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