Critical Positions Driving Strategy Success - Virgin Group Ltd - Case Study Example

Critical Positions Driving Strategy Success: Virgin Group Ltd Introduction Virgin Group Limited is a British multinational conglomerate company founded by Richard Branson in 1970. Over the years, the company has experienced tremendous growth and success such that it has been ranked among the most successful companies in the world. Moreover, the company has managed to diversify its product and services by establishing its business operations in the air travel, telecommunication, music, transport, retailing, healthcare, financial services and the food and drinks industry. Currently, Virgin Group has over 400 companies operating in about 50 different countries around the world. The main aim of this paper is to examine the critical positions or ‘A’ positions which drive strategy execution and success for the Virgin Group. Foremost, it will describe Virgin’s competitive strategy and operational goals. Subsequently, this paper will identify and illustrate the critical roles or positions that are most important when it comes to executing Virgin’s organisational strategy. Operational Goals and Competitive Strategy Virgin Group’s key operational goals revolve around developing customer loyalty by providing value to customers through high quality products and first-rate customer service. The company also seeks to enhance its operational effectiveness and differentiate itself from other competitors in the market. Virgin’s growth and success over the years can be significantly attributed to its competitive strategy. Although the company employs a wide range of strategies to gain competitive advantage in the various markets that it operates in, there are four core competitive strategies that the company employs. These strategies include; innovation, differentiation, operational effectiveness and cost leadership strategies. A. Innovation Strategy/Product Leadership In an ever-changing and increasingly competitive global business environment, Virgin Group has managed to maintain its competitive edge in the market through its innovation or product leadership. Evolution in technologies and changes in consumer tastes have also compelled the company to direct its time and resources towards innovation. Virgin’s innovation strategy can be categorised into; process and product innovations. Its process innovations have helped the company to enhance the efficiency of its operations and provide value to its customers. For instance, Virgin airline became the first company to introduce in-flight internet that enables passengers to order what they want during a flight by just a touch of a button. Moreover, through its product innovations Virgin has managed to introduce cutting-edge products and services in the market such as; Virgin money, Virgin Limobike, Virgin Drink and Virgin care among many others. B. Differentiation In order to maintain its competitive edge in the market Virgin Group has adopted a differentiation strategy that seeks to develop customer loyalty through the provision of quality and better performing products and services. The company’s differentiation strategy also encompasses providing unique products and services with exclusive product features that are not offered by other competitors in the market. Virgin airlines provide a good example of the company’s differentiation strategy. This airline offers exceptional and first rate customer services to its customers. Staffs working for the airline are friendly, engaging and receptive to the needs of customers. The airline also offers passengers an exceptional ambiance and space. C. Operational Effectiveness Virgin’s competitive advantage in various markets significantly hinges on its operational effectiveness strategy. This strategy aims at ensuring that internal business activities are more effective and efficient than those of competitors. The strategy that the company uses encompasses; the use better technologies, superior inputs, employing talented and well trained employees and an effective management structure. In addition to this, the company’s operational effectiveness strategy involves strategic positioning. The company deliberately chooses which products or services to deliver to which market based on their needs. In this case, the company identifies focuses and limits specific products and services to certain geographical markets. For example, Virgin Money only has its operations in the United Kingdom, Australia and South Africa. Figure 1 : Virgin’s Group competitive strategy Critical Positions/ Roles (‘A’ positions) In any organisation, there are several critical positions or roles that have direct strategic impact on the organisation’s capability or aptitude to effectively execute its competitive strategy and achieve its operational goals. In reference to Virgin Group’s operational goals and competitive strategy, it is evident that there are certain roles and positions that are critical to the execution and overall success of the company’s competitive strategy. Based on Becker, Huselid & Beatty (2005) framework for Strategic Position Assessment, the positions/ roles identified as critical for Virgin Group strategy execution include; research and development , sales and marketing , customer service representatives, logistics and strategic management. A. Research and Development (R &D) Research and Development is a critical position that drives Virgin’s competitive strategy. It generally involves activities geared towards creating new knowledge, and discovering technologies that can lead to the development of new products and