3. COMPETITIVE ADVANTAGE
– Generic competitive strategies (cost, differentiation, focusing strategies); Hybrid and advanced strategies
1. Current marketing strategy Customers: The virgin customers are enthusiastic and excitement searcher. They are successful with high self-esteem, and are rising mobile and achievers. Virgin’s corporate customers find immense value and service in brand to be fruitful. Virgin’s ultimate customers are value, service, and quality conscious and pays top price. They are exciting loving, brave and rebel. They are global and they belong to middle-middle to upper-upper class. Customer base varies according to product/services and step of the cycle but it is rational to assume base tobe 200 million. They want value, service, and quality and fun. Network externalities, cool and buying experience are motivators. Customer experiences that they are special in every stage of buying process. Brand awareness, brand information and brand promise help customer immensely.
Virgin, an umbrella brand, has diverse products, serviced by 3,000 brands from mobile telephony to transportation, travel, financial services, media, music and fitness. Virgin has product that are in different product life cycles – introduction, growth, maturity and decline. Virgin Atlantic is in mature phase, and Virgin Green is in introduction phase. Products have high degree of differentiation and perceived to provide unique brand promise of quality, service and dynamism. Simple, valuable and upscale product and service is Virgin’s specialty.
Customer loyalty and relationship forces repurchase. Packaging, customer service enforces brand loyalty. Innovative product and service introduction is frequent. Products in different stages of life cycle have customer centric method. Brand extension and failure of some determination has recently dented brand image.
Virgin products and service command premium price, cost-plus because Virgin has considerable market power. The brand recognition, brand knowledge and brand promise of quality and service brings premium but competitive price. It is safe to assume that they promote channel discount. Free shipping in certain product for example cell phone is frequent.
Placement (Distribution): Virgin product and services are diverse and they have diverse placement dependent on the industry and area of operation. They use direct, online, mail order and distributor channels. It is reasonable to assume that they pay premium price to channels. Being global Virgin is mindful of cultural sensitivity. Megastore in big international cities acts asstore and marketing promotion as well where lot of international tourists gather. Logistics is handled efficiently to keep the brand promise.
Promotion or Integrated Marketing Communications (IMC):
Highly differentiated brand positioning using competitive frame of reference, points of difference and points of parity, and straddle positioning to assure customer gets more than promised. Delivering value pricing, high quality, fun, great customer service, and innovation, and being authentic, people-oriented, hip, and associated with Virgin founder Sir Richard Branson and his personal charisma.
Buzz and brand awareness is generated by lifestyle and activities of Richard Branson. Mega stores, billboards and TV shows and magazines.
Use of social network sites such as Facebook, Twitter and blogs is implemented to promote publicity. Richard Branson is covered doing heroic adventurous acts and seen with the presidents, politicians, diplomats and movie stars.
All Virgin services are marketed directly as well.
Business Level Strategy
The Virgin Group uses an integrated set of business level strategies to gain a competitive advantage in the market by exploiting its core competencies and matching its strengths with opportunities in its respective individual product markets. Virgin group has sometimes been referred to as a keiretsu organization, or a structure of loosely linked autonomous firms run by self-managed teams that use a family brand name. The advantage of these private conglomerates is that owners can ignore short-term goals and concentrate on long-term profits, reinvesting for this purpose. Their approach to management is a decentralized decision making process, with a focus on independent business-level decision-making and responsibility for their own development (Keiretsu). The brand name Virgin symbolizes the company being a virgin in every business they enter into and creates their actions to enter into different market segments.
As a venture capitalist, Virgin has more opportunities for innovation and profit maximization in accordance to its high rivalry in many business sectors. Its financials are steadily growing along with its physical resources such as jets, phones, cinemas, and overall technological organization. However, Virgin is currently increasing its brand reputation by using its tangible resources more effectively to expand across the Atlantic and U.S. Virgin has a flat management structure that helps encourage innovation. Decisions for Virgin are decentralized which also encourages an environment of managers taking a personal interest in the outcome of the company and accountability of decisions made. Coupled with their management style, Virgin acquires talented people to be managers. The atmosphere of creativity in Virgin’s management style create complacency in the marketplace. For example, each of the airlines under Virgin airlines operates independently. Each airline under Virgin develops a quality of jets that is relatively new creating a rareness and inimitably unmatched by its competitors.
