Richard Branson Management Analysis

Richard Branson Management Analysis staring(a) is a company established in 1970 by Richard Branson as a get off order company for sale of records. The company name sodding(a) was suggested by an associate of Mr Branson and was adopted as proclaiming their commercial innocence, while possessing approximately variety and modest shock-value ( apportion, 2010808). Over the years, the company has self-aggrandizing rapidly and became a tip instigatored venture which modify into rebounder(a) pedigreees. Today, thoroughgoing(a) is widely recognize and has become iodine of the most respected blurs owing to successfully winn businesses in atomic number 18as much(prenominal) as the air passage industry, telecom, fiscal work, music and so forth So far, the company has more than 200 individual companies or ventures which be owned and controlled by 20 holding companies that operate under one umbrella sodding(a). Most of these companies own assets, employ people, offer goods a nd services (Grant, 2010816). purge though wholly saturated companies and ventures be separate entities, each is appoint to campaigning its own affairs. They sh be common resources and capabilities that bring together them. Grant (2010) illustrious that the principal commonalities between this respective(a) range of enterprises are, the Virgin brand, and the role of Richard Branson as their instigator and major(ip) investor which is discussed below.Resources and capabilities defined by Grant (2010) are earnable assets owned by a company and what the company can do. Resources are non productive in themselves they need to be converted into capabilities by being managed and co-ordinated (openlearn.open.ac.uk). For a company to gain hawkish advantage, the company requires to accent on key specializations in resources and capabilities and ensure both work in concert kinda of in isolation. In the case of the Virgin chemical throng, one major resource is its founder Bra nson, who founded the company in 1970. His fond leadership is vital to developing new capabilities for Virgin. As tell by Grant (2010), his strength as a businessman was in conceiving and implementing new business ideas. Richard Branson is not only the founder, he is in any case an instigator and major investor in the company. His fervency and devotion for business led him to establish a series of former(a) Virgin companies such as Virgin Records, Virgin Airline, Virgin Rail, Virgin sens etc.He is famous piecewide, his leadership of the Virgin Group extended beyond his role as a source of entrepreneurial ideas. As creator of Virgin and its unique corporate culture, and the primary booster station of its image and entrepreneurial spirit, Branson was synonymous with Virgin (Grant, 2010814). He does not get a line in corporate culture and bureaucracy, he prefers to do things antithetically by transition from rule Britainnia to cool Britainnia. Informality and disrespect for c onvention were substitution to Bransons way of business (Grant, 2010814). Over the years, Branson has become more of strategicalal and magnetized leader of the Virgin Group instead of mere hand-on manager and his business vision has been a driving force for the success of Virgin.An some other link is the Virgin Brand. Brand names and other trademarks are a form of reputational asset, their value is in the confidence they instill in customers (Grant, 2010128). Grant (2010), depict it as the Virgin groups most valuable asset. He noted that the value and characteristics that the Virgin brand communicated are inseparable from Branson the entrepreneur. The Virgin brand was also identified with innovation and unconventional strategies and securities industrying that characterised most Virgin start-ups (Grant, 2010813). With the brand, the group was able to make up other companies representing quality of services and value for money. It enabled them to take a crap a range of produc ts and services over other markets. Even though a brand name is an intangible asset, the value to organisational growth and competitive advantage sometimes can be immeasurable. The success of a soaked to build a strong consumer brands cook a powerful motivator to diversify which the Virgin group wee succeeded in doing (Grant, 2010130). The Virgin brand allowed the group to diversify to unlikely business areas in countries around the land like the US, Australia, Singapore, Japan, Hong Kong etc.The success of Virgin can also be traced to its organisational structure and culture. Organisational culture as identified by Jay Barney and cited by Grant (2010) is a firm resources of great strategic importance that is potentially in truth valuable which relates to its values, traditions and social norms. Virgins ability to operate effectively with so itsy-bitsy formal structure or anxiety systems owes much to the groups organisational culture as defined by Bransons own values and ci rcumspection style (Grant, 2010818). He draws inspirations from the ideas of others and advance submission of new business ideas to its corporate offices. Employees are encouraged to develop business ideas for new businesses. Grant (2010) pointed out that the idea of Virgin Bride was actually from a Virgin Atlantic employee appalled of products and services offered by bridal stores in the UK. Employees have stakes in the group and strive to make the company succeed, allowing them to manage and control the company and also to wonder the benefits of their success. In 1993, Branson summed up Virgins relationship with employees as staff first, then customers and shareholders. Virgins susceptibility is in using employees competence and commitments in achieving organisational goals which can only run across where there is an open work butt structure and culture.Virgin has done swell up in the establishment and management of new businesses over the years, but some of its businesses a re no dourer what they used to be considering the current the world economic downturn. Virgin must look inward and see some of its ventures that are no longer economically viable and consider divestment. A few of them should be considered like Virgin airline, Virgin money, Virgin sens etc. Virgin dominated the airline industry due to its management style and offering customers value for money, but this came at a price. The airline industry is capital intensive. As a matter of particular, in 1992 Branson sell his most profitable and