its chief executive Richard Branson and its people. Branson’s charismatic style makes the company stand out. In fact, the entrepreneurial flair of the chief executive gives the company the competitive edge as other companies are unable to replicate this in the affairs of their companies. The Virgin people also constitute human resource or capital that is difficult to replicate in other firms. The Virgin Group has a corporate strategy of operating like a venture capital firm which is predicated on its Virgin brand. This corporate strategy encompasses the diversification at the individual business unit level into non-related ventures. The unrelated ventures into which the Group has diversified include those in the entertainment industry, the transport business and the lifestyle industry. In addition, there are synergies that are built between the head office and the individual business units. The Group ventures into new business and product areas by leveraging on its already prominent Virgin brand thus shaking up the preexisting orders and establishing its foothold in the particular industry it enters. The entry into new industries is also aided by the unique Virgin culture. It may be said that that the whole success gained by the Virgin Group owes it to the corporate parenting strategy adopted by the Group’s founder Richard Branson. Further, the continued sustainability of the competitive advantage that the Group enjoys is dependent on how well the company will retain its unique Virgin culture and whether it will execute the strategy of decentralization under unified branding.
Question One: Virgin Group’s emergent strategies or approach
It is indeed true that Virgin Group’s emergent strategy has not proved successful as intended. This is so especially with the failure of start-ups like Virgin Bride and Virgin Cola which posted consistent losses and have till now remained small businesses. This brings the question as to whether it matters that the emergent approach by the Virgin Group to strategy development did not work in the two lines of businesses. It also begs the question as to whether all emergent strategies adopted by a company need to be successful for the firm to be said to have succeeded in business. We start from the position that Virgin Group is a highly diversified corporation with over 300 companies under its Group. The several chains of businesses are quite diverse as they range from air transport to record music stores. It may well be said that the Virgin Group is highly diversified into unrelated areas. It has ventured into areas which are not related.
In finding answers to the above questions, we must first understand the meaning of the term emergent strategy. Emergent strategies refer to a set of unplanned actions by a firm that form an unintended pattern over time in an organization. This usually happens in the absence of a mission or goals as the approach undertaken under these strategies is not planned originally. The implication of this is that, in adopting emergent strategies, the company is essentially testing what will work in practice. This usually translates to a pattern or consistent actions though such behavior or actions are never planned. Virgin Group has definitely employed emergent approach to its affairs. In fact the statement from its chief Executive Richard Branson is instructive in this respect. Branson is quoted as saying that businesses are like buses, and that there is always another one coming along. This essentially means that the philosophy of Virgin Group and the Virgin culture is that there are always opportunities and this must have informed their continued venture into different chains of businesses. This being the case, it then follows that those emergent strategic approaches are usually experimental in nature. This in turn means that some of these experiments are bound to fail and this must be the fate that befell the Virgin Bride and the Virgin Cola which have failed to pick unlike its other sister lines of businesses like Virgin Atlantic. I would argue that it does not matter for Virgin Group that all the emergent strategies employed by the group have not been successful. As highlighted above, it is not likely that all business experiments that are conducted in the emergent strategic approach will succeed. However, it must be the case for the group that the payoffs that accrue from the success of the business must offset the losses that the group makes; otherwise the whole venture would fail. Since the Virgin Group has not collapsed despite the several chains of businesses, it then follows that it does not matter that the emergent strategies approaches at the group have not all succeeded.
References
Jackson, T. (2006). Virgin King: Inside Richard Branson’s Business Empire. HarperCollins: London.
Campbell, A., Goold, M., & Alexander, M. (2006). Corporate strategy: The quest for parenting advantage. Harvard Business Review , 12-17.
Wernefelt, B. (2007). A Resource-Based View of the Firm. Strategic Management Journal , 171-180.
Question Two: Evaluation of the success of the emergent strategies adopted by Virgin Group
The strategies adopted by the Virgin Group can only be said to have been partially successful. A case in point of the strategy which was successful was the development of its air travel franchise, the Virgin Atlantic in the year 1984. This line of business performed impressively pitting competition against some of the best airlines in the world. Indeed, the establishment of the Virgin Atlantic enabled the group to secure their future and venture into exploration of other product areas in the ensuing years. Before determining the question as to whether it was wise on the part of the firm to invest in the many product areas that it did, it is imperative to examine the different lines of businesses and product areas that the group ventured into. Richard Branson started with the first issue of Student Magazine in the year 1968, which was subsequently closed. The year 1970 saw the founding of the Virgin Mail Order operation which enabled the sending of mails at a cheaper price compared to the record stores. In the following year, the first record store was opened in Oxford Street, London in the United Kingdom and a recording studio was opened in the year 1972. What followed in the following year was the launch of a Records Label and a Music Publishing. The most potent of its businesses was launched in the year 1984 when the Virgin Atlantic started with limited flights between the United Kingdom and the United States. The Group then went on to found Virgin Holidays, a travel agency and then Virgin Hotels. The Group also launched Virgin Vodka and Virgin Cola with much publicity as well as Virgin Cars which was a car purchasing website. The Group also launched Virgin Mobile in the year 1999 which concerned itself with the selling of mobile telephone services in the United Kingdom by renting space on the network of a competitor. Virgin Bride was started in the year 1999 as a bride emporium with its launch featuring Richard Branson being photographed in a white bridal gown so as to seek publicity for the business. However, it is crucial to note that this line of business has not grown over the years to a larger business has a softy drink business Virgin Cola.
