Organizational Analysis of the Virgin Group Company, Free Essay

Type of Company: A parental developer because it consists of several strategic business units.

Countries present: International presence. The Virgin has established more than 300 proprietary companies worldwide, employing an estimated 50,000 people, in 30 countries

Target Customers: Almost everyone, wide variety of products spread across various markets.

Recognition: telecommunication, entertainment, and Retail, Travel, Holiday services

Organizational Structure: A parental developer because it consists of several strategic business units

Focus: Innovation, creativity, value for money, Good quality, Brilliant Customer Service, fun and a sense of competitive challenge

Competitors: British Airways, Delta, American Airlines, AT& T , T- Mobile, Vodafone, Ryan Air, Bhati Airtel, Australian Airlines, Emirates.

Substitute products: for Virgin airlines, substitute services that exist include rail, road and water transport. For Virgin telecommunication services, fax, telegram, traditional mail and internet based services are substitutes. For Virgin money services, Visa, MasterCard, Western Union, MoneyGram, PayPal, Skrill, electronic bank transfers and Payoneer provide substitute products. The virgin wines have substitutes consisting of alcoholic and non-alcoholic beverages such as coffee, vodka and grape juice.

Virgin products are high tech. the companys policies emphasize on quality and do not compromise.

Fully-fledged company with many subsidiaries and associated holding companies. began as a startup in 1968.

Value addition:

Relies on strategic business units.

Founder Richard Branson is a thorough strategist and a high risk taker.

Taking risks entry into markets difficult to penetrate.

Operates commercially under its brand name- strategic partnerships with other brands.

Global presence of strategic business units - offer knowledge, technology and resources for the supply of top quality products.

Invests in research and development- Operations are founded on in depth research and analysis.

Organization structure:

Decentralized management

Each company has its own management

Management style is not conventional

Managers are independent in their divisions

Companies are autonomous in decision making

Employees esteem and sense of belonging is encouraged to boost productivity.

Based on available data pertaining to the company, Virgin Group can be categorized on several basis with regards to its business structure.

Virgin group encompasses the entrepreneurial spirit. It was founded as a small startup based on the production of a magazine that subsequently led to the emergence of several other businesses over time based on the owners keen eye to business opportunity.

What is the key part of the organization?

Strategic Apex, where the owner is at the apex of the leadership chain providing direction. The owner managed to build an empire based on individual leadership.

What is the primary coordinating mechanism?

Flat Management Structure- managers enjoy a high level of autonomy. Minimal layers of management. No rigid lines of reporting.

What type of decentralization is used?

None

What does the organization gravitate to?

Having autonomy in management to allow talent to flourish

The organization can also be viewed as a professional organization with a complex structure and a non-regulating system.

What is the key part of the organization?

Operating Core the administrators also known as co-CEOs with relevant training and experience in the market.What is the primary coordinating mechanism?

Variety of operational skills-the management is qualified in the running of international operations and is familiar with the direction the business needs to head towards.

What type of decentralization is used?

Horizontal decentralization

What does the organization gravitate to?

Specialize- the management needs to obtain specific expertise in the particular industries Virgin Group operates.

Virgin group can also be identified as an organization that prides itself in developing innovation.

What is the key part of the organization?

Support Staff- staff are encouraged to display innovation in the operations of the company in order to improve efficiency and delivery of services. Innovation enables the consistent production of quality and gives a competitive edge.

What is the primary coordinating mechanism?

Mutual Adjustment- the different departments of firms have to learn how to adjust to cope with changes that are brought by innovation from other departments.

What type of decentralization is used?

Decentralization

What does the organization gravitate to?

Collaborate (Learning) - the employees need to know the workings of the organization and its structures. The knowledge will enable them to cooperate in working towards maximizing the companys output and as a result, the performance of the whole group.

Due to: Reduced growth, loss making investments, unpopular management structure, stiffer competition, changing trends in management structures, change in legislation, the main concern of Virgin group is how to stay competitive in the markets despite the hurdles and sustain growth internationally.

Key Issues or Problems

Diversification gone wrong- customarily, Virgin group mainly invested in the retail segment. However, with their entry into transport and telecommunications, there has been a lot of capital intensive operations. Virgin rail led to the experiencing of losses by the whole group due to its flop.

Management organization- Virgin group is large and the companies have different interest. Without an orderly management system, the group can end up in trouble due to poor decision making in the rather unconventional management style for a big group

Linkages- despite the advantages of collaborations, linkages with some groups may lead to obstacles to growth, and hindered profitability. This is because bad decisions or poor investment strategy by a linked company can result in losses for the whole outfit.

