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Diploma in Business
Unit Number and Title
Unit 33 Small Business Enterprise Virgin Group
Strategies define the strength of organization to sustain and grow where innovation in workplace helps to achieve competitive advantages in market. Virgin organization has dimensions in many businesses like airlines, cinemas, media and networks. The report will present the analysis of Virgin organization for its resources and capabilities to sustain and grow. For that SWOT (Strengths, weaknesses, opportunities and threats) will be identified. Later report will evaluate the impact of changes and external factors on the entrepreneurial activities in workplace. Virgin organization will be observed for influences with PESTLE (Political, Economical, Social, Technological, Legal and Environmental) analysis tool.
Figure 1: Logo of Virgin Group
The sustainability of any organization depends on the set of resources available to it and the strength in strategies to meet changes in market. The organizational strengths need to be effective to use the available set of resource so that business can be promoted to make use of competitive advantages. The virgin Group has number of businesses as it deals in airlines, mail orders, media, cinemas, music, trading, travel etc. This dynamic nature of organization helps to achieve the objectives without being much integrated in same business. The swot analysis of Virgin Group is effective to determine the capabilities of organization along with strengths in strategies for growth of organization (Parry.et.al.2010).
Strengths: Virgin Group is dynamic to meet the organizational objectives and has less integration with big business groups. This flexibility of organization to transform according to market demands makes it capable to generate effective revenue. The organization has skilled employees those are diverse in culture and origin so that organization achieve the effective decision making for different geographical area. Addition to it, the strength of organization lays complete ownership and decentralised control on business so that there is less risk of failure in products and services.
Weakness: The strategies of Virgin Group are effective to accomplish the business but the diverse brand portfolio of organization may appear as the barrier to make competitive organization. The diversity in services and products distract the organization to conquer the market with brand image. Also the services and quality gets affected in multiple businesses. Organization has high cost basis operation structure which draws back the graph of revenue. Al though the management of organization has effective and skilled employees to achieve competitive advantages.
Figure 2: SWOT analysis
Opportunities: It is clear that organization has investment in multiple businesses and the profit is proportionally growing with time. Also the organization has opportunity of acquisition of other business in market due to its diverse services and products. Organization has strong foundation in United Kingdom and associated countries but it can make use of growing markets globally. The capability of organization to retain in market with multiple brands helps it to make advantages of growing economies (Wang.et.al.2011). Addition to it, organization may enhance the quality to cover the rest of market for target customers.
Threats: With the increasing business size, Virgin also has issue of finance distribution and operation management . The cash flow in organization is difficult to handle for effective use. Also the market is driven with competition and most of organizations are trying to generate revenue in same manner as Virgin does. Therefore, there is threat of sustainability and substitutes in market along with management of customer loyalty for long term objectives of organization (Wheelen and Hunger, 2011).
Changes in business influence the organizational capabilities to arrange the resources and to make use of pre-planned strategies. Organization may draw into financial as well as marketing constraints for products and services. Virgin motivates entrepreneurial activities in workplace as new ideas and innovations can open new dimension of marketing and revenue generation.Entrepreneurial activities in business help organization to achieve market benefits and strength in strategies to manage the workplace.The PESTAL tool is effective to analyse the behaviour of external factors on Virgin business.
Political factor: Virgin group is completely owned by Branson and has almost negligible impact on organizational strategy and innovations. Branson holds major stock shares and only minor shares are distributed in market (Welter and Smallbone, 2011). The complete ownership helps organization to deal with political issues on business. The licensing is used to add functions in specific region. For instance, Branson has shared the licence in United Kingdom for Virgin Mobile and radio and in Australia for Virgin Mobile Australia.
Economical: Virgin is private organization and has expansion in many businesses. Therefore, the economic status of organization is under the control of Branson not the governmental and public effect. Organization has large amount of revenue to enhance the service and to overcome the economical drowns. The strength of organization is empowered with increasing revenue and shared capital among businesses.
Figure 3: PESTLE Analysis
Social: Organizational has social impact on operation as Virgin media is expending a lot in airlines and market competition is making low returns form cash flaw. The airline services are being costly for organization to serve the customers under economic prices. Organization is facing problems in cash flaw doe services and can make use of acquisition in business as most of airline owners drawing back their services due to financial lost and social influence (Baranenko.et.al.2014).
Technological: Virgin Group is capable in technical setup of business but the changes in technologies are influencing the business operations to stay on regular patterns. Security and monitoring systems of organization needs regular review and consumes large investment. The technical facilities and services in airlines, travels and cinemas are affecting the growth of organization.
Legal: Virgin organization has effective management for legal procedures and policies. Organization handles the legal issues according to the legal regulation in country. Al though, it faces issues in business when it needs to provide international services in airlines and media. The difference in policies and legal framework among various geographical areas are appearing as the barrier for organizational growth.
Environmental: Virgin organization has impact of business environment on the organizational growth. The physical locations and market at specific region determine the environmental strength of organization. Virgin organization has effective approach to market and target customer. Also the physical stores are at good location to present the business (Cadle.et.al.2010).
The market position and profitability of Virgin organization describes the effectiveness in return as the return of investment depends on the organizational strength to manage the business. The under average revenue model of organization does not matter if it is properly positioned in business. The strategically choice of Virgin Group normally follows the pattern of Porter’s generic strategies which determines that organization’s capability to sustain in market can be put into two categories: cost advantages and differentiation. Addition to it, organization also uses the concept of merging and acquisition in business for organic and non organic development. Al though, there is not a case for merging to other organizations (Bamber, 2015).
