Does the Virgin Group, as a Corporate Parent, Add Value to Its Businesses?

Does the Virgin Group, as a corporate parent, add value to its businesses? If so how?

Corporate Parent

Corporate parent is a role that is performed by ‘corporate-level’ executives in relation to managing individual business units that makes up diversified corporate’s portfolio.(Johnson et Al,2007). There are four main categories of activity by which a corporate parent can add value: Envisioning, coaching and facilitating, providing central services and resources, intervening. Value adding activity differs to each type of corporate parent.

Virgin as a Corporate parent

The Virgin Group as a corporate parent values all its businesses. Richard Branson, Founder of Virgin Group, declared in a statement, ‘At Virgin, we try to infuse everything we do, whether its music, travel or telecommunications industry with a sense of entrepreneurialism, innovation and fun.

The Virgin Group achieves value by understanding the institutionalised markets. The Virgin’s management team has done a good job in identifying satisfaction in the market. The management team expertise and experience matched with the strategy allows the company to offer more for less.

Virgin added value: Brand Value, Shared labour resource pool, Internal capital market, stretch and resource leverage

Value Adding Activities:

The Virgin Group, as a corporate parent does value to its business. It is achieved by the following points:

Understanding of institutionalised Markets
Virgin’s management team have done well in identifying complacency in the market. It is this expertise/experience coupled with the strategy to offer more for less that has helped the Group plough through complacent business industries. The sharing of knowledge, expertise, common values, interest and goals assist their businesses by identifying and understanding opportunities presented by ‘institutionalized’ markets. Corporate parent boosts its business unit significantly by picking the right market at the right time.

Virgin brand name to overcome barriers to entry
The Virgin brand name is a consumer’s champion and as mentioned previously is a much respected brand with the British public.

In a sense the Virgin Group is a community, every Small Business Unit in it share ideas, values, interests, goals, and the most important, they share the same brand. Therefore the Virgin Group as a corporate parent have set standards and helped the businesses know exactly how to create value to the customers and how to ensure that the brand name is upheld.

As a corporate parent virgin’s brand name has helped to overcome barriers to entry. The fact the brand name is well established and accepted by the public it has helped with getting into certain markets and to expand into areas where the Virgin Group believes it can make a difference and offering something different to the consumers and a good price.

The Virgin group also added value to its businesses with the brand name and used the brand name to help overcome barriers to entry. The Virgin brand name is a consumer’s supporter and as mention before the brand is much respected with the British public.

1.   The Virgin brand name is the single most important asset of the company – companies’ willingness to form joint venture

Limiting Risk in joint Ventures
Any company, corporation or organisation in a joint venture with the Virgin Group has the benefit of limiting its risk in the market place. This reiterates the point made in the last paragraph.

The Virgin Group at a corporate parent also helps with limiting the risks for the other businesses joining in the joint venture. Any company, corporation or organisation that is in a joint venture with the Virgin Group had the benefits of limiting the risks associated in the market place.

Virgin has limited the risks by going into joint ventures and any company that goes into a joint venture with Virgin also benefits the limitations of risks in the market place. As a corporate parent it helps the new venture as one have limited risks as it is under a well known brand of standards and low cost. It also encourages the management teams to be independent and make choices that will better the growth of the company.

1. Close ties to other companies in a related industry. The virgin group covers a wide range of area. Allow individual virgin businesses to offer better value and deals than its competitors.  Economies of scale. More flexible financial funding paths

Management are not restricted
A flat management structure helps encourage innovation; provides flexibility and promotes the values of shared ownership and responsibility.

The other value that the Virgin Group contributes as a corporate parent is that they do not restrict the management teams. The Virgin Group has a flat management structure which helps encourage innovation, flexibility and it can help promote the values of shared ownership and responsibilities. (Rob Abdul, 30/01/02)

Innovation
Virgin’s senior staff consists of individuals with successful careers. The Group acquires like-minded partners in ventures who match their ability to innovate and differentiate.