Virgin Group Essay

Virgin
Virgin is one of the best known-brands in Britain today, with 96% recognition and it is well known world wide. It is strongly associated with its founder
– 95% can name him. In 2004 Interbrand ranked it eighth in the global rankings for Brand of the Year.
Research shows it is associated with value for money, quality, good service, innovation, fun and a sense of competitive advantage. But despite its high profile, Virgin is actually made up of lots of small companies – 20 umbrella companies with some 270 separate, semi independent businesses, most set up in partnership with other companies. This mirrors a Japanese management structure called ‘keietsu’, where different businesses act as a family under one brand, each empowered to run their own affairs independently, but offering help and support where needed. Richard Branson explains: Despite employing over 20000 people, Virgin is not a big company - it’s a big brand made up of lots of small companies. Our priorities are the opposite of our large competitors’....For us our employees matter most. It just seems common sense that if you have a happy, well motivated workforce, you’re much more likely to have happy customers. And in due course the resulting profits will make your shareholders happy. Convention dictates that big is beautiful, but every time one of our ventures gets too big we divide it up into smaller units....Each time we do this, the people involved haven’t had much more work to do, but necessarily they have a greater incentive to perform and a greater zest for their work.
Virgin uses its brand as a capital asset in joint ventures. It is continually searching out opportunities where it can offer something ‘better, fresher and more valuable’.
Virgin contributes the brand and Richard Branson’s PR profile, whilst the partner provides the operating capability and often the capital input – in some ways like a franchise operation. New firms are set up and sold off to finance Virgin’s global expansion. In the three years to 2002 Virgin raised an estimated £1.3 billion in this way. Among these the biggest was the sale of 49% of Virgin Atlantic to Singapore
Airlines for an estimated £600 million, followed in 2001 by a £75 million mortgage secured on his remaining stake. Virgin sold 50% of Virgin Blue, the Australian lowfare carrier to Patrick Corp. for £96 million. It also sold Virgin One to Royal Bank of
Scotland for £45 million, the Virgin Active health clubs for £75 million and the French
Megastore business to Lagardère for £92 million. Virgin has also raised smaller amounts by selling stakes in Raymond Blanc’s restaurants.
The brand has been largely built through the personal PR efforts of its founder.
According to Richard Branson:
‘Brands must be built around reputation, quality and price …
People should not be asking ‘is this one product too far?’ but rather, ‘what are the qualities of my company’s name? How can I develop them?’
According to Will Whitehorn, director of corporate affairs at
Virgin Management:
‘At Virgin, we know what the brand name means, and when we put our brand name on something, we’re making a promise.
It’s a promise we’ve always kept and always will. It’s harder
© 2008 Professor Pal Burns. Extract from: Corporate Entrepreneurship: Building the
Entrepreneurial Organization (2nd Edition), Paul Burns, Palgrave Macmillan, 2008.

work keeping promises than making them, but there is no secret formula. Virgin sticks to its principles and keeps its promises.’
Virgin defines its consumers as ‘the public at large – anyone who will buy from us.’ It defines its customers as ‘people who are using Virgin products or services’ and would like to extend its relationship with them, for example through Virgin Mobile. It believes its products and services are about making life easier – ‘developing better value for money, a better service, challenging the status quo, and injecting an element of fun into

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