Thursday, March 7, 2013

week 14


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

‘Business Unit level’ Strategy:

Organization which makes their own decision on its way to maintaining, creating and via its competitive benefits is referred as business unit level strategies. Once identifying the organization product line, competition and market situation, then a business owner can easily recognize where the competitive advantage lies. For example: A gourment candy company finds that they cannot compete in price in market because they know bigger companies usually benefit from economies of scale which maintain cost low. As a substitute the small business would prefer a differentiation strategy, highlighting quality ingredients, freshness or other attribute to add value to their customer. So, business strategy will distress the small company’s functional decisions such as selection of its distribution and promotion channels.

‘Corporate Level’ Strategy:

As we know when organizations recognize opportunities outside its company, it might ponder diversification. When additional business turn into the part of the industry, the small business owner must consider ‘corporate level’ strategy. The umbrella company must contribute different things to be effective such as their efficiency, competitive advantage and profitability of each business unit. One of the gourmet candy makers may choose to enter into the business of dried fruit as per example the corporate decision is said to be sound if only the parent organization can extend and develop a competitive advantage like economies of scale, integrated procurement and management, mass production or cost reduction over their business. For example: The founder may verify that mail order candy distribution scheme is rightly fitted for the dried fruit business and that consumer survey as well as research indicates existing customer will purchase items for the both companies. Furthermore company may able to negotiate volume discount for raisins, dried cherries or cranberries which products will used in both business.

 We recognize that there is equal important to the company whether it is corporate level strategy   or business unit level. Workers are utilized effectively and efficiently by the firm but they should be utilizing differently according to their skills, abilities, knowledge, specialization areas and others. Business level strategies is used in order to solve definite problems on the other hand corporate level strategies is used in order to solve when the stuff is regarding to wider problem.

 In addition corporate unit strategies is long term strategies which should not be changed commonly whereas business level strategy is short term strategy which is changing according to change is markets and consumer preferences.

 Furthermore, a corporate level strategy is complex in nature which requires more time, effort, cost, etc and it impacts more in organization than business level strategies.

 2. Discuss the corporate parenting style of Virgin group.

Introduction of Virgin Group:
The virgin group is the collection of individually run British companies with the virgin brand beneath the control and leadership of English celebrity business tycoon Sir Richard Branson. The key business areas are lifestyle and music, leisure, holydays, wellness, entertainment, travel, among others. It employs more than 50000 people and global branded revenues in 34 nations were approximately 13 billion (in pounds).

Source: : https//www.Virgin.svg.png%3Bhttp%253A%252F%252Fen.wikipedia.org%252Fwiki%252FVirgin_Group%3B200%3B178


Virgin’s Corporate Parenting Style:

Virgin group was first and most obvious distinctive resource is the Richard Branson and the virgin people that make up the organization. Charismatic style leadership is followed by Richard Branson which is a synonymous and entrepreneurial style is apositive feature that others organizations are unable to replicate or imitate and it is his personality that is synonymous with the virgin brand which makes the company unique in nature. Likewise, the virgin group catches the attention of the virgin people in their branding and reputation who are only a definite type together with Branson; the virgin inhabitants form the human capital that is distinctive to virgin which is unattainable for other firms to copy.



Source:

Virgin brand is familiar by the 96% of the UK consumers and is linked amongst consumers with innovation, fun, trust and success. Virgin has been able to continue the virgin personality across multiple businesses in a way that hardly any other companies have, and the popularity of the virgin brand generate unique brand equity that is not easy for competitors to replicate or imitate.

The virgin culture which is related to people who make up the firm, that has been build over decades and that distinguish the work environment within virgin group from other organizations. It is the ethnicity that is not looking for clones that is like a family and is one that necessitates employees to have the virgin style. These unique attributes in attendance in virgin workers set together to create a typical corporate culture that only the virgin group maintains to have.







Corporate parenting style involves non-related diversification at the individual business unit level in virgin group. For the moment, synergies are created from hierarchical relationships and the communication of the corporate head office with individual production unit. Unique cultures of virgin also permit to breaks into new markets and execute its project very effectively. Decentralized in organizational structure adds value in decision making also to prevent breakdown in communication individual business units pursuing their own strategies in an uncoordinated.

