1. What directions of strategic development have been followed by Virgin over the period of the case (use Figure 8.2 as a guide)? 2. Which type of corporate parenting role (as per Figure 8.5) best describes the Virgin Group? Justify
2. Which type of corporate parenting role (as per Figure 8.5) best describes the Virgin Group? Justify your choice.
3. How does the Virgin Group as a corporate parent add value to its businesses? To what extent are these parenting skills relevant to the differing businesses units?
4. What should the future corporate strategy be? (And how essential is Richard Branson himself to that strategy?)
The Virgin Group is a highly diversified organisation which runs a range of businesses including mobile telephony, financial services, airlines, railways, music, holidays and health and care services. It has grown to be one of the largest private UK companies, employing around 50,000 people in 50 countries and with revenues in excess of £15bn (¬18bn, $22bn). According to the Centre for Brand Analysis, in 2015 Virgin was the number three best-known brand in the UK after British Airways and Apple.
Virgins flamboyant founder, Sir Richard Branson, is one of the UKs richest and best known entrepreneurs and at the centre of the groups growth. Branson has a flair for publicity and over the past 40 years has generated the interest and awareness that have made Virgin such a strong brand. The
Group believes the Virgin brand is so well respected that it adds value to any business that bears the name. What is difficult to unpick is how much of Virgins success is down to Bransons entrepreneurial flair and how much is down to the groups unusual structure and business model. Virgins strategy and business models are not widely understood and, as a result, investors have questioned its sustainability should Branson depart. The parent company describes itself as a leading international investment group. But does Virgin Group add value to the diverse portfolio of SBUs? Does the portfolio of businesses make strategic sense?
Virgins beginnings and style Branson founded his first business, a student magazine, after dropping out of school at the age of 15. Virgin began in 1970 when Branson sold music (vinyl records) by mail order. Able to undercut high street retailers, the business grew rapidly. He opened Virgin Record Shop named to reflect his naivety in business in Oxford Street, London a year later. Further expansion took the form of backward integration as he moved into recording and publishing music: his first album, Tubular Bells by unknown musician
Mike Oldfield in 1973, became a worldwide hit. He then controversially signed the Sex Pistols, a punk rock group
who became notorious for their rude anti-establishment behaviour and lyrics. Those two events epitomised the business philosophy Branson would use to build a worldwide brand a love of risk-taking, irreverence to the old school of business, a passion for fun and a flair for publicity.
The common threads uniting this diverse group of companies are the core values of the Virgin brand as described by Virgin Group itself: customer-driven with an emphasis on value for money, quality, fun and innovation.
Branson is not risk averse, but a core part of his business philosophy is protect the downside that is limiting possible losses before moving forward with a new business venture. It was a lesson his father taught him when he was 15. His dad agreed to let him drop out of school to start a magazine, but only if he sold £4,000 of advertising to cover printing costs. 2.
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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