MANAGING STRATEGY

Managing Strategy



Managing Strategy

SECTION A: Compulsory Question

Virgin has positioned themselves as the consumer's champion and strives to be known for developing products and services that make the consumer's life easier – delivering better value, a better service, challenging the status quo, and injecting an element of fun. But to truly understand their success, it is important to look at their generic strategy and how it has changed adapted over different periods of history (Grant & Jordan, 2012: 19). To investigate what generic strategies Virgin has followed, we have to have an understanding of generic strategies are.

Cost leadership strategy

Cost leadership strategy emphasizes on efficiency. This strategy requires economics of scale in production and distribution in industry. Virgin's creation of a low cost basic no-frills airline is a perfect example of implementing this form of strategy. If you ever think of low-cost you realise that Virgin low running cost in order to provide low prices for customers. This is not easy to implement as it is necessary to cut costs at every opportunity in order to stay competitive and have a competitive advantage or edge over your rivals. Another example would be that, how would you hold a competitive edge over your rivals, in the earliest days of Virgin, Virgin begana a mail order business offering popular records at prices around 15% below those charged in shops (Grant & Jordan, 2012: 19).

Differentiation strategy

Differentiation strategy involves creating a product or service that is different and unique. In order to be successful the product or service must be of greater value to a customer than its producer, it must offer that something special that attracts customers more than any other brand. We can once again use the above example, Branson was obvious when he offered a mail order service providing records that were 15% cheaper than what they were receiving in the high street shops.

Branson realised by opening joint ventures what he could achieve, after the early success of with the immediate success of, and the start of virgin retail. These retail interests were later consolidated around the Megastore concept in a joint venture with a major retailer. In prestige locations in major cities Megastores, began to sell home entertainment products- music-videos-books, on a large scale . They replaced the string of small secondary retail outlets for which Virgin had become known . The success of the Megastore concept was exported to major cities throughout the world, frequently through joint ventures (Grant & Jordan, 2012: 19).

Focus strategy

This is when a company focuses on selling its product or service to a partial select group of people (various segments of the market). The company usually looks to gain a competitive advantage through effectiveness rather than efficiency in this strategy. Early on Virgin launched Virgin Atlantic Airways in 1984 it has built up a market segment for business travellers. Realising the company was on the up, Branson further exploited this by introducing Virgin Atlantics, which now serves 29 destinations around the globe, due to this ...