Case study Emergent strategy at Virgin Group Under the strong and populist leadership of its chief executive, Sir Richard Branson, Virgin Group has pursued an opportunistic strategy to build a company with estimated annual sales of over US$10 billion by 2007. Starting from nothing in 1968, Virgin Group tried a series of strategies over the next 30 years. Its aim was to find opportunities to grow the business on the basis of what became the Virgin brand name and on the strong reputation of its founder and chief executive. The strategic trial-and-error process was essentially emergent, rather than prescriptive. This case outlines some of the main strategies with Virgins successes, failures and continuing business developments.

Background to the early years After an experimental launch of a student magazine, the young Richard Branson developed a small record mail-order business in 1969 to take advantage of the end of resale price maintenance in the UK. He opened his first record shop two years later and subsequently developed it into the Virgin Megastore chain. At the same time, he was attempting to develop a record label by signing up various pop artists of the time. None of these businesses possessed any clear competitive advantage, though arguably contractual rights to popular musicians and the Virgin brand itself had some real value. He continued to seek business opportunities using the Virgin brand and, by chance, met up with an entrepreneur wishing to develop an airline business. This eventually led to the Virgin airline business with its first route to New York in 1984.ii In later years, the company moved into a variety of business ventures from Virgin Bride and Virgin Cola to Virgin Trains and Virgin Mobile telephones see Table 2.2. In terms of its strategy, Virgin Group claims to examine business opportunities carefully, seeking an opportunity for restructuring the market and creating competitive advantage.

Virgin Groups underlying business strategy The company has developed its strategy over a number of years. Essentially, Virgin takes the view that there are always opportunities available for the hungry business executive. The underlying business logic has been summarised by Branson thus: Business opportunities are like buses . . . Theres always another coming along. In practice, what this means is that Virgin examines new opportunities to see if the group can offer something better, fresher and more valuable than existing companies. It looks particularly at markets where the existing customers are not always receiving value for money and where the existing companies have in some cases become complacent trains, insurance and banking for example and where the new internet might deliver a business opportunity. This means that the main thrust of the strategy has been to find new market opportunities where the company believes its brand name can create competitive advantage. Contrary to what people may think, our constantly expanding and eclectic empire is neither random nor reckless. Each new business demonstrates our skill at picking the right market and the right opportunity, says the Virgin website.

Outcome of emergent strategies: Virgin focuses on geographical expansion In the last few years, Virgin has focused its strategy on geographical expansion of its existing product portfolio rather than adding products. For example, it has taken its highly successful concept of Virgin Mobile telephones to other countries beyond its UK base. However, it remains opportunistic in its main product areas for example, its bid to rescue the failed UK bank Northern Rock in 2007. The strategy continues to emerge both into new countries and into new product areas.

Table 2.2 Selected business opportunities developed by the Virgin Group Year Business opportunity 1968 First issue of Student magazine - Branson's first business venture, which was subsequently closed 1970 Start of Virgin Mail Order operation - records sent by mail at cheaper prices than those of record stores 1971 First Virgin Record Store opens in Oxford Street, London, UK 1972 First Virgin Recording Studio 1973 Launch of Virgin Records label plus Virgin Music Publishing - the Sex Pistols were signed in 1977 1984 Virgin Atlantic Airways launched with limited flights between the UK and USA 1985 Virgin Holidays founded (travel agency chain in the UK) - Virgin Hotels then followed in 1988 1988 Virgin Megastores opened in UK - Japan followed in 1990 1991 Virgin Publishing (book publishing) begins 1992 Virgin Records sold to the major record company, EMI 1994 Virgin Vodka and Virgin Cola launched with great publicity Richard Lynch 2012 1995 Virgin Direct Personal Services founded - sells financial services within the UK 1996 Virgin Trains launched to provide long-distance train services in parts of the UK 1999 Virgin Mobile begins - sells mobile telephone services in the UK by renting space on the network of a competitor; Virgin Bride - a bridal emporium - begins with Sir Richard seeking publicity by being photographed in a white bridal gown 2000 Virgin Cars - a car purchasing website; Virgin Wines - a wine purchasing website; Virgin Cosmetics - 500 products for men and women in the UK; Virgin Active - acquisition of chain of fitness centres in UK Virgin Blue - low cost airline launched in Australia - becomes major success with Initial Public Offering (IPO) in 2003. 2001 Virgin Mobile extends into Singapore 2002 Virgin Mobile extends into the USA and into South Africa 2000 Virgin Group decides to grow its businesses by a geographic expansion strategy of existing products and services, while also identifying new products and services in its home country 2003 Virgin acquires stake in the British cable television company NTL, which is re-branded as Virgin Cable Instructions 1. Make a "Strategy Evolution" post. Answer all four parts. Each part should be between 2-4 sentences. Title your post "Strategy Evolution - Your First and Last Name". Failing to correctly title your post will lose you one point. Strategy Evolution a. What part of the Virgin Group's strategy was intended? Briefly justify your answer. b. What part of the Virgin Group's strategy was emergent? Briefly justify your answer. c. What part of the Virgin Group's strategy was non-realized? Briefly justify your answer. d. What part of the Virgin Group's strategy was deliberate? Briefly justify your