Virgin Mega-Store in UAE - Internal Environment, Business Model, Strategy Risk Management - Case Study Example

Virgin Mega-Store in UAE Name Unit Class Table of Contents Table of Contents 2 Background of the Company 2 The Company’s Mission 3 The Company’s Internal Environment 4 Franchising and licensing 4 Leadership 4 Customer group 6 Company’s Strategy risk management 6 Culture 7 Reduced bureaucracy 7 Financial organization 7 Diversification 8 Branding 8 Marketing strategy 8 Recommendations 9 Conclusion 9 References 11 Background of the Company Virgin megastore is a global retailing company dealing with entertainment industry. The retailing chain was founded in 1976 in London. The owner of the chain is Sir Richard Branson and various companies such as Lagardere Group. The retailing chain is under of virgin group of companies. The chains have expanded from their original single store in 1976 to consist of more than 300 stores worldwide. The company main operations are based at Middle East especially in the United Arabs Emirates. The company presence in Middle East consists of more than 100 stores. In United Arabs Emirates, the ownership is mainly by Lagardere group. The main operations of the Virgin Megastores in the UAE are as Star Multimedia LLC (Grant, 288). The company stores have stocked variety of books, CDs, games and other entertainment accessories. The stores have been involved in online sales where the Virgin Digital was launched in 2005. This was in a bid to sell the content digitally due to globalization. The company operations in the Arab countries have increased where they have been able to expand with stores in Syria, Morocco, Lebanon, Egypt, Syria and UAE. The first store in the UAE was opened by the Virgin Mega Stores in 2001. There have been more than 10 megastores in the UAE with the main stores being opened at Dubai (Virgin website). These have assisted in artists signing and appearance, movies and Jewelry. This research paper will look at Virgin Megasores in UAE and analyze their management strategy and policy. The Company’s Mission The virgin megastore mission is being different to be better, better quality, better service and better value. This has helped the company to strive to create a brand that differentiates them from the competitors. The differentiation strategy has been used to help the Virgin megastores to venturing into new products. This has worked in ensuring that the retailing chain staff works hard in ensuring they are able to meet the consumers’ needs. Through offering quality services and products, the company is able to help the employees and consumers (Virgin). The Company’s Internal Environment Franchising and licensing At the moment, virgin group which is the parent entity of virgin mega stores worldwide is a leading business in venture capital organization. The company has more than 300 stores in different parts of the world. The main strength of Virgin Megastores is their franchising and licensing their brand and building their business from foundation rather than acquiring established entities. The company under the leadership of Richard Branson have been able to encourage their workers to work hard towards innovation which have enabled the company to produce diversifies products (Branson). The ability to diversify has enabled the Megastores to operate different sectors. The stores have been able to attract new customers to their premises due to fact that they provide new products regularly. The megastores were initially for entertainment products but have since been involved in various products with new items being put on their shelves regularly. Leadership Another competency that puts the Virgin Megastores in the UAE ahead of the competitors is their leadership. Leadership style is the method that the leaders utilize in achieving their objectives. Leadership is also responsible for motivating the employees and guiding them during their work. The manner in which the company leadership interacts with their junior workers is very vital in ensuring success. Leadership can be transactional, transformational or autocratic. For transactional leaders, there is interaction of the leadership and the subordinate staff. The leadership using this format in their operations rewards and punishes the workers depending on their performance and actions. Transformational leaders are visionary and use inspirational approach in carrying out their duties. The leadership using this type of approach has the capability to provoke emotions of the workers. They also come out with goals which the junior workers can easily follow. Autocratic leaders exercise total authority on their workers without giving them a chance to express themselves (Grant, 403). For Virgin Megastores in UAE, the type of leadership that is practiced by Sir Richard Branson has enabled the firm to rise from a magazine retailer to one of the world biggest retailer with stores in different countries. Sir Richard Branson is credited for his charismatic leadership where he maintains close relationship with the workers. He heads the Virgin Group of companies and has transformed all their business into successful ventures. Sir Richard personality had enabled him to gain media attention and he always appreciates his workers. The type of leadership style that is practiced by Branson is democratic where he allows the workers to take part in making leadership decisions. The leadership that is practiced at Virgin Mega stores has every element that is required for good leadership (Grant, 288). Leadership at Virgin Megastores has been known to have established foundations which help young entrepreneurs. Using these aspects, Virgin Megastores in the United Arabs Emirates have been able to have a competitive advantage in the industry. The company main activity that transforms inputs to outputs involves selling of entertainment materials and accessories, educational magazines, and other diversified equipments. The customers can make online orders through accessing the company website. The company keeps the customers updated on any new products using their websites (Virgin website). The company commitment to quality service delivery has helped them gain wide acceptance by the customers. The Company’s Business Model The company products are mainly in the entertainment sector. The products involve music, video games, music signing, music appearance and magazines. The company has been able to fully satisfy these aspects by making sure they deliver quality products. Entertainment is an important aspect in today’s lifestyle. This is due to the growth of the leisure industry where the associated products have been able to gain market. Through penetrating the music industry, virgin megastores in the UAE have been able to satisfy the entertainment needs of the customers (Virgin website). Customer group The firm clientele profile caters for all customers from different age groups. This is due to fact that they offer entertainment accessories for all age groups ranging from video