Although Virgin does use some pieces of the cost-leadership strategy, Virgin mainly uses the differentiation business level strategy to try to better develop its brand image and capture profit maximization. The main reason for it to falter in its cost-leadership approach is that it does not have its own manufacturers. By differentiating the brand name and philosophy instead, Virgin can increase its brand awareness. The Virgin brand has been associated with quality and pleasure throughout Europe, but is not as highly valued in the U.S. The Virgin Group name has an established reputation, brand, and customer/stakeholder relations. Virgin increases its customer service by having their staffs take an active role in coming up with new ideas to solve for improvements in products and services. For example, Virgin Active in South Africa, the leading health club chain, is challenged to think of 10 improvements for every new club built. These changes influence customer’s experience of Virgins products and services. Virgin Active management team also highlights outstanding customer service in internal education programs and providing customer service awards that make their employees motivated and happy. However, Virgin does have some competitive risks associated with this strategy. For example, differentiation ceases to provide value for which customers are willing to pay in Virgin Travel when dealing with cheaper flight fairs. Virgin’s minimum level of quality for differentiation also creates threshold pricing. Finally, Virgin faces constant challenges deciding how and where to invest their capital in its respective industries (Customer Service).
Along the Value Chain, Virgin excels in sales and services used to implement its business level strategy. For example, Virgin Travel offers discounts on premium seats that have created rising sales of first and business-class seats for the industry. Virgin also analyzes its load factors to implement its rigorous price-cutting activities. Human resource management, therefore, has been put into place to keep people committed to these different companies by stock options, bonuses/profit sharing, and promotion from within. The Virgin Group is constantly being technologically developed with its touchscreen seatback entertainment, Wi-fi accessibility, health club maintenance, cutting edge smartphones, and new space travel. Their service has been specifically differentiated by each individual segment. The Virgin Group has found success in its ability to identify complacency in other industries in the market to add value to the brand. It achieves this by brand recognition, understanding of the institutionalized markets, and unrestricted management.
The Virgin Groups performance so far as an industry has been influenced directly by its industry environment factors. Its barriers are high with economies of scale and scope highly elaborate while containing high fixed and investment costs that are required. The regulation domestically and internationally in the travel industry also must be taken into consideration. Rivalry for the Virgin Group is high. Virgin faces an array of different smartphones, tablets, laptops, online video services, airline industries, and home computers. Virgin’s supplier power is high. Its suppliers are large and it has few in number in its manufacturing. Gas is moderate in its supplier power due to economic fluctuations, but gas fluctuations can be better planned for by hedging. Buyer power is high in the Virgin Group. Buyers are large but not few in number. Because most of Virgins products are competitively priced, buyers can switch to another product without incurring high switching costs. Consumer spending can be tough to control though. Finally, Virgin has a high group of substitutes. Leading substitutes include innovative products such as iPhones, Blackberries, Times Warner Productions, and Google products. Some of these substitutes products prices are lower, creating buyers to face few high switching costs. In conclusion, the Men in the Back, have decided that the Virgin Group industry is very attractive for incumbents. Yet, in order for Virgin to be truly successful, it must analyze its corporate strategy to fully understand how to solve this magnanimous problem.
Level of Diversification
Virgin is a highly diversified corporation. It has more than 300 companies worldwide ranging from air travel to record stores. From an external look of the company, it may seem that Virgin is highly unrelatedly diversified. However, this strategy is what makes Virgin so unique. Virgin does a lot of things in the travel, entertainment air, travel, and space travel industry to music entertainment from its record stores and radio stations. It even has businesses in shopping malls and health clubs. However, Virgin is adamant that it looks for areas in businesses where they believe that they can create value. Branson explains that they look into a new sector by examining if that specific market is not providing customers something that Virgin would be able to provide. Virgin’s management team has done well in identifying complacency and areas of value in different markets. It is this strategy coupled with the business level strategy of being a differentiator but also offering it at competitive prices that allows Virgin to be successful. If Virgin feels confident that they can provide more value in that market, then they enter that market through a variety of ways.
