Corporate Strategy and Internationalisation
1. What directions of strategic development have been followed by Virgin over the period of the case?
Directions of Strategic Development
Virgin has been in the market for a long while, and there is number of measures that it has been putting in place to make sure that it wins a good number of consumers and players in the market. The group provides some services that cut across, airlines, music, railway and also financial services. Virgin has been following specific directions when it comes to strategic development over the period when it has been in existence.
For instance, it has been majoring in providing efficient price signals as one of the strategic development directions. The company operates on the notion that an organization should seize to exist if it does not succeed in the first year of operation. In that case, it sets prices that are affordable to everyone regardless of the fact that it offers high-quality services and products (Layton, 2013). According to the information provided in the case study, the group has been looking for opportunities in areas that pose a tremendous competitive advantage (Sweet, 2016). The company looks for areas where the customers have been getting a positive value for their money such as cosmetics, clothing lines and weddings ceremonies (Penguin, 1988). The kind of prices that it places in those areas usually are unbeatable, and that is the reason why it has been relevant over the past few years.
Figure 1: Rate of Change of Corporate Strategy Direction Source: Bauenfeind, 2005
The graph above shows the rate at which an organization changes its direction when it comes to corporate strategy. During start up, an organization is likely to face issues of flexibility but later on it experiences growth steadily (Bauenfeind, 2005). The company has also been promoting various modes of flexibility and even some form of resilience in the market systems. The group does this to make sure that it has a mix of both public and private companies. The companies are in the form of start-up ventures, and this has been able to boost its corporate businesses based on the kind of assets that it has been able to accumulate over the years of existence (Richards, 2015). The company has a group of people who come from diverse backgrounds, and this means they are always flexible depending on the roles they are assigned. This move has been able to make the company move on and develop when looked from the direction that it takes when it comes to strategy.
2. Which type of corporate parenting role best describes the virgin group?
Corporate Parenting Role
The parenting role that best describes the virgin group is based on parental developer. The corporate parenting control that the organization has taken enables it to be able to control a good number of its subsidiaries since they are supposed to operate on their own but still report to the headquarters based on the financial decisions that they make (KAPLAN, 2016). In strategic control, the parent company is supposed to be able to initiate all the strategic plans that have been put across by the subsidiaries. The parent company also takes a middle course by allowing the subsidiaries to be able to develop and also handle the kind of strategies that come from the headquarters.
Figure 2: Stages of Corporate Strategy Development. Source: (Richards, 2015)
From the graph above, the virgin group makes sure that he has not direct lines when it comes to controlling the entire activities that it has in plans (Richards, 2015). The kind of management that takes place in that line is minimal, and it can be understood from the few layers that it has in that line. The companies and subsidiaries in Virgin Groups are also linked in such a way that everything is done in a sophisticated manner having in mind that it offers more than one service. There is a lot of freedom among the employees and the companies that are under the group, and this is a clear indication of the strategic control that is taking place among them.
The role of the headquarters is to approve the plans that have been put across and to make sure that all the activities are running as planned. The kind of separation that exists between the parent company and the subsidiaries creates an environment of entrepreneurism. This means that all the personnel is trusted and the level of responsibility that they exhibit is top notch. The legal matters surrounding the group are also handled at the subsidiary level, and this proves the minimum kind of control that comes from the parent company and headquarters.
3. How does the Virgin Group as a corporate parent add value to its business? To what extent are these parenting skills relevant to the differing business units?
Value of Corporate Parent to its business
The Virgin Group as a corporate parent adds value to its business by making sure that it has full control of all the issues that revolve around finances and contracts that it signs with bodies that have the same intents. The group takes part in service provision, and it, therefore, makes sure that it has a group of managers and leaders who are ready to take care of all the financial needs that it encounters. The value that the corporate parent adds to its business can be seen from the perspective of the customers who have developed a lot of interest in the way it has been operating over the past years.
