Virgin Group

CHAPTER 10

SWOT Analysis of Virgin Group

Strength:

1.It is the master of building brand value. 2.Offers a choice for every customer.

3.The creation of partnerships. 4.Virgin reviews the industry.

5.The awareness of opportunities for restructuring a market. 6.Branson’s reputation.

Weakness:

1.Virgin’s constantly expanding empire could take it to reck. 2.Virgin could be considered as a monopolistic company. 3.They aren’t leaders in their markets.

4.Virgin has minimal management layers, no bureaucracy, a tiny board and no global HQ.

Opportunities:

1.Virgin can offer something better, fresher and more valuable. 2.Virgin delivers “old” products and services in new ways.

3.Virgin considered using in-store listening kiosks, while reducing operating costs.

Threats:

1.The global copetition in the market. 2.The network of rivals in the market.

3.Its not domination of the markets may disappear with competition.

Marketing Strategy and Target Market:

Virgin Marketing Strategy is based in Branson’s intuition. The company uses its strong brand name to guarantee quality of diverse products and services. The strategy of “public figure marketing”. Two types of objectives define their marketing strategy. These objectives are strategic thrust

(future direction of the business) and strategic objectives.

Target market segments are ranging from modern, traditional working class, to upper conservative.

Advertising:

Objectives:

1. To encourage people to try our services and products. 2. To raise awareness of new product developments. 3. Capture the attention of the media and consumers. 4. To gain new consumers and brand recognition.

Media:

TV, press, magazines, outdoor posters, and taxi sides.

The company uses direct mail to send ads so people can be aware of any new product, service, and our promotions. This advertises uses

General information

Airline British Airways Virgin Atlantic Airways

Airline Website British Airways (britishairways.com) Virgin Atlantic Airways (virgin-atlantic.com)

Airline Category Luxury Luxury

Airline Type International International

Primary Airline Alliance Oneworld -

Ratings

Smart Rating 77 74

Skytrax Rating 4 out of 5 4 out of 5

Travel and Leisure 2011 Rating - 86.62 out of 100

Contact Information

Airline Website British Airways (britishairways.com) Virgin Atlantic Airways (virgin-atlantic.com)

Phone 0 (844) 493-0747 (800) 862-8621

Email Type Web Form on Site Web Form on Site

Checked Baggage

1st Bag (Checked) $0 $0

2nd Bag (Checked) $51 $60

3rd Bag (Checked) $51 $140

Max Checked Bag Dimensions 81 inches 81 inches

Max Checked Bag Dimensions with Extra

Fee 130 inches 35 inches

Max Checked Bag Weight 51 lbs 50 lbs

Max Checked Bag Weight with Extra Fee 70 lb 70 lb

Checked Bag Overage Fee (low) $51 -

Checked Bag Overage Fee (high) $51 $50

Airline Leg Room

Economy Seat Pitch 31 inches 31 inches

Business Class Seat Pitch 73 inches 76 inches

Preferred Seating Options

Choose your seat Choose your seat

Exit Row Exit Row

Extra Legroom Extra Legroom

None Offered None Offered

Preferred Seating Cost (low) $75 -

Meal Price $0 -

Snack Price (low) $0 -

Snack Price (high) $0 -

Unaccompanied Minor Type Per Child Per Child

Unaccompanied Minor Fee $75 -

Booking Fees $0 -

Carry On Baggage

Carry-On Weight 51 lbs 13 lbs

Carry-On Dimension: Length 18 inches 9 inches

Carry-On Dimension: Width 10 inches 14 inches

Carry-On Dimension: Height 22 inches 22 inches

Carry-On Dimension: Volume 3,960 cubic inches 2,772 cubic inches

Specialty Baggage Special Baggage may incur special

fee? Archery Equipment Archery Equipment

Special Baggage $80 -

Pet (Cabin) $0 -

Pet (Cargo) $0 -

Pet (Checked) $0 -

Additional Airline Information

Primary Geographic Region Internationally-based Airlines Internationally-based Airlines

