According to Grant (2012), “At the beginning of 2012, there were 228 Virgin companies registered at Britain’s Companies House, 68 of which were identified as removed or “recently dissolved”. There is no overall parent company for the Group, there are approximately 20 holding companies that own several operating companies within the same line of business, each of which owns/employs its own resources.

OperationsVirgin aims to:

Seek new opportunities and innovation within industries Build businesses, doesn’t buy Operate as individual smaller companies Build business around people Give back to consumer and society

Resources Brand Finances Organisational/management structure

Capabilities Management and marketing Increasing global presence Industry links

Organisational structure The Virgin companies have an entrepreneurial spirit whist minimizing bureaucracy. It

is a cluster of loosely associated companies instead of a hierarchical company. Branson acts as a back seat leader, encouraging people to use their creativity and welcoming good ideas. The culture is one of ‘make work fun’ and informality.

The Virgin Group possesses considerable financial and managerial talent, and what Virgin lacks in formal structure is made up for by a strong culture with close personal ties. The Group’s structure is virtually flat, offering short lines of communication and flexible response capability. Employees are given a great deal of responsibility and freedom in order to stimulate ideas generation, initiative, commitment and fun. The lack of a corporate headquarter and the small size of most of the Virgin operating companies are intended to foster teamwork and a strong entrepreneurial spirit.

Financial organization and performance Each Virgin Company was financed on a standalone basis. During the past 15 years,

Virgin has relied increasingly on equity partners to finance new business ventures. Virgin was able to use the Virgin brand and Branson’s celebrity status to obtain 51%

or more of the equity of new ventures while contributing a minority of the equity capital.

Companies are not public, but privately owned and financed by internal cash flows and equity. Others are financed through joint venture agreements or external debt.

The idea is to nurture the companies to stand on their two feet and compete favorably among themselves and others in their lines of business.

Problem: Business analysis from sources such as the Economist and the Financial Times, have

consistently criticized Branson's sense of business, alleging that most of his companies are underperforming and making losses; while some are taking cover under the viable ones.

To avoid damage to the Virgin brand and Branson’s image, a number of unprofitable businesses have kept operational, rather than being sold or declared bankrupt; yet, other Virgin companies that were profitable, such as Virgin Records, have been sold in order to finance new ventures.

Globalization The group has moved into global markets, with new ventures such as health clubs, space flight and biofuels.

Virgin has not yet completely established itself in the US, European and Asian markets. Currently most of the business are in the UK only, and consequently the majority of sales are generated here. Because Virgin operates in so many different countries, it faces the risks of fluctuation in the economic cycle of the different countries. The main obstacle for Virgin in creating a truly global brand is the geographical balancing of the sales. Expansion will be needed in countries outside the UK to achieve better balance.

Brand & Linkages The common linkage between the entire range of enterprises include the use of the

Virgin brand name, and the role of the Group’s founder, Richard Branson. For most of the Virgin companies, the ultimate parent was identified as Virgin Group Holdings ltd.

The use of 'Virgin' brand by this diverse range of enterprises creates that sense of belonging and cooperation within the group. The brand name is perceived by many to be the single greatest asset binding these different companies.

The brand name and the novel entry of Branson into new business frontiers has become an open door to the entire group, as the companies collaborates in business. Branson's modest approach to business has done a lot to strengthen the brand name, which in turn strengthens the synergies among the separate Virgin companies.

Despite public criticisms over possible over extension of this brand, the wide spread use of the brand in capturing new and ailing business is enjoyed by many within the Virgin group.

The business collaborations among the ever expanding Virgin group of companies are indeed a strong indication that without such synergies through use of its brand, majority of the Group's firms would have folded up and cease to exist.

From customers' point of view, Virgin's desire and ambition to be known as 'customers' champion' is achieved basically by delivering brand values across the entire Virgin Group.