The parent company makes sure that its employees are productive and this means that it facilitates better profits making when it comes to the kind of output that the customers expect. The idea of having constant trust among the employees and the employers is of much value to the group’s business in that it enables them to behave in a manner that is headed towards the achievement of a competitive advantage in that line. Virgin is commonly known to be a risk taker whenever it wants to enter a new market, and this move has made it be able to benefits especially when it makes profits instead of losses. This makes the corporate parent be able to withstand all the pressures the come with competition and various forms of management.
The relevance of Parenting Skills
The parenting skills that are put in place by the company are relevant to the different business units in that they operate on platforms that are not similar to each other. The parenting skills entail cooperating and coordinating well with the government and the people who are responsible for the businesses that it handles. The parenting skills also involve training the employees working at the subsidiaries and making sure that they are well conversant with the activities that lead to better customer relations and retention of the loyalty that they have already created.
4. What should the future corporate strategy be? (And how essential is Richard Branson himself to that strategy?
Future Corporate Strategy
The future corporate strategy of the Virgin Groups revolves around making sure that the products and services that it offers are on the competitive pricing scale. For instance, it needs to make sure that the kind of planes that it purchases are high end and are also luxurious to make people develop an interest in what they do. Coming up with a luxury brand will be a better way to make sure that customers get an ample time when it comes to the disposable income that they impose on the kind of products that they get from the group.
The corporate strategy will also entail a mass market to be able to appeal to a broad range of consumers in various places. All the demographic categories will be able to appreciate their products in that they are presented in diverse ways that suit all members of the public. Mass market products entail some consumer goods that cut across household goods and those that are enjoyed by the public on a vast platform. In that case, the corporate strategy needs to focus on essay writers making sure that the consumers enjoy the goods and services comfortably without any restriction that comes out of prices that have been set by the economy or the company itself.
Richard Branson is essential in the strategy as he will help in making sure that the issues stated are implemented at all costs. He has an influential effect when it comes making the employees and the people responsible for the injury to implement all the measures that have been put across in the newly introduced corporate strategies. Branson needs to make sure that all the rules and regulations of the company are going according to the goals that are set when it comes to the new corporate strategies that have the intention of making sure that the sustainability aspects of the company are maintained.
Case Study Two
1. Considering Yip’s globalization framework, what drivers of internationalization do you think were most important when Wanda entered the U.S market through its AMC and Legendary acquisitions?
Drivers of Internationalisation
One of the drivers of internationalization that were important when Wanda entered the US market was technical innovation which can be interpreted from the market drivers. Technological innovation is the most critical issue that companies are supposed to focus on while operating in the United States market (Bauenfeind 2005). The country takes part in the rapid production of goods and services, and that means any organization that needs to operate and becomes successful there needs to be on the right platform when it comes to technology. Wanda entered the United States market through AMC and the Legendary acquisitions, and this has made it show the kind of ability that it has when it comes to the use of technology to carry out the production process.
Social and political reforms are some of the other drivers of internationalization that has made Wanda able to succeed in its entry to the United States. This can be interpreted from the competitive drivers of internationalisation. The country has been experiencing some transformations when it comes to politics in that the leaders that are elected make sure that stability is achieved all the way. The kind of realities that exist among the people of the United States is a better way to understand a society that is sociable. Wanda is an entertainment industry, and therefore it was ready to take over the people who have been enjoying the services that come from AMC and Legendary Entertainment (Pankaj, 2011). These two organizations are the best when it comes to cinema and the filming industry, and that is the reason why the Wanda managed to enter the United States through them.
Wanda Company had been operating in the Chinese market, but it, later on, realized that the domestic market there was saturated and the kind of competition that it got was also not healthy. The fact that the local market was saturated meant that there were few opportunities for growth and taking part in the global expansion was the only way in which it could be able to overcome the situation (Lombardo, 2014). Since Wanda was only known in the Chinese market, they had to choose companies that are known in other markets so that they could acquire and use them as a marketing strategy (Regner, 2016). Some typical customers wanted to make sure that they had an experience in global marketing and in that case, marketing happened to be the driver of the globalization movement of the company.