Hub Airports London Heathrow Airport (LHR), London _{Gatwick Airport (LGW).}

Charlotte/Douglas International

Airport(CLT), Philadelphia International Airport(PHL), Phoenix Sky Harbor International Airport(PHX)

Structure

Virgin Group

Virgin Travel _Lifestyle Virgin Virgin Media

& Mobile Virgin Music

Virgin Money

Virgin People & Planet

Virgin group 

Global Product Structure

– Activities within the companies are organized around specific products or product groups

– Department/division is responsible for all functions in specified products

Virgin’s Strength

Virgin’s Weakness

other regions

• Complicated coordination and cooperation between product divisions

• Intensive knowledge

transfer concerning product • Focus on differences between products • Expertise on specific products • Flexible response to changes in product requirement

• High market orientation of product divisions

• Promotion of enterprenual behaviour

Virgin Travel Virgin Atlantic Airways Virgin Holiday Virgin Trains Virgin America Virgin Galactic Virgin Lifestyle Virgin Active Virgin Balloon Flights Virgin Racing Virgin Experience Days Virgin Spa Virgin Media & Mobile Virgin Media Virgin Mobile Virgin 1 Virgin Connect Virgin Music Virgin Megastore Virgin Festivals Virgin Radio International Virgin Money Virgin Money Virgin People & Planet Virgin Unite Virgin Earth Challenge Virgin Green Fund

Management Style

• Integration between brand franchising

operation and Japanese keiretsu system

– Brand franchising: identity as purchasable asset

– Keiretsu: business relationship and shareholdings between a set of companies

Management Style

• Decentralised structure  responsibility and

control in the management of each unit.

– Unorthodox version centralised  long-term business direction and financial control of the group in the executives of the Group

Management Style

• Holfsteed’s Cultural Dimension

• No barrier between employees and superior • Minimum layer in chain of command

– Low uncertainty of avoidance

• Innovativeness and enterpreneurship

– Individualism

Leadership Style

• Transformational leadership

– Focus on positive changes to members/employees – Work = fun  employees gain pleasure from their

role and gain sense of fulfillment from contributing a larger goal

– Create sense of belonging and loyalty as well as dedication of employees to the companies

– Employees’ involvement in decision making process

Communication Style

• Upward communication style

– Provide feedback, ask questions, obtain assistance from higher level management

– Get input from employees and their concerns through employees survey

Virgin Atlantic vs British Airways

• Difference in its size and culture

• British Airways

– Formal structure with precise rules and procedures due to its size and global scope of activity

• Virgin Atlantic

– Cost conscious, lean organizarion

– Small, networked and dynamic structure – Relies more on personal initiatives

Management Style: Head-to-head

British Airways

• Bureautratic and distancing • Neglect of subordinates

• Depersonalisation and hierarchy

Virgin Atlantic

• Flat organization with an open and flexible culture • Informal organization

climate

• Ability to move quicky, innovate and react well to threats

• Power culture to to central figure: Richard Branson

• Virgin put staffs first on priority

• Generate 99% of staff retention  stability and

continuity

CORPORATE CULTURE

• Virgin Group  Tough guy, macho culture • Types of corporate culture

- Tough guy, macho culture : success and failure come very quickly, higher risk

- Bet-your-company culture : the result of decisions pay off in long time

- Work hard/play hard cultures : small risk, rapid feedback

CORPORATE CULTURE

• Virgin Group  Tough guy, macho culture • WHY  higher risk and fast market feedback - Virgin Group is a venture capital company

- Long term planning, decisions are taken from growth perspective

- Companies operates independently, loosely structured under a common brand name: VIRGIN

- Brand dependent on Branson

- Virgin get business opportunities where customers were being treated badly

CORPORATE CULTURE

How Virgin Group develop a strong corporate culture: • Building a shared vision  3 criteria

