Virgin, history and analysis. Five forces analysis, SWOT and PEST

Virgin’s Entry Into The New Millennium

Part One Strategy Analysis

1. History review

1968-1983/4

Virgin went through the development stage of its founding, with its operations in music producing, issuing and the related fields. During this period, virgin had shown its insight in market opportunities, established its brand, style and market position by a series of unconventional operation acts.

In 1984, Virgin Atlantic was founded. This seemingly risky strategic decision was made after Branson realized the possible threats and positioned better and fresher service VA could provide. Behind this lies Virgin’s business idea of “never let the facts get in the way of a good idea” and providing value-for –money service.

1985-1992

In this period Virgin went through the process of float and management buyout. Meanwhile, it went through entertainment, airway, retailing business through a series of reconstructing such as selling, founding joint venture and launching, among with entertainment and retailing all entered international market successfully. Its airline won good reputation and greeted new developing opportunities in 1991.

Virgin showed its ability to expand as a conglomerate and reconstruct its resource.

1992-1998

In 1992 the sale of Virgin music was a milestone event in Virgin’s history. It transformed Virgin’s financial situation, provided support for the development of Virgin Atlantic, kept and upgrade V’s brand image.

This is a preview of the whole essay

1992-1998

After that, V came into the period of rapid diversification expansion ___ VA opened up new routes, its retail business was developed overseas, it began to operate in finance in 1995, V Rail was founded, V-Net was formed to enter internet market in 1996, V Express which was renamed from Euro Belgium Airlines floated in 1997 and started flights from Stansted to continental Europe in 1998. V maintained its diversification in business, investing in games, TV, computer, soft drinks, hotels, trade, consultancy, cosmetics, bridal service and re-entered music market with V2 Music in 1996.

V’s investment and operation in this period embodied the following characteristics:

· It usually chose a market of poor service and development opportunities to start a new venture;

· Reasonably set up V’s market position. It usually creates competitive advantage and promotes its brand image through providing value service and being best, fun, competing on quality as well as price;

· Make use of its brand, work together with established partners, share the resource and develop new business;

· Flexible, unconventional HRM and discrete, open, independent organisation structure guarantee the safe of its operation and the effectiveness of expansion.

1999-2000

Facing new millennium, V pushes its development in e-commerce, mobiles as well as consolidates and reconstructs its old core business such as VA, V retail.

2. Five forces analysis

3. PEST Analysis (current time)

· Politically stable in Britain;

· Competitive Tendering is carried out in public service sector including railway;

· Worldwide peace and development have been commonly recognized;

· Terrorist Attack on 11th Sept impacted on some industries, esp. airlines.

· The issue of Euro will push the development of European economy;

· China’s entry into WTO provides opportunities for world;

· Many markets remain stable;

· Globalisation will speed up the flow of capital among the nations;

· The collapse of NASDAQ had a negative effect on global e-commerce.

· Globally, there is a trend of consumer’s requirement for higher service quality and more service types;

· Cultural differences among nations increases the requirements for service localization.

· IT’s development provides opportunities for delivering “old” products and service in new ways;

· Increased regulation concerning product safety, ecology, etc. affect technological changes.

In summary V is in a macro environment with relatively stable politics, both diversified and consistent economic development, increasing and changing social needs and rapidly developing technology.

4. SWOT Analysis (current time)

· Good brand image: value- for-money, quality, innovation, fun and a sense of competitive challenge;

· Branson’s ability and publicity;

· Unique management structure and style, open, independent SUB around a centre, more like a family than a hierarchy, suitable people for suitable position;

· Unrelated diversification. Reduces risks and changes flexibly with the market. Meanwhile it provides room for reconstructing organisational resources and exerting the advantages of resources configuration.

· Good relationship with public, partners and government.

· The decision process is over-depend on Brason;

· Loose and independent organisational structure is not beneficial for playing integrated advantage;

· International markets including China provide extensive space for V’s business, esp. Airline and Retail;

· IT’s development and net user’s increase provide support for E-commerce

· Rival from competitors in main industries;

· Main industries face recession, esp. Airline

5. Major events

6. Business Philosophy

About new venture

· Built not buy;

· Never let the facts get in the way of a good idea;

· People who have to ask the questions don’t understand;

· Ideas are debated and analysed at center;

· Branson immerses himself in a new venture until he understands the ins and outs of business and hand over it to a good managing director and financial controller;

· Give new company initial awareness by Branson’s public stunt.

About organizational structure

· A corporate strategy center around Branson by a small supporting team;

· Discrete and autonomic legal entities;

· Best not biggest;

· Small is beautiful;

· Virgin Charter.

About Human resource management

· Staff first, then customer and shareholders;

· Family rather than hierarchies;

· People matter, business should be shaped around people;

· Promotion-within and making-millionaires within policy and suitable people on suitable position;