The issue of cost of production is the other factor or driver that must have made Wanda move to the United States after acquiring some companies there (Cost drivers). There is a need to maintain efficiency when it comes to sourcing from one country to the other, and this means that firms are supposed to take advantage of the chances that they get in other countries. In this case, Wanda reasoned that the cost of production in the United States was cheaper as compared to the way it was in China and therefore opted to take advantage and move there as a way of expanding their service provision.
2. What national sources of competitive advantage might Wanda draw from its Chinese base? What disadvantages derive its Chinese base?
Sources of Competitive Advantage
There are some sources of competitive advantage that Wanda might be able to draw from its Chinese base and they all make sure that it operates in a manner that is accepted by the law. In this case, the capital and natural resources in China are some of the sources of competitive advantage when looked from the perspective of the kind of services that Wanda offers. Capital is always significant in that it enables organizations to operate in a manner that is flawless without hiccups that come in the form of damages that cannot be corrected.
The other source of competitive advantage is products that come along with intellectual property (Mar, 2013). China has some companies that are intellectually wealthy, and that is the reason why they come up with products that are unique and fit for the market. For instance, Wanda enjoys the fact that the Chinese people are always ready to come up with brands that will be accepted and appreciated by many when it comes to gaining a good number of customers. The more a company takes part in branding and supporting itself the more it gets customers and positive reputation from the people.
Figure 3: Sources of Competitive Advantage. Source (Mar, 2013)
The graph above shows that the rate at which the quantity of goods are demanded determines that source of competitive advantage in the long run (Mar, 2013). The processes and practices that are at the Chinese base are legitimate and benefit when it comes to the kind of operations that the company handles. The fact that China has a superior method of producing acceptable and unique products when it comes to the filming industry it means that it enjoys a better completive advantage concerning the companies that have been set up there. Process and practices cannot be replaced quickly and his means the country enjoys this aspect to a great extent. Even though Wanda is in the first line to get to the global platforms, it still has the opportunity to experience the services that come from the home country.
The disadvantage that it derives from its Chinese market is the overcrowded market. There is a large number of people who like watching movies and cinemas that are produced using high-quality devices. In that case, companies have been able to come up rapidly so as enjoy that large number of people who like being entertained in various ways. In that case, Wanda needs to get a new market since the one at the Chinese base is already overcrowded and the kind of profits or gains obtained there are also minimal.
3. In the light of the CAGE framework, what challenges may Wanda meet as it enters the U.S market?
In the light of the CAGE framework, there are some challenges that Wanda may meet as it enters the U.S market. One of the challenges is based on the cultural distance where there is difference in languages, ethnicities and social networks might be a problem (Mason, 2017). China and the United States are two countries that are on different continents, and this means that the way they treat people is also different in some instances. The U.S market has people who speak English while the Chinese market has people who speak in the Chinese language. This means that language barriers might be a significant problem while focusing on the way the people will be interacting (Johnson, 2016). The difference in the ethnic background might be a challenge in that the kind of things that the Chinese find to be positive in films might be negative in the United States films.
The other challenge is based on administrative distance. The colonial ties between the Chinese government and the United States government are different, and this means the kind of leadership that Wanda will experience in the new market will be difficult to understand. There is also not shared regional trading bloc, and this adds up to the administrative challenges that Wanda will experience as it enters the U.S market. Also, there is no universal currency between the two countries, and that means Wanda will have to make a lot of changes in its financial bases to make sure that it complies with the needs of the U.S market.
The other challenge can be seen from the geographic distance that exists between the two countries. The current headquarters of Wanda is in China, and that means it will have to find a way in which it can be able to coordinate its new branches in the United States. There is no land or border between the U.S and China, and that means there will be no mutual network that will stabilize the kind of connection and interaction that needs to take place in the process. The time zones in the two countries are also different, and that means production will have to be adjusted so as to fit all of them. Wanda has acquired companies that are already operating globally, and that means it will have to make sure that its base is ready to undertake all the new developments that come in that line.
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