They also look for synergies that can be created by entering that market to help its other business ventures. Then from their collection of businesses they are able to have a ‘Virgin Community’ in where Virgin companies help each other in their respective expertise. This ‘community’ is something that differentiates itself from other companies. This enables Virgin to benefit from synergies that other companies are not able to replicate. Not only would Virgin benefit from controlling its supply chain but since it has ventured on other sectors, it is able to create even more synergy. An example of this is Virgin Records, Trains, Shopping Centers, and Atlantic are able all to benefit from each other from doing business with each other. This is one of the main benefits Virgin gains from its diversification.
Another benefit of being unrelatedly diversified is that once they establish a company in a sector that they haven’t been in and succeed, it leads to a better reputation and increases their brand image and its value. Virgin is a well-respected brand of value and customer service in the U.K, as well as parts of Europe. This building of brand image leads to an easier transition for Virgin to enter into a new market because of its reputation and trust.
One of the main ways Virgin Group has attempted to horizontally integrate is through other cooperative strategies. By utilizing various cooperative strategies Virgin has effectively practiced these tactics. Exhausting other firms’ core competencies to their advantage, Virgin is able to also leverage their own competencies without risking so much. When Virgin is focusing in on business-level strategies, alliances and partnerships are of the utmost importance to the group because they make it possible to differentiate their products to a higher degree. The accessibility to more capital, knowledge, and skills yields an exceedingly differentiated brand name. The Virgin brand name can be concluded from the countless joint ventures that have been formed throughout the firm’s history; “for example, Virgin’s pledge in the Virgin Direct affair was a mere £15m for the initial investment. But AMP Limited the leading international financial services initial investment was an extensive £450m, and yet it is a 50-50 joint venture!” (Abdul). Utilizing others’ resources continues to help them to prosper as well.
Virgin Travel Group is a great microcosm to understand Virgin Group’s overall Virgin Strategic Management Analysis International Business Strategy. Virgin Travel’s international strategy is multi-domestic and decentralized. Each company makes its own business decisions separate from the other companies. Virgin America operates separately from Virgin Blue, Virgin Atlantic Airways, AirAsia X, Air Nigeria, Pacific Blue, Polynesian Blue, and V Australia. In addition, Virgin Trains, Virgin Galactic (space travel), and Virgin Balloon Flights (hot air balloon travel) operate independently of each other and Virgin’s airline businesses. Socio-politically, Virgin Travel has to be aware of the enormous safety regulations that each country enforces. Virgin Travel operates in stable countries, so nationalization is not an issue. Lastly, Virgin Travel has to understand the cultural differences of where it operates. There are language barriers, and there could also be barriers some travelers may have to the idea of flying (i.e., security guidelines/procedures and safety regulations). Virgin Blue (and its holdings: V Australia, Pacific Blue, and Polynesian Blue) and Virgin Atlantic Airways are wholly-owned subsidiaries. This is probably because Virgin Group, being UK based, had more knowledge of the Australian/New Zealand and British markets. Virgin America, AirAsia X, and Air Nigeria are alliances. The alliance in the American industry makes sense for Virgin Group for two reasons. First, international, private companies are not allowed to own a majority stake in American companies. Due to this, Virgin Group only has a 25% stake in Virgin America. Secondly, the American airline industry is very competitive. It makes perfect sense for Virgin Group to ease its way into such a difficult industry. Obviously, operating airlines in Africa and Asia creates all sorts of challenges, both socio-politically and economically, so an alliance there makes perfect sense to minimize as many risks as possible. To summarize, Virgin Group uses a multidomestic, decentralized international strategy. When entering into new industries, markets, and countries, Virgin Group has two strategies. If the market is familiar, they will launch a wholly-owned subsidiary. If the market is unfamiliar or in America, Virgin Group will form alliances (less than 50% in America).- Resources and Competencies analysis – Core and distinctive competencies – VRIO framework buscar eso(como un dafo)
It`s the chief of building brand value.
Offers a choice for all clients.
The mindfulness of opportunities for restructuring a market.
Virgin`s constantly expanding empire could take it to care.
They could be considered as a monopolistic company.
Virgin`s companies aren`t leaders in their respectives markets.
