Strategic Analysis: Virgin Group

1. 2011 PESTLE analysis
1. Political:
1. austerity in Euro-zone
2. governments (and US states) desperate to court big business for tax revenue
3. anti capitalist protests in US and UK
4. 2012 US election will involve the most money ever spent on campaigning
5. New governments in the Middle East, Europe and Asia (Tunisia, Egypt, Libya, Italy, Spain, Kazakhstan, South Sudan, Thailand, Japan, North Korea)
6. Reform possible in Syria, Bahrain, Saudi Arabia, Morocco
7. Rebalancing of influence in Asian South Pacific Region and Eastern Europe
1. New US base in Australia
2. US Missile Defence abandoned in Poland
2. Economic:
1. high unemployment in US, UK and wider Europe
2. evolving consumer behaviour away from high personal debt load
3. slowly recovering US economy, rapidly growing Chinese middle class (approx. 250m)
4. large Government measures to continue QE into 2012
5. limited bank lending, very distressed European bond market. Even German bond yields are climbing
3. Social:
1. General feeling of new global order (F. Zakaria's book: Post American World)
2. US hegemony waning, Chinese consumer beginning to replace US as target market
3. Border-free communication through the internet, price transparency
4. Technology:
1. IT evolving rapidly, and software becoming easier to use.  This has the effect of raising consumer expectations.  Companies such as Google offer many useful tools for free.
2. Phone service is now less important to many consumers than internet service
3. Mobile applications and content are preferred by many (especially younger) consumers
4. Facebook is the de-facto standard for social networking, and most companies are marketing through its interface rather than "reinventing the wheel" with their own offerings.
5. Twitter messaging allows millions to share information rapidly, including deal and promotion information.
5.  Legal:
1. IT legislation, British Rail Law, Airline regulation (eg. FAA in US)
2. Increase in anti-corruption legal watchdogs in recent years (eg. SFO in UK)
6. Environmental:
1. Consumers are aware of climate change and environmental degradation
2. Many consumers select businesses based on perceived "clean and green" image
2. Assessment of Virgin Group

1. Too much autonomy among some businesses leading to a lack of consistency in the Virgin portfolio.  Does Virgin need a Cola? Did you know they sell wine also? More organizational "learning" could be shared between operations.  Look to GE to structure an improved talent search, retention and indoctrination process.
2. Succession plan must be developed.  R. Branson will continue for another decade, but what then?  A successor must be trained and prepared for the group CEO role, or the organizational structure must evolve.
3. Follow GE or PG's strategy and divest businesses which don't fit or are not profitable.  Welch famously strove for number 1 or 2 in industry.
4. Focus on transportation and entertainment industries. Customers are willing to pay a premium for good service here.  Even Virgin Galactic can be considered transportation of a sorts (my favorite of the Virgin brands ;))
5. One core competency of Virgin has been the brand itself, and attaching it to the various businesses has added value in the minds of customers who know that a certain innovative approach will be taken on their behalf.  Care should be taken that this brand doesn't get associated with Richard Branson the man, but rather the vision that will outlive him.  Disney can be cited as an example of a Brand that outlived its founder.  Just as Levitt noted that the railroad was in the transportation business and not trains, Branson must realize that Virgin is in the creative brand licensizing business, whereby the company continually identifies promising talent to run new businesses and then allows them the autonomy to do so.  In another analogy, Virgin Group resembles Ryan International (not to be confused with RyanAir) which employs pilots and crew, but doesn't own its planes.  Branson has been effective in identifying prime talent to run what are in effect, serial entrepreneurial ventures.  Branson himself is like an angel investor, and he has shown a keen ability to find the right people to run each business. In this way, the group is more like a HR recruitment and deployment firm than a centrally administered hub for all businesses.    
6. Perhaps the most bizarre Virgin businesses, which probably makes more sense upon further study, is this one:  Virgin Health Bank