Problem: Branson places too much emphasis on the brand. The power of the Virgin brnd has

overshadowed Branson’s ability to successfully align his strategic and tactical objectives. He must realize that in the competitive world, the brand may not be enough. The global consumer is requiring more from marketers, not just the product but also all the elements that add to its position in the market.

Branson’s reputation is closely linked to the Virgin company reputation, thus if he were to tumble, the Virgin brand would also tumble. As they are so closely linked, the risk is also high should Richard Branson abruptly depart or die.

Diversification

Virgin has penetrated a large number of very diverse industries, from the music industry, airline industry to the telecom industry and online car selling. Although the industries are unrelated, Virgin has penetrated each of them with great or reasonable success. The markets that virgin has been able to successfully penetrate tend to have features in common: they are typically markets where the customer has been taken advantage of or under-served.

Problem: Branson has led the Virgin Group in many different ventures within completely

different business segments, including cola, vodka, utilities, train services, computers, mobile telephony, etc. However over diversification and lack of focus have caused problems. For example, intense competition in its airline business forced Branson to sell Virgin Records to help the airline survive.

Virgin decided to run part of the British Rail by promising that it would improve the service and punctuality. Unfortunately, Virgin did not deliver on either promise.

Although being involved in various businesses can give the people the image of being competitive and diversified, it can also send out mixed messages regarding the image of the Virgin brand.

Analysis of Virgin’s Corporate Strategy Model

The Virgin culture Since its start up as Virgin Records, the Virgin Group has retained a strategic model

that devolves from its original culture and values. Distinctly entrepreneurial, the organization has no headquarters yet has presided over and managed a period of massive growth and continued profitability.

Virgin’s Linkages and Diversification One risk-mitigating strategy that Virgin employs is to keep most of the individual

Virgin companies legally independent from one another, thus avoiding many legal pitfalls faced by more traditional conglomerates; yet the companies are linked in their strategy and in certain areas of knowledge sharing, much like a family rather than a hierarchy.

The individual entities are empowered to run their own affairs, yet help on another, and solutions to problems from all kinds of sources. In a sense, Virgin is a community with shared ideas, values, interests and goals.

When entering into a new industry, Virgin attacks the dominant companies, playing strongly the ‘David’ against the industry’s ‘Goliaths’, carefully picking its battles and

trying to hit the Goliaths where it hurts. In the mean time, Virgin is proactive and quick to act, avoiding paralysis by long analysis, which is one advantage to having a small, close-knit management team. To fill the expertise gaps, the company uses joint ventures or other partnerships.

Future outlook Organizational Restructuring:

Virgin is described by many, as a flat organization that is centered on an individual. The inability of Virgin Group to operate under a formal structure leaves many of its

performances to questioning. As it is today, Branson calls the shot and determines the business and policy

direction. It is true, that Branson has excellent business acumen and charisma, and it has been working for him under this loosely structured arrangement. How would it be if Branson retires?

To ensure a proper succession plan, Branson should follow a formal structure, with centralized decision-making body, such that any other top opinion former coming after him can easily fit in. Virgin Group should also have a corporate headquarters, where the group's policy and financial decisions are centralized.

Financial Restructuring As it is today, financial structure and accounting system in Virgin remains

fragmented. No consolidated accounts exist for the group, not even for some holding companies

and their subsidiaries. Tracking the financial results of the separate Virgin companies appears to be the most daunting part of Branson's business.

Even though, Branson consistently argued that all his business investments are financed on a standalone-basis, but analysts also pointed many instances where monies accrued from viable companies have been transferred to other ailing companies to resuscitate them without proper accounting.

For example, records available proved that in 1992, Virgin records, one of the most profitable businesses of Branson, was sold to safeguard Virgin Atlantic; and about 49% of Virgin Atlantic again given up to Singapore Airline to survive Music Retail Business. In view of this, and to ensure continuity, Virgin should have a more structured and centralized financial accounting system for the group.