The have minimal management layers, no bureaucracy, a minuscule board and no global HQ.
Virgin can offer something better, newer and more appreciated.
Virgin brings (old) products and services in new ways.
Virgin considered using in-store listening stands, while reducing operating costs.
The global competition and network of opponents in the market.
It`s not authority of the markets may disappear with competition.
.2 Porter’s Five Force Model Analysis
Michael Porter’s famous Five Forces of Competitive Position model provides a simple perspective for assessing and analysing the competitive strength and position of a corporation or business organization.
Existing competitive rivalry from suppliers Today Virgin to some extent is a large and globally economical company with a rapid development in recent years. For Virgin to maintain their base in the markets, have to look into expanding their base in different markets. Actually what matters sometimes is the industry size and Virgin as an industry has lived up to their standards. They have a wide range of products and services flourishing in the market and have maintained their low cost strategy and always tried to create a difference with their products. So, the growth of Virgin doesn’t come from the competition with other companies but try to open new opportunities in the industry.
4.1 Analysing the current strategy
In an industry where most airlines offer basically the same thing; the same service, the same aircraft, Virgin Atlantic has been able to use the
to create competitive advantage. The differentiation strategy means that there is an obvious distinction between product from the company and the others product from the competitors, which is viewed by the customer as unique and valuable (Dess et al., 2010).As a pioneer of visible customer innovation, being first seems to have become a trademark of the Virgin Atlantic approach. The long list of firsts some of which include being the first airline to have individual TVs in all classes, to have no smoking flights, to have drive-thru check-in, to have an arrivals lounge, to allow mobile connectivity and SMS texting on board, the first to have at-seat podcasting the first to fly one of its planes using biofuels and most recently the first airline to introduce Limousines service for the upper class at both ends, the theme of their current marketing campaign, ”
Your airline’s either got it or it hasn’t.
(Innovation Leaders, 2008) The Virgin state of art clubhouse at Heathrow has consistently won best clubhouse from numerous bodies. Virgin Atlantic has been a leader in sustained innovation in this industry. (Innovation Leaders, 2008). All these have made the company enjoy a fair amount of first-mover advantage in the industry. Also closely related to its strategy of differentiation, virgin Atlantic also uses a focus strategy.
This means narrowing down the market for a particular buyer group, to a particular segment (Dess et al., 2010). Much of Virgin Atlantic differentiation strategy is targeted to the upper class passengers. In fact the£10million marketing campaign is targeted to build its upper class passengers.(Marketing week, 2010).´Having changed the perception of business class travel with the introduction of its Upper Class service, which provided ‘first class experience at a business class Virgin Atlantic | 18
price’, Virgin Atlantic soon caught the target market’s imagination. As competitors responded with similar products, Virgin Atlantic then followed up with the introduction of the Upper Class Suite in 2003. This multi award winning concept introduced a flip over chair providing a completely flat bed and a wider seat than any alternative airline. In addition, it also included an in-flight cocktail bar, on-board massage as well as personal limo services for customers´(Innovation Leaders, 2008). And also the state of art clubhouse is only for the upper class.
– Value Chain analysis (if data available); Importance/Performance analysis (not compulsory)
Value chain analysis for Virgin Group:
Value chain analysis is a strategic analysis of a company that focused on the serial process of value generating actions. The Virgin group’s generic value chain which identifies the actions that might be separated to present a further in depth identification of the Virgin’s actions.Michael porter’s representation of the value chain distinguishes between primary activities (those involved with the transformation of inputs and interface with the customers) and support activities (Grant and Jordan, 2012, 126).
Inbound Logistics: In the organizations that present services, inbound and outbound logistics refer to design, solution, development and research (Desset al, 2010). Virgin actions with devoted to make sure of the services and raw materials. Virgin works with suppliers on a high level, which has provided for many
years, and thus cover the standard services and products (Virgin, 2012). Operations: Virgin’s product and services are high quality. Besides, Virgin has different websites for each activity that offer different facilities to its consumers,
for example purchasing tickets online for airlines and trains.
