Virgin Group Success Businesses: Diversification, and Key Strengths

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The threat of entry:

Virgin involves many different services that are price-cut due to the economic downturn of the recession (Grant, 2012). Threat of new entry for virgin train is very low, as it very accepted train operating company in the country. However, The threat of entry in the airline industry is quite high.

The bargaining power of buyer:

In today's competition world, customers have to be attracted in order to maximize the selling. Virgin group depending on Branson's innovative ideas with a good team around him, he was successful to provide all his products and services in competitively priced direct to the customers in the world. For railway business, it’s not possible to travel by public transport or private all the time, therefore the passengers do not have much of bargaining power because travel is a necessary requirement.

The bargaining power of supplier:

Virgin is an international business firm with a constant growth in rapid years. The major issues for suppliers is the brand name reputation and Virgin as a brand has met their standards.

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However, Suppliers have the power to make decisions on whether to supply Virgin with a service or raw materials. The Virgin would need suppliers to transfer all Virgin produces to local “Megastores” and for this the suppliers would have the power to increase prices.

The threats of substitute:

Virgin is offering different kinds of similar products and services in comparison to other firms. Virgin improved their variety of services and products in Virgin Megastores to comprise mobile phones, cola, and music in order to increase sales. Which this is a threat of substitutes. On train service there are always substitute, for example public transport such as flights for long distance or coaches, and private vehicles. However, in the Airway industry there is a minimal threat from the modes of transport on the domestic routes due to relatively low prices.

Competitive rivalry:

The Virgin group is a rapid development and globally economical company in recent years. For Virgin to continue their base in the markets, must look into increasing their base in various markets. The virgin has a wide range of services and products flourishing in the market and have sustained their strategy of low cost and usually attempted to generate a difference with their services. Therefore, the expansion of Virgin doesn’t come from the competition with other firms but an attempt to open new opportunities in the business (Grant, 2012).

The Virgin Group's success is based on the strategy of corporate parenting. Each new business that the firm entered it well inherits the Virgin's brand name, the management style, value, with access to the Virgin's resources and support from the group. Virgin Group's Competitive

advantages sustainability depends on way of[pic 8][pic 9][pic 10]

managing to support decentralization and Virgin's

culture under a unified brand. As the brand name is associated with Richard Branson the question arises whether it will have the same value for customers after he leaves the business. To generate sustainable competitive advantage the firm has to integrate its core competencies into internal processes and corporate culture (Grant, 2012).

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Core competence according to Hamel and Prahalad (1994) is a bundle of technologies, resources, and skills that allow a firm to present a particular benefit to its clientele. Core competencies are not a specific product, they contribute to the competitiveness of a range of services or products. Core competences are some of the most significant sources of uniqueness, they are things that a firm can do uniquely well, and that no-one else can duplicate speedily sufficient to influence competition. Most evident Virgin’s core competencies are: strong brand name and reputation built by Branson, promotion and considered advertising in ‘fun’ style. The success of Virgin Group is standing on the corporate parenting strategy, every new venture unit of business inherits the company’s brand name, values, resources, management style, and support. To create sustainable competitive advantage Virgin have to to incorporate its core competencies into corporate culture and internal processes (Grant. 2012). However, customers desire the image that a brand name can bring but besides they require the value at a competitive price. Branson has extended the basics of his brand in different ways that they are changed into a number of different activities. The Virgin group's reputation is directly related to Branson's reputation. Consequently, if Branson falls down, the virgin brand will also fall down.

Diversification refers to the expansion of an existing firm into another product line or field of operation ,which might be related or unrelated (Grant and Jordan, 2012). The Virgin Group decided to take on a related diversification of several firms spread across not related business. For a number of years Virgin Group successfully employ the diversification policy with more than

300 companies in the group. Moreover, it is always looking for to invest profits from existing goods and services in new markets. For example, such as starting Virgin its businesses from mail record, airway industry, retails and other businesses.

Over expansion strategy was one of the

key issues that facing Virgin throughout constant

diversification. Virgin gets across a lot numbers of different industries, such as financial services, industry of airline, music industry to the communication and computing services. While unrelated industries, Virgin has made a way into

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each of the industries with reasonable and logical success. Markets in which Virgin was able to successfully penetrate, tend to be common characteristics, they are markets that usually have been taken for consumers to take advantage of or under-served, where there the competition is uncertainty complacent.

On the other hand, Virgin's lack of focus