report discusses how two globally largest Commercial Organizations from their humble
beginnings reached great heights with contrasting Management Strategies.
Group of Companies
Richard Branson, Britain’s well known, leading and one of the richest
entrepreneurs, started his business career as a student, in a private school.
His magazine ‘Student’ which contained many of Branson’s subsequent
entrepreneurial initiatives such as optimism, anti-authoritarianism, fashion,
popular music and avant-garde culture filling a ‘vacuum in the market’. The
success of the magazine led him to depart from the school at the early age of 17. Branson’s
earliest venture was mail-order records. Without a fixed investment and little
working capital, Branson could easily be price competitive and challenge the then
established retail chains. In 1971, Branson opened his first retail store, on
London’s land mark Oxford Street, under the name Virgin Records reflecting
their commercial innocence. Entering into record publishing, Branson installed
a recording studio in his Oxforshire home. The album Tubular Bells, produced in
1973, was a hit and millions of copies were sold instantly all over the world. Virgin
Records then went on to sign up bands and in 1980s had popular bands Phil
Collins, Simple Minds and Boy George’s Culture Club under its Label. Sending shockwaves in his colleagues at
Virgin Records, Branson launched Virgin Atlantic, the first transatlantic
budget airline in June, 1984. Subsequently encouraged by the success of this
budget airline Virgin Atlantic, the winners of reputed customer service awards,
Branson launched several other low cost airlines for the travelers shuttling between
other major cities in the world, while creating Virgin as a great Brand in the
Travelling/Airline business too. In
financial services segment Virgin Money expanded steadfastly into retail
presence through the acquisition of government-owned Northern Rock operating with
75 branches, 2100 employees and a million account
In Primary Healthcare
services in the UK, Virgin acquired Assure and again established Virgin values
in the segment.
With the dawn
of the cellular communication era, Virgin launched Virgin Mobile, a joint
venture with Deustche Telecom as a Network Operator with bought-up access from
other providers which facility was then replicated in the US, Australia, South
Africa and South East Asia. Virgin Mobile and Virgin.net under Virgin Media Inc.
became the pioneers as providers of ‘quadruple play’ telecommunication services
in UK, offering mobile, fixed-line services broad band and TV under one roof,
consolidating Virgin as a great Brand in that segment too.
1998, Virgin introduced a speedboat service to and from Heathrow Airport and
London city centre, through the river Thames, facilitating busy executives to
avoid traffic jams of London city in its own way.
penetration into many categories of existing trades and pioneer status in many
other new areas with the unique style of constantly developing and changing
product range having in mind the customer demand in an ever changing world of
Starbucks Corporation founded in 1971 in
Seattle, USA as a small coffee shop now operates more than 25,000 outlets in
more than 60 countries and is considered as the second largest chain of
retailers in the world dealing with coffee and other fast food items. Starbucks engaged in a single category of industry/business
without diversification deals with premier quality roasted coffee, tea, fresh
food items and other beverages with a mix of other brand names. Starbucks VIA,
Starbucks Refreshers, Teavana, La Boulange are few such Brands. While Starbucks
enjoys the largest market share, Dunkin Brands, McDonalds, and other Brands
enjoy the rest.
Virgin Group of Companies,
commenced Business in 1970 in UK, now comprises more than 300 separate
Companies (in addition to more than 160 UK-registered companies there are many
Virgin companies registered and operating in overseas) with a complex ownership
structure linked through a network of parent-subsidiary relationships, in a
wide range of businesses such as Travel, Airline, Shipping, Hotel/Holiday,
Financial Services, Information and Communication Technology, Media, Fashion,
Music, Entertainment, Primary Healthcare Services/Fitness and multitude of
Retail Trades spread over 30 countries including US, Japan, Australia, New
Zealand south Africa, South East Asia and Europe. Large number of companies are
operating under the franchise of the group mainly dealing with Virgin Brands or
as suppliers, with pioneering status or most innovative new business
ideas/ventures in the respective trades. Today, while employing millions directly
and indirectly, Virgin is a leading branded venture capital organization
considered as one of the world’s most popular/recognized and respected Brands.
In communications Virgin has expanded into
overseas operations in many countries as providers of cloud computing services
in Brazil, Colombia, Chile, Poland, Oman and in the UK for the corporates.
In the Travel segment Virgin has continued its dominance as pioneers in
many innovative and customer service ventures. Virgin Galactic Spaceship has
ventured into activities in the space by selling seats in their spaceships at
rates more than £300,000 each. Pacific Blue in New Zealand, Virgin Blue in Australia,
Virgin America in the US and Virgin Balloons are few additions to the unique
service that Virgin is popular to provide.
retail trade Our Price record stores, Virgin Bridal bridal stores, Virgin Megastores
pioneered not only in the UK but in the US, Australia, Japan and in the Europe
as well to serve its customers with ever changing but uncompromised quality
products to its satisfied and loyal customers through its chain of stores.