Outbound Logistics: Outbound logistics refer to distributing service or products to
buyers or customers (Dess et al, 2010). Virgin’s product and services reach the customers with a fun, value, and success. Virgin is empowering employees and
attempts to innovation services and products and offer it to its customers (Grant, 2012).
Marketing and sales: Virgin to achieve competitive advantage is taking researches
and doing analysis about the industry, with offering its services and product at a
competitive price (Grant, 2012).
Service: The major objective of Virgin Group is to provide high quality services
and products through training effectively their employees and conduct the technique of innovation, with follow up the feedback
of consumers (Grant, 2012).
Firm infrastructure: Virgin is operating in 25 countries with 300 companies in the
group, its owning many buildings, lands, plant and equipment, and Virgin gets
across a lot numbers of different industries, such as financial services, industry of airline, music industry to the communication and computing services (Grant, 2012).
Human Resource Management: Virgin Group carries a successful brand name
over 43 years due to the high skills, experiences, intellect, talents of its
employees and their desire to outperform, with the unique culture of management
style with minimal hierarchy and management levels. Besides, Branson gives primarily credit to the human resources for the success of the Company (Grant, 2012).
Technology Development: The quick developments in digital technologies created a whole new field of opportunity for Virgin. Virgin group is extremely admired for its innovative application of information technology to professionally offer its services to the consumers (Grant, 2012).
Procurement: Virgin stets its prices in the right direction and obtains services and goods at cheaper costs, which allows Virgin to keep consumers satisfied.
Porter Five Forces analysis for Virgin Group:
Porter’s Five Forces frame work help logically evaluate potential stages of risk, opportunity, and profitability depended on five components within a venture. It is used as a tool to better grow a strategic improvement over competing companies within a business in a healthy and competitive environment. It is classified five forces that specify the long term profitability of a market
(Porter, 1998).The threat of entry:
Virgin involves many different services that are price-cut due to the economic downturn of the recession (Grant, 2012). Threat of new entry for virgin train is very low, as it very accepted train operating company in the country. However, The threat of entry in the airline industry is quite high.
The bargaining power of buyer:
In today’s competition world, customers have to be attracted in order to maximize the selling. Virgin group depending on Branson’s innovative ideas with a good team around him, he was successful to provide all his products and services in competitively priced direct to the customers in the world. For railway business, it’s not possible to travel by public transport or private all the time, therefore the passengers do not have much of bargaining power because travel is a necessary requirement.
The bargaining power of supplier:
Virgin is an international business firm with a constant growth in rapid years. The major issues for suppliers is the brand name reputation and Virgin as a brand has met their standards.
However, Suppliers have the power to make decisions on whether to supply Virgin with a service or raw materials. The Virgin would need suppliers to transfer all Virgin produces to local “Megastores” and for this the suppliers would have the power to increase prices.
The threats of substitute: Virgin is offering different kinds of similar products and services in comparison to other firms. Virgin improved their variety of services and products in Virgin Megastores to comprise mobile phones, cola, and music in order to increase sales. Which this is a threat of substitutes. On train service there are always substitute, for example public transport such as flights for long distance or coaches, and private vehicles.
However, in the Airway industry there is a minimal threat from the modes of transport on the domestic routes due to relatively low prices.
The Virgin group is a rapid development and globally economical company in recent years. For Virgin to continue their base in the markets, must look into increasing their base in various markets. The virgin has a wide range of services and products flourishing in the market and have sustained their strategy of low cost and usually attempted to generate a difference with their services. Therefore, the expansion of Virgin doesn’t come from the competition with other firms but an attempt to open new opportunities in the business (Grant, 2012).
The Virgin Group’s success is based on the strategy of corporate parenting. Each new business that the firm entered it well inherits the Virgin’s brand name, the management style, value, with access to the Virgin’s resources and support from the group. Virgin Group’s Competitive advantages sustainability depends on way of managing to support decentralization and Virgin’s culture under a unified brand. As the brand name is associated with Richard Branson the question arises whether it will have the same value for customers after he leaves the business. To generate sustainable competitive advantage the firm has to integrate its core competencies into internal processes and corporate culture (Grant, 2012). Core competence according to Hamel and Prahalad (1994) is a bundle of technologies, resources, and skills that allow a firm to present a particular benefit to its clientele. Core competencies are not a specific product, they contribute to the competitiveness of a range of services or products. Core competences are some of the most significant sources of uniqueness, they are things that a firm can do uniquely well, and that no-one else can duplicate speedily sufficient to influence competition. Most evident Virgin’s core competencies are: strong brand name and reputation built by Branson, promotion and considered advertising in ‘fun’ style. The success of Virgin Group is standing on the corporate parenting strategy, every new venture unit of business inherits the company’s brand name, values, resources, management style, and support. To create sustainable competitive advantage Virgin have to to incorporate its core competencies into corporate culture and internal processes (Grant. 2012).