Due to: Widening the scope of investment, diversifying at a speed to fast and laity in management, the Virgin group is at risk of having its strategies as the cause for losses. Globalization and diversification in a bid to outdo the existing competition has led to decline in growth.

CONCEPTS

A plan (A deliberate course of action)

A ploy ( specific scheme planned to outdo a competition)

A pattern (chain of known actions)

A position (agreement between the organizations strategy and external environment).

A perspective (outlook that unites the organizations members, a way of picturing the world and their response to it).

The best strategic fit would be from out. The P.E.S.T.L.E analysis would affirm this.

Political Factors

Virgin Group operates in a wide-ranging political state of affairs,

The company has to cautiously select the countries it carries out business with to avoid negative repercussions on the business.

Operates an array sectors and at a global scale. Legislation and government policies differ.

Growing apprehension on international terrorism impacts negatively particularly on travel and leisure sectors of Virgin Group

Economic Factors

Stable economic situations in the UK allow Virgin to advance long-term strategic planning.

Most of the companys accounts located offshore, therefore, Virgin avoids various UKs taxation fees.

Operating in a variety of countries reduces the companys profitability due to fluctuation of currency

On the other hand, international expansion enables it to gain greater market share.

Social Factors

Campaign for traveling and energetic lifestyle promotes business for Virgin products associated with leisure.

The Virgin brand is popular among clientele due to Richard Bransons aggressive promotion; the company receives a lot of publicity.

The differing cultures across its target markets create a need to specialize in each location.

Technological Factors

Development of eCommerce enables the company to try a multitude of distribution channels.

Intensive competition in media and telecommunication area makes it a must for Virgin to produce innovative services and products.

Increased regulations concerning safety of products and concerns for the environment influence the technological developments.

Legal:

IT legislation, British Rail Law, Airline regulation (eg. FAA in US)

Increase in anti-corruption, legal watchdogs in recent years (eg. SFO in UK)

Environmental:

Consumers are aware of climate change and environmental degradation

Many consumers select businesses based on perceived "clean and green" image

In Conclusion: The above is proof of the competitive advantage and unexploited potential Virgin group enjoys over its competition. Moreover, it is evident that Virgin Group has the resources enabling it to prosper in the long term.

Managing on three levels

Information level

Managing the flow of information around the company levels of management and the staff level. Creation of precise communication structures.

People level

Managing the individual who make up the staff. Their ability to make decisions and drive the company towards its goals.

Action level

Managing the activities of the company in pursuit of its goals. Controlling the activities and coordinating the sectors of the company to maximize output and realize goals.

Evaluation Strategy:

Consonance-the strategy addresses the external environment despite much of the external factors being beyond immediate control of the company.

Advantage- the strategy creates a competitive advantage in the selected areas of activity due to the targeting of specific factors that affect productivity.

Consistency- the goals and policies are mutually consistent there is no conflict of interest within the goals. Achievement of one does not impact any other.

Feasibility-the strategy can be attempted within the physical, human and financial resources available. Its core is the availability of resources required to achieve the goals.

In Conclusion: It is important to understand the strategy the management of Virgin group employs in order to have a grasp the direction the company is headed. Moreover, a grasp of the heading will make it easier to find the missing links or possible causes of failure and amend them. Virgin group needs to focus on building a stronger brand name and reduce diversification which moves it towards dilution of the already established brand name.

Porter 5 Forces:

Barriers to Entry:

Legislation in many countries that provides obstacles to entry in the market.Lack of knowledge of some markets.Brand Loyalty; some firms are strongly established in the market.

Product Differentiation- in order to educate customers about the superiority of new products in the market, sometimes it is too much capital intensive.

Ownership or control of a key scarce resource- this could affect the ability of other firms to prosper in the business by depriving them.

Bargaining power of Suppliers:

Pricing- some suppliers have significant control on prices due to their large presence and may dictate prices.

Supply/Product Availability- some suppliers may be unable to cope with product/ service demand and affect output.

Quality Issues- circumstances where the supplier compromises on quality of the product in order to bring down costs, leading to poor quality output. Negative impact to consumer.Dictating Industry Dynamics- where large suppliers tend to sell only to some companies, the industry may get too hostile for some companies, forcing exit.

Bargaining power of Buyers:

Buyers are Powerful if:

Buyers are focused - there is a limited number of buyers...