games to music CDs. The entertainment industry is diverse and allows different types of customers to be served. The company has been able to offer service to the customer groups who have been taken advantage of by other companies or underserved. They have also established their business where there is confusion and poor competition (Grant, 285) Company’s Strategy risk management Risk management is one of the core strategies in capturing new ideas at Virgin megastores. The method is used in controlling risks and threats that may be experienced in the business. The megastore separates the risks into various groups which enables them to have an advantage if one of the groups fails (Grant, 286). It ensures that if any of the risk segments fails, the whole group does not go down with it. This ensures that the affected portion of the business will not affect other business operations. Culture Since inception, virgin megastores in United Arabs Emirates follow the same culture used by the Virgin Group. The company has been able to thrive despite lacking a corporate structure. Virgin Megastores uses a team of senior executives and advisers in making a team for guiding the company strategy (Virgin website). Reduced bureaucracy The company maintains a spirit of entrepreneurship and ensures there is reduced bureaucracy. This is strengthened by the fact that the companies that are involved are clustered and loosely associated with each other. The companies under the Virgin group are not organized in a hierarchical structure. This has enabled Virgin Megastores to operate smoothly with no interruptions or conflicts with other companies. The company also utilizes their business acumen which counters the effect of lack of a well defined corporate structure. Virgin megastores in the UAE utilize the group strong culture which is maintained through close personal ties. Virgin mega stores strategy gives their workers freedom which enables ideas generation and commitment (Grant, 283). Financial organization Another strategy used by Virgin megastores is their financial organization and performance. Virgin group finances each of the firm independently. The group utilizes cash flow and the company capital value as a measure of the financial strength rather than using the traditional accounting methods. This leads to the Virgin megastores to be increasing in the real value and the cash potential despite having negative accounting profits. The virgin megastore relies on the equity partners for their financing. The company strategy ensures that they have little cash output and a big equity share when they start a new business. This ensures that they transfer the risk to the investors (Grant, 283). Diversification Diversification is another strategy that has been used by Virgin Megastores in UAE. The stores have stocked diverse entertainment products to cater for different clientele tastes. The diversification of the products by the retail store has enabled the company to have successful business and new customers (Grant, 283). Branding The virgin brand is one of the most successful assets in the Megastores. The virgin brand has been valued by the customers making its role vital in business success. The brand has been voted to be the most admired in many countries. Virgin megastores have a strong brand name in the UAE which when combined with its parents brand makes it possible to make sales (Grant, 286). Marketing strategy The virgin megastore marketing strategy depends on the items on sale. The strategy used for one item cannot be used on another due to their diverse nature. For example, the musical instruments from Yamaha cannot be strategized as the gaming items from Sony. There have also been difficulties in virgin group paying much attention to the marketing strategy. This is due to the fact that Virgin group deals with more than 300 businesses worldwide with different marketing strategies. The marketing strategy that is used by the Virgin Megastores in UAE differs from the marketing strategy that is used in Virgin megastore in France (Colin, Jevons, Gabbott, and de C. Leslie, 302). Recommendations The fact that the management of virgin megastores in UAE involves their staff in decision making may leads to loss of authority. This occurs when the company workers lacks a leader whom they report to. This may lead to leakage of important or confidential information from the company (Grant, 287). The company has also been cited to be lenient on their workers. This may result in lack of cooperation. The company should make sure there is authority in the megastore which will enable the firm to retain confidentiality. The company should also ensure that the workers do not abuse the leniency they are accorded and become dishonest. Virgin Megastores in UAE should ensure that they are able to control their leniency to workers and enable them to have an authority where they have to report to. Virgin megastores should continue diversifying their products in the market. The megastore success in the UAE has been through offering wide range of products and services. This trend should continue to ensure that the business is a going concern. Conclusion Virgin megastores are on the right track in their business growth. This is due to fact that they have managed to make profits in their business and stay ahead of their competitors. Looking at the background of the company, it’s clear that Virgin Megastores have a great background that can enable them to succeed in their future ventures. Virgin megastores have managed to follow the company mission by being different from the competitors. This has been through making their operations and products different. The company branding have made them different from the competitors. The company strategy has been followed well which have enabled them to retain the market. This is through risk management, brand strength, leadership and diversification. Looking at the company business model, the company has a great future in entertainment industry. The company should continue with diversifying their products. There is also need for the company to make sure that they have authority to avoid workers leaking confidential information or being dishonest. References Branson, Richard, and Danielle McLimore. Virgin Rebel: Richard Branson in His Own Words. , 2013. Colin, Jevons, Gabbott Mark, and de C. Leslie. "Customer and Brand Manager Perspectives on Brand Relationships: a Conceptual Framework." Journal of Product & Brand Management. 14.5, 2005: 300-309 Grant, R.M. Contemporary Strategic Analysis. Malden, MA: Blackwell Publishing, 2008. 339- 413. Grant, R. M. Richard Branson and the Virgin Group of Companies in 2007, cases to Accompany Strategic Analysis. Malden, MA: Blackwell Publishing, 2008. 279-297. Virgin, Virgin Mission statement. Retrieved 4 May 2014 from Http:// www.virginviethome.com/public/ourcompany/mission-statement.asp Virgin Website. About Us, Retrieved 4 May 2014 from Http://www.virgin.com/AboutVirgin/What WeAreAbout/WhatWeAreAbout.aspx Read More