Background Information and Challenges of the Virgin Group
From 1968 to 2007, Richard Branson leads the Virgin group to become a conglomerate of more than 200 companies with business in music, airlines, rail transport, soft drinks, radio broadcasting and etc. (Grant 2005a:309) The Virgin Group followed many other companies during the 1950 to1980 period in adopting diversification as a mean for corporate growth. The boom of unrelated diversification of the early 1960s and 1970s was halted abruptly however by the failure of many large diversified companies (Grant 2005b:447). The simple action of bringing various businesses together under a single ownership itself was clearly not sufficient in creating shareholder value. The following years saw a reverse trend in diversification where large conglomerates either become unprofitable and declare bankruptcy or chose to de-merge to form more focused corporations around more related capabilities (Besanko et al, 2007:287). Related diversification offered greater potential benefits, but may also posed greater management problems in managing such that such potential advantages may not be realized (Grant 2005b:463). In an era of corporate refocusing and the nurturing of core competences, the Virgin group faced, and keeps facing major challenges in managing a large diversified company. The success of Virgin can be in grand part attributed to Branson’s innovative style of management.
The Culture of Virgin Group- Branson’s Management
The Virgin Group chose to adopt a related diversification of many companies spread across very unrelated business (from airlines to soft drinks), but sharing common management capabilities and strategic management systems. Virgin is formed by mostly start–up companies which benefited from Brans ...