successful business, Virgin Music for 560 million to computer memory Virgin Atlantic (Grant 2010809). Even though the airline still makes profit but it is not as profitable as it used to a decade ago. People no longer travel as much, and aspiration in the entire travel industry is rife. Nowadays, airlines are always nerve-wracking to win customers over by offering low prices and unique packages, heighten with substitutes to air travel etc. There ar e other factors touch the profitability of air travel such as government regulations and deregulations, mellowed jet fuel price, taxes etc. Considering all these, it depart be vanquish for Branson and the Virgin group to divest Virgin Airline.Branson is always known as trying to stick it the freehand boys, but his involvement in financial activities seems to be a business that should be left to the big boys by divesting and concentrating on other areas. Customers exiting prefer products and services from institutions with a long history and good track record such as banks and other financial institutions. With more established players in the field, his involvement is a superficial tricky. Virgin is not a bank and does not have all the infrastructures to ensure full banking activities, and as a result its travail to put forward for 318 RBS branches in England and Wales failed, and was ran over by Spanish banking giant Santander, a hap indication for Virgin to divest Virgin money.Virgin cola, another of Richard Bransons effort to stick it to the big boys should also consider divestment. It is a known fact that brands fail when they move into unknown territories. Even though, Virgin cola skill be cheaper than the likes of Coca-Cola and Pepsi, these are two giant coke makers known worldwide. It will be hard, if not impossible for Virgin Cola to make an impaction competitively in the world market. Coke and Pepsi take competition disadvantageously and will not fold arms while Virgin Cola try to unseat them. It is believed that strong brands exploit competitors weaknesses. Though Virgin is a strong brand, but its Virgin Cola is not a strong brand when compared to Coca-Cola and Pepsi. By 1997, Virgin Cola was losing 5 million on revenues of 30 million (Grant, 2010813). Still trying to take on the big boys will come at a detrimental speak tos to Virgin. So, it will be wise to also divest Virgin Cola.As a result of diversification, a firm can expand its r ange of products and services and sell to existing customers or create new markets in different parts of the world thereby increasing value and growth. Grant (2010), expound it as risk reduction strategy that enables shareholders spread risks. He noted that the focus of diversification analysis has been to identify the circumstances in which multi-business exertion can create value (Grant, 2010406). To determine if diversification will create shareholder value, Grant advised to apply Porters essential tests the attractiveness test, the cost of entry test and the better off test, Grant (2010408). He explained that without diversification, firms are practically prisoners in their own industry. Branson successfully built companies from ground-up but strategic shackle with firms with the resources and capabilities might be beneficial. Alliance is something Branson knows well. In 2007, he negotiated an union with an Indian company Tata to establish Indian Virgin mobile. Branson shou ld do the corresponding by diversifying into road construction in developing countries like Nigeria. An alliance with an already established company in Nigeria with the resources and capabilities such as Chinas move Shibang Machinery company (SBM) will be ideal. SBM provides construction companies with large amounts of stone crushers, gritstone making machines and industry grinding machines. Virgin has economies of scope as a result of tangible and intangible resources due to its brand name, this can be exploited to increase value through licensing or franchising.Virgins operating styles have been designed by Branson. Things have changed, Virgin should adjust its financial structure. Branson should consider looking within the group and consolidate or divest companies that are not performing well. Grant (2010) noted that to obtain the tax eternal sleep from Virgins loss-making firms, there are clear advantages to consolidation. Branson argued that Virgin companies operate on a st andalone basis but consolidation of some in similar businesses such as Virgin Atlantic, Virgin Blue and Virgin Express, Virgin retail and Victory Corporation will create more financial stability. This will also cut down the overhead of conducting multi businesses and offer customers more diversified service range.Virgin is a successful brand of small companies that run independently, its organisational structure has been as styled by Branson. The structure has worked to an extent but Virgin should allow its brand name to be used by other small good companies through certification and collect royalties. Grant (2010), draw the Virgin brand as its most valuable asset. The benefit of franchising the brand means Virgin can reduce risk, provide the much need cash that it requires to run other profitable businesses, watch the business grow with minimal involvement, freely expand to other businesses and enter new markets in new countries. Franchisees are very of the essence(predicate) s ource of newmarket offeringsand product concepts. Many companies have done well through franchise such as McDonalds, Trump hotels etc.The management structure of Virgin has been centred on one man, Branson and operated with little formal structure or management systems, this will not last forever. An organisation as big and diverse as Virgin should have a top-bottom management system instead of decisions being made by Branson and a few close pals. It is important that a well detailed management structure is in place instead of no-building, no-headquarters type of management he operates. The system may have worked under Branson does not mean it will work after him. Virgin is not a one-man business, it is a multi-national corporation and if Branson was to become slight active as chief entrepreneur, public relations director and strategic architect without a defined management structure in place, who or what would take his place (Grant, 2010822)? A centralised and systematic way of ma naging the time to come without Branson is what Virgin needs like Apple Inc.