- Clarity: corporate vision needs to be simple, relevant, and important

- Continuity: organizational values and strategic objectives need to be constant over time

- Consistency: all people in organization must share the same vision

CORPORATE CULTURE

• Virgin group has strong corporate culture as coordination mechanism

• Virgin slogan: Being the best, not the biggest (Clarity Criteria) • Culture of Virgin Group (Continuity Criteria):

- High priority for the staff - Capturing ideas

- Virgin community

- Be the best not the biggest - Priority to the customers

- Create new business instead of taking over an already existing company

CORPORATE CULTURE

• All the companies under Virgin Group must have

typical Virgin identification  represented by values (Consistency Criteria)

CORPORATE CULTURE

How Virgin Group develop a strong culture: • Building a shared vision

• Role model

- Visible behavior and public actions of senior management

- Corporate cultures are shaped by company founders or long term management

- Through charisma of founders that are seen as heroes which personify culture’s value

CORPORATE CULTURE

• Richard Branson PARTICIPATIVE LEADERSHIP style • 3 styles of leadership (buku abu-abu CH 13, hlm

461):

- Authoritarian leadership : one way downward flow of information and influence from authoritarian

leader

- Paternalistic leadership : continual interaction and exchange of information and influence between leader and subordinates

- Participative leadership : continual interaction and exchange of information and influence between

CORPORATE CULTURE

• Minimal management layers, no bureaucracy

• Management through empowerment, companies under virgin group are all empowered to run their own affairs

• Virgin’s employees are valued as individual

• Involving employees in the organizational process

• Little hierarchy  take employees like family

“Our companies are part of a family, rather than

a hierarchy” – Richard Branson

CORPORATE CULTURE

• BRANSONISM

- Unafraid of failure, refuse to stay within the confines of single core of business

- Virgin Group failed ventures : VIRGIN COLA, VIRGIN

RAIL, VIRGIN BRIDES

- “If you know one business, you know any businesses”

- Organic growth  prefer to create new business rather than taking over an already existing one

VIRGIN COLA

• Join venture between Virgin Group and Cott Corporation (Canadian) in the early 1994

• Market : US Market and UK Market • Aimed to rival Coca Cola and PepsiCo

VIRGIN COLA

• Why it failed?

- Too ambitious  one of the culture of Virgin: COMPETITIVELY

CHALLENGING

- Coca Cola and Pepsi have established strong brand of carbonated drinks worldwide

- Not good enough products

- Did not fit with the brand image - Little on advertising

“That business taught me not to underestimate the power of world’s leading soft drink makers. I’ll never again make the

same mistake of thinking large, dominant companies are sleepy” – Richard Branson

CORPORATE CULTURE

How Virgin Group develop a strong culture:

• Building a shared vision

• Role model

• Initial socialization

- Process of socialization of individuals through

communication of the way doing things

- Organization has to pass elements of its culture

on to new members of the organization

CORPORATE CULTURE

• Virgin Group’s initial socialization done through VIRGIN COMMUNITY

• Members of an organization must share certain values specific to the group

• Everyone is expected to be familiar with corporate culture

• Ideas, values, interest, and goals are shared in the community

RECOMMENDATION

• Become less diverse

- Virgin name has become diluted and its brand

a purely endorsement brand  Virgin Cola

• Reduced dependence on Richard Branson to

ensure future beyond Branson

- Introduce new role model

RECOMMENDATION

• Less emphasize on the brand

- In the competitive market, brand may not be

enough

- Global consumer required not only product but

also elements that add position in the market

(positioning)

• Attack less dominant companies at first market

penetration

CONCLUSION

• Virgin is a leading branded venture capital organization and is one of the world’s most recognised and respected brands

• Virgin had Minimal Management Layers, No bureaucracy, a small board of

directors and no massive global headquarter

• Virgin’s flexible structure, dynamic

culture and charismatic leadership and ability to understand employee needs can face up to challenges and grow to a great degree