Abstract
Sir Richard Branson, the well known British creator of the Virgin Group, began to build his business by establishing the Virgin Records in 1972. Since this date the Virgin brand has never ended to grow and develop various branches, such as Virgin Atlantic Airlines, Virgin Train, Virgin Card, Virgin mobile, Virgin Radio. The main strategy of Virgin Group during these past decades was therefore to diversify its activities and to cover a wide range of industries to gain as much market share as it could.
The emphasis of the group – often compared to Japanese keiretsu because of its specificity to gather unrelated businesses under the same CEO – was less on synergy and more on strictly financial performance (Ito & Rose, 2004, p. 67). But the willingness to achieve this financial goal lead to some problems. Because of its too diversified businesses, it became difficult for the group to identify and implement an overall strategic direction. This report will analyze the problem of the massive diversification of Virgin Group which can lead to a loss of value for the group's image. Firstly, it will describe the troubles that Virgin could face in the future. Then, some solutions will be discussed. Finally, recommendations will be advised to try to deal with these potential issues.
Virgin corporate strategy is to increasingly diversify itself in more industries and products. However, even if Virgin Group uses an unrelated diversification strategy, it has never diversified its brand name. All the services and products the company provides to customers have the name “Virgin” in common: Virgin Blue, Virgin Drinks, Virgin Music. This strategy can be a source of problem because the brand can lose its value.