services or the improvement of existing products and services. Moreover, R&D can contribute to the improvement of organisational processes thus enhancing efficiency and effectiveness of organisational operations. R& D can be considered as a critical position in Virgin Group mainly because it affects more than one strategic capabilities. Not only does this position support innovation but it also enhances operational effectiveness. It is also a significant source of revenue for Virgin Group. For an organisation such as Virgin Group whose competitive advantage directly hinges on the innovation of cutting-edge products and services, R& D boosts the organisation’s competitive edge and profitability in the market. By developing new products or processes to improve and expand Virgin’s operation, this position enables the organisation to minimise operation costs, tap into new market segments and generate more revenue. The lack of effective R&D personnel can be detrimental to the execution and overall success of Virgin’s competitive strategy. B. Sales and Marketing Sales and Marketing is also critical position that drives the execution of strategy at Virgin Group. Generally, this position encompasses a wide range of activities that focus on strategically assessing the needs of consumers in the market and subsequently targeting consumers based on their needs and preferences. It also involves strategically communicating and promoting the value of a company’s products or service in the market. Sales and marketing is a critical position in Virgin Group mainly because it directly impacts on the company differentiation and operational effectiveness competitive strategies. Through sales and marketing, the organisation is able to strategically promote and communicate the uniqueness and superior quality of its product or service features. As a result, the organisation is able to differentiate itself from other competitors, gain customer loyalty and boost its revenue stream. Moreover, sales and marketing aids Virgin Group to enhance its operational effectiveness. By assessing the needs of consumers in a market and selectively choosing which products or services to deliver to which market based on their needs, the company is able to minimize losses associated with targeting its products to unprofitable market segments. The performance of sales and marketing position directly affects the organisation’s profitability and competitive edge in the market. C. Human Resource Management (HRM) Human resource management is also another critical position that drives Virgin’s strategy execution. It essentially involves a wide range of processes and activities such as recruiting the right employees, managing performance, managing talent, retaining employees and motivating employees among many other processes and activities. Human resource management can be considered as a critical position at Virgin Group mainly because the execution and overall success of the company’s competitive strategy and operational goals hinges on HRM processes such as recruitment and selection, performance management, talent management and staff development and training and employee retention. For instance, the effectiveness of Virgin’s innovation, differentiation and operational effectiveness competitive strategies are all dependent on the recruitment of the right employees, with the right skills and talents that will enable them to develop new products or processes that provide value to customers and minimise the organisation’s operation costs. Even after the recruitment of the right employees, the position of HRM is still essential for manage performance, motivating and developing employees in order to ensure continuity in employee performance when it comes to innovation, differentiation and operational effectiveness. Therefore, HRM is a critical position at Virgin Group which drives the execution of strategy. Table 2: Strategic Position Assessment based on Becker, Huselid & Beatty (2005) framework Research & Development Sales and Marketing Human resource management Strategic Impact -Impacts on innovation and operational effectiveness -Improves revenue generation streams -reduction of operational costs -Impacts on Virgin’s differentiation and operational effectiveness strategy - Increases revenue - Contributes to the reduction of operational costs -Impacts on innovation, differentiation and operational effectiveness - Improves revenue generation streams -Reduction of operation costs Performance Variability -Large gap in performance variability -Poor Performance is easily detectable -Medium gap in performance variability -Poor Performance is easily detectable Large gap in performance variability -Poor Performance is easily detectable Top Talent Impact Performance significantly/ to a great extent improves the performance of organisation Performance significantly/ to a great extent improves the performance of organisation Performance significantly/ to a great extent improves the performance of organisation Top Talent Scarcity Top talent difficult to attract and retain Top talent fairly difficult to attract and retain Top talent fairly difficult to attract and retain Conclusion This paper has examined Virgin Group’s competitive strategy and the critical positions which drive strategy execution. It is depicted in this paper that Virgin’s competitive strategy focuses on innovation, differentiation and operational effectiveness. Some of the key positions or ‘A’ positions which drive and impact on the organisation’s competitive strategy include; research and development, sales and marketing and human resource management. Read More