By understanding different attributes of virgin such as management style corporate structure as well as ownership we can say that this company is pursuessynergy manager corporate parenting style. Enhancing value across business unit by managing synergies across business units is done with the help of synergy manager corporate parenting style.
Everyone can simply speak that Virgin is pursuing synergy manager corporate parenting style because of enlisted reasons:

Moveable or transferable skills:
This group is transferring their skills in different organization. For example: to improve their technology by simply transferring virgin Music to virgin cinema. Virgin group add their capabilities and value by sharing knowledge, skills and technologies. Gathered skills and knowledge of one business unit is utilized in another business unit which obviously enhance in performance and outcomes.

Sharing resources and activities:
In different nations virgin offices are shared by their smaller unit of business according to geographical diversity. They also exercise similar distribution system across their business. In addition they used the same brand name for each of their products and services.


Case Study:

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

In my opinion virgin group follows synergy manager corporate parenting style. It emphases and improve as autonomous enterprises under a distinct unified brand name. Another attributes is that it also focuses on decentralized organizational structure which allows an entrepreneurial environment for managers to make decision effectively, which escape bureaucracy related with large centralized business.

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

Really virgin companies add value to its business under their umbrella that accrues to the brand as a whole. The diverse aspect of the virgin group allows for more consumer and investor confidence. This group does not depend on the just one area or industry for its economic health and profitability. In fact investors are especially aware of the advantageous of diverse portfolio. Each company shares in those benefits in more than one way.
Virgin group different companies which form a part of the group also take advantage from economies of scale. When resources like raw materials are wanted purchase can be done in large amount that allow each business to increase revenue by reducing marginal cost. Another areas in which virgin add value to its business is their brand which is trustable by customers.

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

The key aim of portfolio is to equilibrium the industry. Logic of portfolio helps every business to fine-tune benefits and losses. Every business is associated with their own risk, only differ is that some business have low and some have high risk. Portfolio designed for solving such risk where it be present. This will assist the sponsor to spend in different firm or companies relatively than a solo business where the risk is superior. Numerous portfolio models are accessible that obviously facilitate corporate parent to supervise their portfolio business. Examples of models are:  the directional policy matrix, Boston Consultancy Group (BCG) matrix, parenting matrix and others.
       

Furthermore, logic of portfolio is how an individual company adds value to their organization by managing     themselves within the selection and maximizing goals and objectives by satisfying the customer needs, wants and desire.

I think virgin group are in mobile telephony, financial services, travel, music leisure, holidays and health and business due to following reasons.

Þ    Brand of virgin.
Þ    Richard Branson Personal Reputation.
Þ    Virgin Contacts and Partners.
Þ    Virgin management style.
Þ    Empowerment of staff.
Þ    Virgin unrivalled networks of customers friends.


The victory of virgin group depends on corporate parenting style which is guide by Founder Richard Branson. The sustainability of virgin group competitive benefit depends on how well it maintains to retain the virgin culture and implement the strategy of decentralization in a combined branding. At least in the short run with Branson continuing to show the way the company, the tactic looks very tough and almost inescapable. In the longer run, though, Branson will have to put in place a strong progression plan and fill the corporate head office with management who are intelligent to appreciate and carry out the virgin charter. While Branson himself might be irreplaceable, he can depart his legacy by make sure that his vision is continued trough the virgin people and virgin culture. 

Virgin also has to make sure that it chooses the industries it desires to enter very carefully. A solo mistake could tarnish the virgin brand, and this might be terrible for the group as a whole association under a single brand is a double-edged weapon which can cut both ways. In addition virgin wants to continue to guarantee that the individual business unit execute in line with the superior virgin brand, and not branch off in an unrelated way.

If the virgin brand is intelligent to construct a strong leadership engine, preserve the branding coordination between its various businesses, carefully assess future business, then its corporate strategy is sound positioned to bring a bright future of the business and the virgin brand.

References:

  1.      De Wit, B and Meyer, R (editors) (2010). 4th Edition Strategy: Process, Content, Context,   Thomson International Business Press: London. Chapter 6


  2.              Dess, G, (2007) strategic management: creating competitive advantages, McGraw-Hill Australia.


         3.      Dick, Devries and Avaucourt (2000), The House that Branson built: virgin entry into the new millennium, INSEAD, Fontainebleau, France.

  4.      Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter7

Online References:

Virgin (2007 the whole story ‘virgin.com retrieved on January 21, 2007 from http/www.virgin.com/aboutvirgin/allaboutvirgin/thewholestory/default asp)






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