I now turn to the question of whether it was wise for the company to venture into all these new product lines. The answer to this question is quite problematic. Nonetheless, I find that the business opportunities that it sought to maximize were too diverse and wide. Further, the strategy by the Group to use the common brand and logo of Virgin in all these lines of businesses was misguided. Looking at the Virgin website, the Group states that it does not venture into a new product area until and after it is able to find that it can bring something different to a clear business opportunity. I disagree with this philosophy since I do not find the Virgin Bride and Virgin Cosmetics being new business opportunities. If I were in charge of the Virgin Group, I would have ventured only to a limited scope of product areas which are interrelated so as to carve a market niche in these areas.
References
Hax, A., & Majluf, N. (2007). The Strategy Concept and Process, A Pragmatic Approach. Upper Saddle River, NJ:: Prentice Hall.
Jackson, T. (2006). Virgin King: Inside Richard Branson’s Business Empire. HarperCollins: London.
Campbell, A., Goold, M., & Alexander, M. (2006). Corporate strategy: The quest for parenting advantage. Harvard Business Review , 12-17.
Question Three: Parenting Company and its benefits
Saudi Basic Industries Corporation (SABIC), a petrochemical producer is a parenting company in my country Saudi Arabia. Despite the conditions on the petrochemical industry being challenging and the elevation of oil prices around the world, the company projects that it will do well. It predicts that a downward scenario is highly unlikely owing to the corporation’s low financial leverage and a strong financial position. At the moment, an upward scenario is also viewed as highly unlikely given the company’s limited geographical diversity. A huge chunk of the corporation’s profits emanate from the production assets that are located in Saudi Arabia. SABIC is viewed as a strong business profile owing to the excellent opportunities of its activities that enjoy access to competitively priced feedstock at prices that are way below the market level. The company is able to make this access possible through its long term gas supply contracts with national oil company called Saudi Aramco. However, as earlier set out, the company’s major limiting factor is its limited geographical diversity. SABIC as a parent company is based in Riyadh, Saudi Arabia and it has grown to become one of the largest international petrochemical companies in the world. The parent company has subsidiaries in four regions namely America, Asia, Europe, the Middle East and Africa as well as six strategic business units that include Plastics, Fertilizers, Metals and Chemicals among others.
There are benefits of having a parenting business like in the case of SABIC. Firstly, a parent company owns the controlling stock of different franchises or subsidiaries and it may thus sell any franchise to an entrepreneur. Secondly, the businesses that operate under a parent name or business have the advantage of basking in the image of the successful business. For instance, all the franchise businesses of Virgin Group all share in the success and image of the Virgin brand thus contributing to their success. In addition, a parenting business provides guidance for the management of business to other franchise businesses thus leading to stability in business. This is because the business usually has access to knowledgeable persons from the parent company and other managing professionals.
References
Jackson, T. (2006). Virgin King: Inside Richard Branson’s Business Empire. HarperCollins: London.
Campbell, A., Goold, M., & Alexander, M. (2006). Corporate strategy: The quest for parenting advantage. Harvard Business Review , 12-17
Wernefelt, B. (2007). A Resource-Based View of the Firm. Strategic Management Journal , 171-180.
Question Four: Levels of decision making in a business organization
In a business organization, there are various levels of decision making. At the top level of management is the uppermost level of decision making. This involves the making of strategic decisions at the strategic level. The decisions are made by top managers and these decisions have the effect of shaping the direction of the business entity. For instance, the senior management may make a strategic decision on whether to remain in business or quit, by looking at the long-term forecasts of the business turnover. The other level of decision making is made by the middle level management and involves tactical decision making. These tactical decisions have the effect of enabling the implementation of the strategy identified by the senior management. For instance, the middle management may make a tactical decision on the time intervals of opening businesses so as to attract new and more customers. The third level of decision making at the lower level is the operational decision making. This is done by either the middle or junior managers and helps in the daily running of the business as well as routine affairs of the company.
References
Walter, J., Kellermanns, F., & Lechner, C. (2007). Decision Making Within and Between Organizations Rationality, Politics, and Alliance Performance. Journal of Management , 12-18.
Campbell, A., Goold, M., & Alexander, M. (2006). Corporate strategy: The quest for parenting advantage. Harvard Business Review , 12-17.
Wernefelt, B. (2007). A Resource-Based View of the Firm. Strategic Management Journal , 171-180
Question Five: Role of leadership in improving national competitiveness
Leaders play a vital role in improving the national competitiveness of a nation. Indeed, it a country’s national competitiveness in business is to increase, leadership has to play a central role. I would not posit that national competitiveness is only the responsibility of policy makers. Instead, business leaders have a role to play in ensuring national competitiveness. It is clear that every company draws upon the community in which it operates. In turn, the government usually has a big impact on the health of the community and it, therefore, has the responsibility of ensuring that a nation is attractive for business so as to enhance competitiveness. On their part, business leaders must also influence the community on which they draw upon, by opening up valuable opportunities. In the event that a business entity improves the community, it has the effect of enhancing its own profitability as well as advancing the prospects of other businesses in the country. In this way, proper leadership is able to instill and enhance national competitiveness in a country.
References
Bryne, G., & Bradley, F. (2007). Culture's influence on leadership efficiency: How personal and national cultures affect leadership style. Journal of Business Research , 50-62.
Walter, J., Kellermanns, F., & Lechner, C. (2007). Decision Making Within and Between Organizations Rationality, Politics, and Alliance Performance. Journal of Management , 12-18.
Hax, A., & Majluf, N. (2007). The Strategy Concept and Process, A Pragmatic Approach. Upper Saddle River, NJ:: Prentice Hall.
