Week 14

1) In your own words and using referenced quotes describe the difference between ‘business unit level’ strategy and ‘corporate level’ strategy.

A business unit level is a self-contained division (with its own functions-for example, finance, purchasing, production, and marketing departments) that provides a product or service for a particular market. The principal general manager at the business level, or the business level manager, is the head of the division. These managers translate the general statements of direction and intent that come from the corporate level into concrete strategies for individual businesses (I. o. C. A. o., 2013).

Corporate level unit develop the strategies for the whole organization. The CEO is the principal general manager. Corporate unit is involved defining the mission and goals of the organization, determining what businesses it should be in, allocating resources among the different businesses, formulating and implementing strategies that span individual businesses, and providing leadership for the organization (I. o. C. A. o., 2013).

2)  Discuss the corporate parenting style of Virgin group.

1) What type of corporate parent is Virgin? (portfolio manager, synergy manager or parental developer)

Virgin Group is like a parental developer. Parental developer types of company mostly seek to employ its own capabilities to add value to its businesses. Virgin Group has been successful business because of its brand name and the reputation of Richard Branson, these two factors have added value to its business. Likewise, the empowerment given to the associations to run their respective businesses also proves it follows parental developer type of corporate parent.

2) How does the Virgin Group, as a corporate parent, add value to its businesses?

The Virgin Company as a parent company does add value to the businesses under its umbrella where any advantages that accrue to the brand as a whole. Likewise, Richard Branson's personal reputation, their unrivalled network of friends, contacts and partners, management style, empowerment of staff, has added value to its businesses. All the companies under Virgin group follow same ideas, values, interests and goal and solutions to problems are often sourced from within the group which helps to build exciting and successful companies.

3) What is the logic of portfolio? Why do you think they are in mobile telephony, travel, financial services, leisure, music, holidays and health & wellness?

The logic of portfolio is that even if their one business fails they can benefit from other business. This module is used to minimize risk and maximize return. It helps to diversify companies business to all the sectors and to create strong brand image.

As Virgin is the brand name renowned to the consumers, the Virgin Group may gain profit from the loyalty of the consumers. So, they are in mobile telephony, travel, financial services, leisure, music, holidays and health and wellness.

4) What are the main risks facing Virgin Group as a result of their strategy? How might they be reduced?

Virgin Group is renowned because of its owner Richard Branson. If a mishap occurred which resulted in his untimely death, the group’s biggest asset its brand value would reduce considerably. Although a highly talented management team exists within the group, none of them have visibility or popularity equivalent to Richard Branson (Jaspal, 2010).

In early 2000’s Virgin group was facing severe cash crunch. Virgin Music was the most profitable company and other companies were making losses or little profits.  Virgin Atlantic was at risk after 9/11. A decision was made to sell Virgin Music to keep Virgin Atlantic for further growth. The cash received from the sale was re-invested for the growth of the group (Jaspal, 2010).

References:

India, I. o. C. A. o., 2010. Strategic Management. New Delhi: Sahitya Bhawan Publications.

Jaspal, S., 2010. [Online]
Available at: http://soniajaspal.wordpress.com/2010/11/10/risk-management-strategy-of-virgin-group/
[Accessed 2013].