However, customers desire the image that a brand name can bring but besides they require the value at a competitive price. Branson has extended the basics of his brand in different ways that they are changed into a number of different activities. The Virgin group’s reputation is directly related to Branson’s reputation. Consequently, if Branson falls down,the virgin brand will also fall down. Diversification refers to the expansion of an existing firm into another product line or field of operation ,which might be related or unrelated (Grant and Jordan, 2012). The Virgin Group decided to take on a related diversification of several firms spread across not related business. For a number of years Virgin Group successfully employ the diversification policy with more tan 300 companies in the group. Moreover, it is always looking for to invest profits from existing goods and services in new markets. For example, such as starting Virgin its businesses from mail record, airway industry, retails and other businesses. Over expansion strategy was one of the key issues that facing Virgin throughout constant diversification. Virgin gets across a lot numbers of different industries, such as financial services, industry of airline, music industry to the communication and computing services. While unrelated industries, Virgin has made a way into each of the industries with reasonable and logical success. Markets in which Virgin was able to successfully penetrate, tend to be common characteristics, they are markets that usually have been taken for consumers to take advantage of or under-served, where there the competition is uncertainty complacent.
On the other hand, Virgin’s lack of focus and over-diversification which led Virgin to problems. For instance, strong competition in the industry of the airline, forced Virgin to sell Virgin records to assist the airline continues to exist (The Biography Channel, 2011). However, offering services in different businesses may provide the community the figure of being diversified and competitive. Virgin selects markets based on entering institutionalised markets, particularly those that do not provide value to services and products as well as do not have a lot of competitors therefore Virgin can dominate it.
Virgin according to the case study followed the non related diversification, which mean that the development of services and products beyond the existing capabilities.
The Management recruited in the Virgin selected its workforce to be innovative individuals, basing on his image, Branson employed its managers in terms of personal characteristics. They have the competitive streak in their personalities and they are pioneers in their field. Virgin’s employees have to able to share value and to perform effectively as a group. Differentiation and innovation were the key emphasis by Virgin, and the purpose was to provide more for less and that each venture was truly a Virgin in its own field for the facts that Virgin group is one of the largest private company in the UK. While, Virgin to keep away from damage to the Branson image and virgin brand, the group kept in operational some unprofitable businesses rather than declared bankrupt or being sold. However, Virgin sold some profitable businesses such as virgin record in order to invest in new business enterprise
(Grant, 2012).The rationale for the Virgin Group’s is to diversify into different and as many as possible markets feasible, and expand its businesses at low cost in terms can be relied upon to decrease barriers to entry into fixed markets. The group aims to present better products and higher quality services than other competitors in a complacent market. The strategy that Virgin rely on it is the markets to be entered have to be still in its growing phase. Virgin’s strategy includes unrelated diversification at the individual business unit level. Moreover, cooperatives are generated from hierarchical relationships and the contact of the head office’s company with individual business units. According to Grant ; Jordan (2012, 18) corporate strategy is the scope of the company in terms of the industries and markets in which it competes, and the decisions involve investment in diversification, vertical integration, acquisitions and new ventures. In relating this to Virgin Group’s, Virgin operates like a business capital company depended on the Virgin brand. The ability of Virgin to enter the new industrial business with a bang and shake up existing orders. Besides the unique Virgin’s culture allows it to perform its ventures very efficiently and to break into new markets successfully.According to the Ansoff’s Matrix –
Diversification strategy there are four strategic different with each other that directs for the corporate-level strategy that are related to the decisions about the market scope and the product, and the way that the firm has to require to add value to them: Market parenting, product Development, Market Development, and Diversification (Ansoff, 1984). Virgin Group is a firm that generates the growth option, due to its diversification with starting with the music industry at first and then became extremely
diverse, with different businesses in different sectors such as rail markets, cinema, retail, and holiday.
