Week 14

1.       Difference Between Corporate Level Strategy and Business Unit Level Strategy.

Corporate- level strategy: It is a single strategy that  interrelates all the function and scope of an organization as a whole. This level of strategy falls under the highest level of organizational hierarchy and the other business units are likely to be highly effected by the decision made. It is also responsible for the deployment of firm's resources among the portfolio units. (jstor.org) 

Business unit level strategy: It is an integrated and coordinated set of commitments and actions that the firm uses to enhance competitive advantage by exploiting core competencies in specific product markets.

Corporate level strategy	Business unit level strategy
Responsible for the issues and functions of a firm as a whole.	Responsible for the specific business unit within a firm.
Decision is made by the top level managers.	Decision is made by mid-level managers.
Responsible for the deployment of resources to various business units.	Responsible for best allocation of provided resources.
Long term strategy that cannot be changed for a long period of time.	The strategy can be changed according to the requirements and changes in the market.
It involves financial decision making, resource allocation and mergers and acquisitions.	It involves issues like pricing, advertising, human resource etc.

2.       Discuss the parenting style of Virgin group.

Virgin is a leading international investment group and one of the world's most recognized and respected brand. Conceived in 1970 by Sir Richard Branson , it had grown successfully in business sectors raging from mobile telephony, travel, financial services, leisure, music, holiday and health and wellness. (virgin.com)

The success of the Virgin group is due to its corporate parenting style. It employs more than 50,000 people around the world and operates in over 50 countries. There are more than 200 companies working under its shed with its low parental control. Being such a huge company, it has managed to keep everything under control with success and the main reason for this would be its flexibility in decentralizing its power and keeping a good relationship among its employees.  Similarly, all the products and services of Virgin are under one brand name and this had kept the good brand image of the company and also company loyalty. They also add value  to its company through innovation and joint ventures. 

Case Study- Virgin Group

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

Virgin Group is more likely to a Parental Developer type of Corporate firm.  It is a huge company and they consider themselves as one big family rather than a hierarchy. Although they have different portfolio business units and SBUs and these units are empowered to run their own affairs, the company actively participates in coordinating and helping one another. They empower their employees to share ideas, values, interests and goals.

The brand name "Virgin" is the main asset of the Virgin group. So, it has the main parenting opportunity from this to add value within the portfolio and also attract the investors.

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

The main asset of the Virgin Group lies in its brand name "Virgin" and also in is the main source of value adding for the company. Through these years, it has been able to hold a strong market share, market value and consumer loyalty. Because of this, it is easy and less risky for the company for market penetration, product development, market development and diversification.

Listed below are some of the various ways the Virgin group has been added value to its business:

·         Its brand name has created a good impression on the market and the customers. This has made the brand to win the consumer loyalty which is a positive and long term factor.

·         With the experience so long along with the various business portfolio units, Virgin group knows its market. They understand the market, its changing factors, the strategies of competitors and more.

·         Virgin group frequently creates partnership with other companies. Thus, value is added  from its joint ventures and investors and the stakeholders are likely to be benefited from the company.

·         Virgin group has a unique set of organizational structure.  The SUBs and portfolio units are empowered to run their own affairs. Likewise, they believe in empowerment of the employees.

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

Virgin group has a unique set of portfolio. Its products are highly diversified. The portfolio of business units of the company are Lifestyles, Media and Mobile, Money, People and Planet and lastly Travel.

The Virgin group has adopted this kind of diversified portfolio business unit mainly because of their interest and also to maintain balance between their risk and return. For example, if the Travel sector of the company is at risk and the media and mobile sector has positive return, it can always inject its profit to invest on the travel sector.  Likewise, in an economy, when the travel market is going down, the other business units are less likely to be effected. They can move on with no disturbance.

Virgin group can always apply, BCG matrix, Parenting matrix, Directional policy and many more to manage its business portfolio.

References:

 JSTOR ARTICLE. The Academy of Management. (2013) [online] Available from http://www.jstor.org/stable/256169?seq=4 (accessed on 8th Oct 2013)

 Virgin Group (2013) "About Us"[online] Available from  http://www.virgin.com/about-us (accessed on 8th Oct 2013)