Richard Branson and the Virgin Group - Case Study Example

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Introduction

Virgin Group is one of the largest British multinational branded capital ventures. The name venture arose from a record business that Richard Branson and Nik Powell forced, and thus they decided to refer themselves as virgins in the business. The first record shop was opened in 1917 in the London along the busy Oxford Street. However, to the astonishment of his colleagues, Richard Branson was thrilled by the idea of the new name. To push the title, Branson appeared in the First World War inauguration wearing a frying outfit to celebrate the event that was held on 24th July 1984 in Virgin Atlantic (Virgin Group, p.657). Being a privately owned company, Virgin established some businesses in different sectors including retailing, information, and communication, traveling international expansion, deregulation and privatization and others (Virgin Group, p.654). In the last few years, the pace of divestment by the company has shown a significant increase as it tries to dissolve some of the businesses that are not successful financially.

Analysis of Questions

Common Resources and Capacities That Link the Separate Virgin Companies

According to Ahmad and Scheepers (2014), resources refer to the assets in a given organization that are productive. In businesses, resources can be divided into three categories including the human resource, tangible resources, and intangible resources. On the other hand, in business, capability refers to what the business can at a givenperiod. When looking at Virgin case, there are different resources that can be identified. Firstly, there are the tangible resources where even though these resources cannot be consolidated accounts for the company and even for the group financial health has it has been questioned severally. In different occasions, Branson has indicated that Virgin Group tends to focus more on long term growth of capital rather than the short term capital which is highly taxable and investment transferable are also common activities in the company. This is an indication of how strong the Virgin financial resources are.

On the other hand, branding is the strongest intangible resource at Virgin Group with the group operating its business using six values which include fun, innovativeness, competitively challenging, effective customer services, good quality, and value for money (Virgin Group, p.662). These are some of the factors that helped the company create a huge difference from the competitors in the different sectors they operate in, and it helps create customer satisfaction hence retention. Secondly, Organizational culture is a major element of Virgin Group. The organizational culture at Virgin Group is casual with few numbers at the management level, and the subordinates and company have tried to embrace a culture of family hood. Through this culture, employees at Virgin Group have always shared idea, goals, and values with the Group and management. The culture is seen by business analysts as a huge intangible resource at the organization (Virgin Group, p.655).

Lastly, for human resource, there are different experts with high experiences who are working at Virgin Group hence the company can offer their new companies with experienced employees. There are different capabilities that can be identified at Virgin Group (Virgin Group, p.664). Some of the capabilities include risk diversification, networking, innovative products and business ideas, management and others.

In running the Virgin Group, Branson has been using the hand on approach. Through the hand on approach, the company ensures the most trusted managers are running the new business ventures, controlling the Group finances and the Virgin management is always supportive in offering advisory and managerial help whenever needed. This capability in the management has allowed Virgin Group to specialize in the different sectors. Regarding network as a capability at Virgin Group, the company runs a business in different fields. Hence a strong network has been established hence the companies gain significant benefits from each other and this result to the development of a win-win situation. Whenever Virgin group want to open a new business, one of the factors that they have to consider is the impact the new business will have on the existing businesses. This results in a stronger network effect. One of the factors contributing to Virgin Group success in the modern business world is the Group innovativeness in products and business ideas. The Group is always developing new ideas on their new markets and existing market hence allowing Virgin Group to gain high market share and be the pioneer in the market hence making huge profits (Virgin Group, p. 663).

Business Branson should consider divesting

In the last few decades, deregulation and privatization drive that has been taken by the United Kingdom government and other governments around the world where they are relinquishing direct control and funds to some of the enterprises owned by the state has been seen as a golden opportunity for Virgin Group and Branson (Virgin Group, p. 657). This has helped the company to venture into new business frontiers that are considered by many to be beyond reasonable boundaries. Branson took this opportunity. Hence he was able to acquire profitable and ailing assets in different sectors. Furthermore, the Group managed to penetrate a large array of unrelated industries with the weak links of profitability from these industries turning out as the drag net to the company. Some business analysts have considered this as the main reason Virgin Group has been experiencing low financial performance in the last few years.

After analyzing the current situation at the Virgin Group, I would recommend Virgin Group to divest in the following business ventures so as to enhance and maintain their Return on Investment:

Virgin Money (Financial Services)

Virgin Group is highly involved in financial services, and this sector is failing to depict the Group’s business values and characters of the brand name and the Branson himself. I believe that over the years, the Group business in the financial sectors is negating the culture of entrepreneurship which is a main feature of the company (Virgin Group, p. 658). Thisis seen where the idea of Virgin group being a people and grassroots oriented does not consider in any way with the traditional financial institutions which have not shown any chances of changing over years. Unlike other sectors, customers in the financial sector who are looking for financial services will always look for long standing businesses which have the strong financial background and with a proven track record in the sector which is lacking at Virgin Group. Therefore, the earlier Virgin Group divests from financial services, the better for its innocent and good brand name.

Beverages and cosmetics

In the last few years, different public commentators have indicated that Branson is too unfocused with this business direction. Some believe that the use of Virgin brand name in covering businesses in the beverage and cosmetics may result in the destruction of the company brand name and loss of appeal. These two sectors are seen by many as opposite of Branson personality and the Virgin character. Therefore, the company needs to divest in these brands or look for other brand names that the products can operate in. Through these collaborating views, my opinion is a business such as Virgin Wine is not effective for the prestigious brand name where even some of these businesses carrying the brand name are not performing. Another reason the Group needs to consider divesting in this business is due to the mushroom nature of these businesses.

When considering diversification three areas need significant attention. The three areas include risk reduction, growth, and value creation. Therefore, the criteria to use when considering diversification for Virgin Group need to be focused on the growth factor. For example, the decline in the economic and hardship in different industries would heavily affect the Group returns hence increasing the risks. Therefore, diversification could be used to eliminate the risks that are associated with this change and allow the Group to maintain its financial stability and increase it revenue generation effectively.

Recommended changes in the organizational structure and management systems of the Virgin Group

Currently, the organization structure at Virgin group is nothing beyond the existence of Branson. Based on this reason, the Group is termed by many as a flat institute mainly focused on individualism. The company has been unable to operate in the formal structure, and this leaves some of its performances in huge question. Currently, Branson is the only individual at Virgin who can call shots and allow implementation of policies. Even though Branson has charisma and business acumen character, it is not clear how the business would operate without him. Therefore, to ensure there is an effective succession plan, I would recommend the Virgin Group organizational structure into a formal structure where there is centralized decision making so that any other manager who will come after him can be able to fit in easily. Additionally, the company needs to have a corporate headquarter where the 200 plus businesses can be managed from and where group policies and the related financial decision can makefrom.

Conclusion

In conclusion, I would personally say that Branson is not an ordinary entrepreneur. He has managed to set world business records not only inside the boardrooms but also outside. For the humble beginning, he has managed to take the brand name Virgin to enviable heights. However, I would recommend changes in the Virgin organization structure and management systems which I can see as being reckless currently.