Virgin Group operates in differentenvironments, and how customers interpret, and understand with that outside world influences their performance. The group businesses are unique, so the external forces that have an effect on them and will be different between them. Business environment analysis is significant in determining the factors that impact directly on an organization both in terms of being an opportunity
or a threat.
Virgin Group is mainly a services provider company, rather than a manufacturer
– In these cases, we can expect that a relative small part of the value chain is actually outsourced, when compared with some manufacturer companies (i.e GAP)
– In most cases, when Virgin’s businesses do not have competitive advantage (i.e. IT and Information Management), we observe that managers choose to outsource that part of the value chain, focusing on the branding and core business of the activity instead.
4. INNOVATION AND COMPETITIVE ADVANTAGE
– Product and process technology-based 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.
These collective innovative thoughts and ideas are applied directly into business; which most often bare fruit. For example Virgin Mobile formulated partnerships with existing telecommunications operators to retail in mobile services. The Virgin management team successfully identified that the complacency was in the handling of network management. Their innovation led them to promote unique services that shock-up the market. These included “no line rentals”, “no monthly fees” and “cheaper prepaid” offers. Irrespective of the fact that Virgin Mobile did not actually operate it own network it had won the best wireless in the UK.
Virgin atlanticVirgin Atlantic has pioneered a range of innovations setting new standards of service, which its competitors have subsequently sought to follow. Virgin Atlantic has introduced a string of firsts including individual seat-back televisions for all economy passengers and the introduction of automatic defibrillators. Despite Virgin Atlantic’s growth the service still remains customer driven with an emphasis on value for money, quality, fun and innovation.Read more at https://www.campaignlive.co.uk/article/superbrands-case-studies-virgin-atlantic/478736?src_site=brandrepublic#5rpVoms1G7xE6V0L.99
– Strategic, organizational, and marketing innovation
– Web-based innovation
Taxi2 Website:Virgin Atlantic’s open innovation initiative yields a new service to connect passengers to share airport taxi journeys.
Virgin Atlantic has been flirting with open innovation to help it come up with new web-based ideas to improve its services and boost its bank balance. Together with NESTA, the UK’s National Endowment for Science, Technology and the Arts, the international flyer launched the VJam initiative to co-innovate with its passengers. NESTA is a major champion of open innovation as it believes it is a more efficient and effective way of innovating, offering companies a faster and cheaper means of developing new products and services.For Virgin open innovation is an easy way of enhancing its value to customers, without massive demands on their staff. Open Innovation BrainstormingThe Vjam program opened with a day-long workshop involving Virgin Atlantic employees, passengers, web developers and social media experts to brainstorm ideas and share insights. Participants were then left with an open invitation to submit their proposals, for which grant funding would be available to those that were applicable to Virgin’s business needs. About a third of participants submitted their ideas, and funding was finalized for the best eight.The airline works closely with each successful participant to develop prototypes and prepare for future investment. The ‘Vjammers’ as they are known keep the intellectual property of their ideas whilst Virgin has first refusal on licensing the products.New Passenger Service One of the first proposals to be put into action is the Taxi2 website which helps passengers find other travelers to share taxi rides into city centers all over the world. It was the brainchild of startup entrepreneur Ed Maklouf and the scheme not only saves money, but it also cuts ground carbon emissions.All passengers have to do is log onto the website and it will help match them to passengers who are on the same flight or whose flights arrive at a similar time and are travelling to similar areas, so they can share a taxi ride. The system will also match female customers who only want female traveling companions.The scheme is not just limited to Virgin as it has been rolled out to customers on other airlines. Maklouf hopes to expand it to mobile devices so that it becomes a commonly used service for passengers wherever they happen to be in the world: “Our expectation is that this simple, sensible way of saving money and cutting down congestion and carbon footprint will become common activity for air travelers worldwide,” he said.
Financial performance (3-4 years analysis; comparative analysis with main competitors’ results)