Case The Virgin Group in 2015 \u2013 Diversification Strategy.docx - Case The Virgin Group in 2015 Diversification Strategy Virgin Group Ltd through its

Case The Virgin Group in 2015 – Diversification Strategy.docx

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Case The Virgin Group in 2015 – Diversification Strategy Virgin Group Ltd., through its subsidiaries, engages in the businesses of mobile telephony, travel, financial services, leisure, music, holidays, and health and wellness in the United Kingdom and internationally. Throughout its history, Virgin has divested businesses, either wholly or partially, in order to release equity for other business ventures or simply to take advantage of the high valuations that others placed on Virgin businesses. in 2012, the Virgin website described itself as a “branded venture capital organization”; by 2015, it proclaimed: “Virgin is a leading international investment group” and described its corporate executives as “Virgin’s Senior Investment Team.” Doubts had frequently been expressed about the overall financial health of the group. Branson was dismissive of such speculation, claiming that analysts and journalists misunderstood his business empire, emphasizing that the financial performance goals of a private company were different from a public corporation: “Short-term taxable profits with good dividends are a prerequisite of public life. Avoiding short-term taxable profits and seeking long-term capital growth is the best approach to growing private companies. ” The observation that few Virgin companies were generating significant profits was reinforced by concerns over the balance sheet strength of the group. The complex financing arrangements between Virgin companies made it difficult to estimate the overall financial position—it is notable that many Virgin companies operated with negative shareholder equity and liabilities exceeding current assets. a. What common resources and capabilities link the separate Virgin companies? Main resources: - Management style and culture - Brand (good managers, partner, communication skilss) - Richard Branson The Virgin brand was the group’s greatest single asset.
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All the markets in which Virgin operates tend to have features in common: they are typically markets where the customer has been ripped off or under-served, where there is confusion and/or where the competition is complacent. In these markets, Virgin is able to break into
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