Porter’s generic strategies: Porter has defined the organizational strengths under the categories so that organization can focus on the strategies effectively. According to porter, organization retain in market competition either by negotiating pricing to lower revenue or by differentiating the organizational strategies for customer specific demands to achieve high revenue. Both of methods can be used to make advantages with market conditions or to retain the sustainability. It is clear that Virgin organization uses the concept of low cost services and products for market advantages. Virgin provides services in multiple businesses those are not so unique in industry but the market is achieved with proper pricing of products and services. Addition to it, Virgin organization uses cost leadership style to lower the pricing of products and services. Organization has no specific group of customers due to general services and economic pricing and needs to control the business in industrial level. There are no specific focus strategies to conquer the market.
Figure 4: Porter's generic strategies
In cost leadership approach, Virgin mostly needs to use the resource and capital effectively. In first approach for market advantages, organization uses the resources effectively as organization is private and has own resources to use according to the market strategy . For instance, the airline cost of Virgin in cheaper than others because organization has own control on pricing and management. Organization also uses the low cost direct and indirect operating in business processing (Uddin and Akhter, 2011). It is effectively done with technical setup in organization and outsourcing of supplementary business activities. Also the cost in minimized with proper communication and controlling of business operation at per employees so that overall management cost can be reduced. Addition to it, organization has effective control over the value chain related to many functions in organization. The cost at each dimension like finance, travels, media and others businesses are reduced with proper analysis of market conditions and product utilization.
Mergers & Acquisitions: The organizational strategies are also making use of market conditions as it analyse the organizations those are being less effective and seeking to be merge with another organization. The strategies are made around the resources, assets and business position of merging organization so that Virgin team acquire the companies (Bordean.et.al.2010). Acquisition is not as easy as it needs to determine the influence of running business and to determine the scopes with new resources and assets in organization. Normally, Virgin Media prefers to merge the organizations those are being bankrupts due to improper marketing and strategies but have effective set of resources to retain. After the acquisition process, Virgin becomes the owner of companies and has complete control on resources and strategies.
Figure 5: Merger and Acquisition Process
The acquisition may occur due to financial constraints on business or due to improper integration into flow of business. Most of organization accepts the acquisition with Virgin because they are running with partnership and ha no longer supports for finance and business control (Müller-Stewens.et.al.2010). At other side, Virgin organization is capable to handle the business and to involve the competitor in it to reduce competition. Organization has big investment strength and owned resources so regulate the business under pressure. Management of organization accepts the proposal of acquisition if the opponent organization has business values and benefits in Virgin to lead the market competition.
For successful acquisition of other companies, organization starts to improve the performance of acquired company. In this manner, Virgin transforms the companies for own business revenue model. To enhance the performance, organization uses low margin services and products for introductory time so that business can be strengthened with new resources. However, the return is always expected to be about at least 70% to continue with business branch in initial state. Virgin authorities also evaluate the companies for consolidated capacity (Cartwright and Cooper, 2014). Organization eliminates the constraints driven strategies and arrangements to achieve market advantages. For instance, companies those were failed due to financial support, Virgin arrange the resources to drive it effectively. Virgin Group also promotes the business and trends according to new acquisition so that production can be started to cover market. Virgin is liable to prepare the market for the products of new acquisition with Virgin brand. The organization’s strategies are also effective as it arranges the resources and technology required to earned with new acquisition and within low cost. The management of Virgin chose the winner from market and assist them to start their own growing with them. In this manner, brand values are preserved and acquisition happens (Hoberg and Phillips, 2010).
The report has been presented the analysis of Virgin organization so that internal resources and competitive advantages for organization can be determined. The report has discussed the capability factors of Virgin with SWOT analysis. The changes and their impacts on business have been identified with PESTLE analysis. The influences on organizational procedure and strategies have been discussed. The report also has been determined the strategically approach for market advantages and benefits. The report has been concluded that organization is in sustainable position with high revenue. Porters’ generic strategies are examined in context of Virgin along with determination of merger and acquisition strategy in organization to win market.
Books and Journals
Bamber, G.J., 2015. Low-cost airlines’ product and labour market strategic choices: Australian perspectives. Members-only Library.
Baranenko, S.P., Dudin, M.N., Lyasnikov, N.V. and Busygin, K.D., 2014.Use of environmental approach to innovation-oriented development of industrial enterprises. American journal of applied sciences, 11(2), pp.189-194.
Bordean, O.N., Borza, A.I., Nistor, R.L. and Mitra, C.S., 2010. The use of Michael Porter's generic strategies in the Romanian hotel industry.International Journal of Trade, Economics and Finance, 1(2), p.173.
Cadle, J., Paul, D. and Turner, P., 2010. Business analysis techniques: 72 essential tools for success. BCS, The Chartered Institute.
Cartwright, S. and Cooper, C.L., 2014. Mergers and acquisitions: The human factor. Butterworth-Heinemann.
Hoberg, G. and Phillips, G., 2010. Product market synergies and competition in mergers and acquisitions: A text-based analysis. Review of Financial Studies, 23(10), pp.3773-3811.
Müller-Stewens, G., Kunisch, S. and Binder, A. eds., 2010. Mergers & Acquisitions.Schäffer-PoeschelVerlag.
Parry, G., Mills, J. and Turner, C., 2010. Lean competence: integration of theories in operations management practice. Supply Chain Management: An International Journal, 15(3), pp.216-226.
Uddin, M.B. and Akhter, B., 2011. Strategic alliance and competitiveness: theoretical framework. Researchers World, 2(1), p.43.
Wang, W.C., Lin, C.H. and Chu, Y.C., 2011. Types of competitive advantage and analysis. International Journal of Business and Management, 6(5), p.100.
Welter, F. and Smallbone, D., 2011. Institutional perspectives on entrepreneurial behavior in challenging environments. Journal of Small Business Management, 49(1), pp.107-125.
Wheelen, T.L. and Hunger, J.D., 2011. Concepts in strategic management and business policy.