New concepts in line with Branson’s
vision from his schooling days, Virgin developed and ventured, penetrated into
existing or never existed business categorization included Virgin Fuels
(biofuels), Virgin Drinks, Virgin Cola (drinks), Virgin Interactive (video
games), Victory Corporation (clothing and cosmetics), Virgin Active (health
clubs) and Virgin Health Bank (Storage facility of Blood stem- cells of babies,
catering to the needy parents).
As Coffee bean is the main input in
the production of premier quality Coffee the company has taken many precautions
to ensure and retain steady line of suppliers and to cushion-off/regulate
seasonal price fluctuations at reasonable levels among the coffee growing/producing
While the company’s income generates
mainly from USA operations, it is now being concentrated on further increasing
the number of Franchise-holder outlets in other Coffee and Tea consuming
Figure 1 : Ansoff Metrics
Existing product sale growth
in the existing market is called the market penetration. Starbucks coffee main
strategy is market penetration. This technique supports the company to development
by the amplifying incomes from the existing market. Starbucks as of now has
nearness in 65 nations around the globe. To amplify incomes and
development in these present markets, the organization applies the market
entrance strategy by opening more organization claimed stores. Starbucks
likewise applies this intensive system for development through authorizing for
stock and diversifying in a few nations, for example, the Dominican Republic. Another
example is Starbucks have begun to print client names on the expresso mugs. The
expectation of this is to build deals because of more net worthy customer
The Strategic direction of the
market is show by market penetration. To improve their market share Virgin
group of companies developed a quality service and the improve product range.
Most importantly various product which consumer cannot find from any other
places as same as Virgin group.
According to product development to increase market growth and sales the
way is launching new products in to existing market. As an example Starbucks
introduce coffee made with very rare beans with a different taste.
Virgin group of companies increase company sales and profit by product development
beyond developing new customers. Product should be varies with different life
styles and different tastes. Marketing development strategy developing to
increase profit through making new customers and expanding the business. Starbucks
Coffee utilizes advertise advancement as its optional concentrated development
example, Starbucks Coffee intends to enter more nations. These nations are for
the most part in Africa and the Middle East. In this strategic system,
Starbucks develops by growing its worldwide reach.
launching new products into market Its is the most risky strategy in ansoff
metrics. According to Starbucks they only had foods which significantly compliment
their beverages but as new plan Starbucks planning to launch new food range is
a diversification as a meal.
and the Risk Analysis
Group of companies
Main vulnerability of this highly diversified business empire is it’s over
dependency on one single Brand – Virgin, the greatest single asset they possess,
failure of same at one instance may adversely affect all other inter dependent
companies in the Group. However the way the group has consolidated the Brand
image in its entirety, it can be safely assumed that a single isolated failure
of one company won’t over shadow on its entire Brand image seriously, due to large
number of pioneer status in many categories of businesses/trades with consistently
developed highly innovative customer services and product variances launched, constantly
having in mind that hitherto underserved end-users a unique and uncompromising quality service/benefit still at
a reasonable price (value for money), creating a brand loyalty that cannot be
grabbed/destroyed by other competitors easily. Virgin values also include a
devoted, highly motivated, target oriented and competent work force with a
sense of possession keenly falling in line with the business principles/vision of
its creator, Sir Richard Branson.
in a highly diversified business entity Starbucks has inherent risks to address
in order to sustain in the long run.
Disposable income of
the consumers which depends on the economic prosperity of the countries they
live-in. Control the suppliers prices to maintain the profitability margins.
Health related trends
to curtail fast food to avoid Obesity and overweight. Introduce more organic
and healthy food mixes into the menus.
Seasonal changes in
Bean supplies effecting demand and price levels Starbuck’s establishment of
long term healthy and partnership relationships with the suppliers has
mitigated this risk.
Easy entry of small
time competitors into the trade. Starbuck’s huge market share, improving
efficiency, large scale and steady availability of raw material enabled them to
achieve economies of scale to maintain its pricing structures low and face the
stores ideally located in prime locations is another secret of long term dominance
over others in the trade. Constant maintenance of Attractive, clean appearance
in a pleasant environment with a customer service of highest standards is
synonymous with Starbucks brand. Starbucks is not only to popularize coffee
drinking habits among consumers but also popularize other optional beverages
like Tea and fresh/fruit juices under its own brand which is in existence
during the last half century.