week 14

Week 14

1.      In your own words and using referenced quotes describe the difference between ‘business unit level’ strategy and ‘corporate level’ strategy.

  An autonomous division or organizational unit, small enough to be flexible and large enough to exercise control over most of the factors affecting its long-term performance.

Because strategic business units are more agile (and usually have independent missions and objectives), they allow the owning conglomerate to respond quickly to changing economic or market situations. (www.businessdictonary.com)

 The most widespread view is that improving the competitive strategies of the operating units is the essence of corporate strategy. The corporate office should be focused on, for example, the identification and capture of synergies between operating units. There remains considerable debate about how best to do this. But the underlying assumption – that corporate strategy supplements competitive strategy – goes unchallenged, begging the question whether the corporate office can make any other kind of contribution. (www.iveybusinessjournal.com)

2)  Discuss the corporate parenting style of Virgin group.

1)      What type of corporate parent is Virgin? (portfolio manager, synergy manager or parental developer)

Virgin group falls under parental developers. As virgin group always give emphasis to add value to their business from their own innovation and capabilities. The brand name and reputation of Sir Richard Branson has been the key reason of the success of the Virgin group. These are some factors that add value to the business of virgin group.  And also Virgin group provides the complete authority to its business unit to operate in their respective way which clearly explains that the company follows the developer type of corporate parent.

2) How does the Virgin Group, as a corporate parent, add value to its businesses?

As the Virgin Company is the parent company and its competitiveness add value to the entire brand image. In addition to that their unrivalled network of friends, Sir Richard Branson’s personal reputation, management style, contacts and partners add extreme level of value for the business. Each and every company under the Virgin group shares the common type of ideas, interests, values and goals.  And the most important thing is that they solve the problem of one unit with joint effort and which helps to make the warm rapport with one another. These things are the reasons behind the electrifying and successful companies under virgin group.

3) What is the logic of portfolio? Why do you think they are in mobile telephony, travel, financial services, leisure, music, holidays and health & wellness?

Every business house and investor wants to make their level of risk low and return high. And for that purpose portfolio is the best way. When  business firm maintains the portfolio than it will help them to recover from the loss of one business as profit from other business will give a support.  Another aspect is that the company want to be in every segment of business to make the brand image strong in the market.

As Virgin is the brand name renowned to the consumers, the Virgin Group may gain profit from the loyalty of the consumers. So, they are in mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. (www.virgin.com)

4) What are the main risks facing Virgin Group as a result of their strategy? How might they be reduced?

Brand image of Virgin group is very strong in the market and the full credit goes for the Sir Richard Branson. If something unexpected happens to Sir Branson than company will lose the greatest assets resulting decrement in the image and brand value. Though Virgin group have a very strong team of management expert but they are not able to endorse themselves in the market as Sir Branson.

References:

 

(n.d.). Retrieved from www.businessdictonary.com: http://www.businessdictionary.com/definition/strategic-business-unit-SBU.html

(n.d.). Retrieved from www.iveybusinessjournal.com: http://iveybusinessjournal.com/topics/strategy/what-is-corporate-strategy-really#.Up59kNIW384

(n.d.). Retrieved from www.virgin.com: http://www.virgin.com/about-us