virgin atlantic case study
EXECUTIVE SUMMARY Virgin began in the 1970s with a student magazine and small mail order record company. Virgin’s growth since then has not only been impressively fast, it’s also been based on developing good ideas through excellent management principles, rather than on acquisition. Virgin looks opportunities where we can offer something better, fresher and more valuable, and seize them. Besides, Virgin often moves into areas where the customers have traditionally received a poor deal, where the competition is complacent. ... Virgin’s are pro-active and quick to act, often leaving bigger and more cumbersome organizations in virgin’s wake. Virgin known as third most recognized brand in Britain, now becoming the first global brand name of the 21st century. Virgin involved in planes, trains, finance, soft drinks, music, mobile phones, holidays, cars, wines, publishing, bridal wear and a lot. What tie all these businesses together are the values of their brand and the attitude of virgin’s employees. Virgin created over 200 companies worldwide, employing over 25,000 people. ... Virgin’s companies are part of a family rather than a hierarchy. ... In this report, Virgin Group is being analyzed in three aspects: General Environment, Industry Analysis and Value Chain Analysis. Besides that, this report also discussing diversification strategy, its relation with its stakeholders and the overstretching of Virgin brand name in Virgin Group. GENERAL ENVIRONMENT: VIRGIN’S GROUP The general environment is composed of dimensions in the broader society that influences an industry and the firms within it. ... For Virgin itself, may face external environment difficulties in understanding and to predict their general environment because they were in different industry. ... In order to increase their understanding of the general environment, company like Virgin engaged in a process called external environmental analysis. ... For Virgin, Branson diversified his business from music record to many other industries such as air and rail travels, soft drinks, spirit mobile phone, cosmetics, bridal wear, financial services, ballooning and the provision of gas and electricity. ... Demographic segments are analyzed on a global basis because many firms including Virgin compete in global market. ... This birthrate will absolutely decrease Virgin’s production and will decrease Virgin’s income and profit. ... In turn, it will affect Virgin overall performance. ... This phenomenon of course will give an impact and is to be sensitive for Virgin to overcome it. ... For Virgin, it is important to analyze the economic factors in making decisions. ... For Virgin, they do concern about all the regulations that will affect the business. ... Like Virgin, they do verify that their firm is continuously scanning the external environment to identify potential substitutes for technologies that are in current use, as well as to spot newly emerging technologies from which their firm could derive competitive advantage. Consumers can easily get information regarding Virgin’s product or latest issues through Virgin’s website. Besides, Virgin Mega store is the place where all products under Virgin was placed there and consumers can easily get to know all the products and of course buy them. Not least, Branson already has millions of customers used to visiting Virgin Web sites to book tickets, buy phones, or manage their finances. In addition, in the next few months, Virgin.com will create a link that lets them bargain shop among Virgin’s competitors before they buy. Branson’s ISP, Virgin Net, with 800,000 subscribers, is already among the top three in Britain. Virgin Mobile, which sells phones, is on target to sign up the same number of customers by yearend. ... For Virgin, always analyze their global segment and very sensitive because as we know that if there is an opportunity, Virgin will get into that business and diversify the business. ... INDUSTRY ANALYSIS The five forces of competition model are being used to understand the industry context in which Virgin Group operate. ... However, Virgin Group is a conglomerate of 200 companies, which is offering multi products to customers from cloths to airline tickets. Therefore, Virgin Group involves in several industry. ... For example, in Virgin Atlantic, Virgin Blue, Virgin Express, Virgin Trains or even British Airways needs high technology in transportation systems to provide high quality services. ... Virgin Mobile has provided pre-paid services in US and UK market where there is no pre-paid service. However, some of the Virgin products do not have significant differentiation with other products. For example, Virgin Atlantic, Virgin Train, Virgin Blue and Virgin Express do not have significant differentiation with other similar services. ... For example, Virgin Atlantic, Virgin Blue, Virgin Trains, need high fixed cost for airplane and trains. In Virgin Mobile, Branson invested $150 million in Sprint joint venture. ... In Virgin Group, there are products that need only low switching cost. ... For Virgin, their major airline supplier is Boeing and Airbus. ... For Virgin Mobile, its major supplier for its data systems is providing by Hitachi. By using Hitachi Data System, Virgin Mobile is now in a position to consolidate multiple disk environments to a single storage location with the added benefit of paying only for storage capacity when it is used. More important, at a time of intense competition in mobile communications, the new system has significantly enhanced Virgin Mobile’s business responsiveness. ... The power of buyers is distribute equally among customers, as there is no major buyers for Virgin. Many Virgin products and service require low switching cost; thus, they could shift to another product or services easily. For example, customer can choose to buy Virgin Cola or others other drinks where the market providing variety of choices. ... THREAT OF SUBSTITUTE PRODUCTS Many of Virgin products facing substitute products that can be replace easily. For example, Virgin Drinks that can be replace by Starbucks Coffee. Besides drinks, Virgin Mobile can be replacing by other means of communication tools such as internet messaging (AOL, Yahoo Messenger, and ICQ). ... Thus, different Virgin Group’s products face different degree of rivalry in the industry. ... For example, Virgin Cosmetics is not the only one cosmetic product. ... For instants, Virgin Drinks that produced in large number to reduce fixed cost for each unit of drinks. ... Virgin products such as drinks, cosmetics face this problem easily. ... Virgin is a brand name that promoted since many years ago. ... Besides that, Virgin Mobile that providing pre-paid service which is the first mobile company to provide this service will be Virgin’s core competency.