ASSIGNMENT OF WEEK 15

CASE STUDY 
1.   Why has this artist been so successful? What are her key sources of sustainable competitive advantage?

Think about her unique resources and core competencies, think about how she has responded to changes in the external environment, why is she difficult to imitate?

Sources: http://www.wallpapershdi.com/wallpaper/1636/face-of-madonna-widescreen.html

Sources:http://hollywoodbuzz.buzznet.com/user/journal/17295049/fans-walk-out-madonna-concert/

Madonna is an American singer, actress, writer, dancer and entrepreneur. She is so successful that no one can be compared with Madonna.  Ruling the music industry for 30 years is not a small thing. Simply, she was successful because of her strategy. As the time changes, she also changed her strategy in order to sustain in the industry.

The early image of Madonna:

·         Punk-pop image

·         Notable performance at the 1984 MTV VMAs

·         Prominently featured on MTV

In 90s Madonna was following the strategy of High fashion look. During that time her main target groups were gay club scene and emancipated women. Further she was awarded for the Critical acclaim for her role in Evita.

Followings are the bases for Madonna sustainable success:

Vision:

The vision of Madonna was to rule the world and she proved it that she is a ruler in the music industry. So, her vision motivated her to become a successful person.

Deep understanding of customers and industry:  

Madonna was also very much aware of the industry and her audience. As time is constant, she adapted different strategy according to the environment. Her MTV co-specialization, club tests, politics/religion shows that she has a deep understanding of customers and industry.

Leveraging competences and addressing weaknesses:

She is a strategist and she was able to determine which strategy to follow in a given environment. Further she was a person who does not hide their weakness. She tried her best to improve her weakness.

Continuous renewal: 

She was innovative and flexible. In addition, she was difficult to imitate.

Consistent implementation

Madonna's Competences for competitive advantage

Threshold capabilities / resources

•         Voice and looks

•         Dancing and style

•         Sex appeal 

•         Skilled support

•         Scandal management

  Core competences / unique resources

·            Versatility

·            The brand Madonna

    Madonna’s strategy from 1893-2010 by which she has responded to change

•      No frills (1983 A.D.)

Low price/Low added value

An opportunity for a new entrant to carve out a niche or to use no frills as a bridgehead to build volume before moving to other strategies” As Madonna was new to the industry it was important for her to have something unique and innovative. Her voice, looks and dancing style were her unique resources for her.

•      Differentiation (1984 A.D.)

She provides products/services that offer benefits different from those of competitors and widely valued by the audiences.

•      Focused differentiation (1985-2013 A.D.)

Her high perceived benefits justifying a sustained price premium usually to a selected market segment made her to be a sustainable in the market. Her songs are regarded as a premium product and they are heavily branded. Also the image and brand of Madonna was difficult to imitate.


2.  What strategy directions could the artist pursue over the next ten years to continue her commercial success?

 Consider each of the four boxes from the Ansoff matrix. What new products or markets could she enter? How might she diversify or continue to penetrate her existing market? Try to think logically but also creatively and innovatively.

ANSOFF MATRIX FOR MADONNA

Market Penetration Target different geographical markets at home or abroad. Target different groups of people, perhaps with different age groups, genders or demographic profiles from normal customers.	New products and services Involve in new business.
Market Development Advertise, to encourage more people within an existing market to choose your product, or to use more of it. Introduce a loyalty scheme. Promotions. Increase sales force activities. Buy a competitor company (reputed music company or production house)	Conglomerate Diversification Launch music in foreign language for foreign audience. Active involvement in politics.

 

References:

• H.I. Ansoff, Corporate Strategy, Penguin, 1988, Chapter 6

• Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 7

• ‘Bennett takes the reins at Maverick’, Billboard Magazine, 7 August (1999); ‘Warner Bros expects Madonna to light up international markets’, Billboard Magazine, 21 February (1998).

• ‘Maverick builds on early success’, Billboard Magazine, 12 November (1994)

• 1994); A., Jardine ‘Max Factor strikes gold with Madonna’, Marketing, vol. 29, (1999), pp. 14-15

• S. Kirschner and D. Kirschner, ‘MTV, adolescence and Madonna: a discourse analysis’, in Perspectives on Psychology & the Media, American Psychological Association, Washington, DC,1997.

•  ‘Warner to buy out maverick co-founder’, Los Angeles Times, 2 March (1999).

• ‘Why Madonna is back in Vogue’, New Statesman, 18 September (2000)

ASSIGNMENT OF WEEK 14

1.      In your own words and using referenced quotes describe the difference between ‘business unit level’ strategy and ‘corporate level’ strategy?

Business Unit Level Strategy:

The way business seeks to compete successfully in the market is called business unit level strategy. It is the decision a company takes on its way to maintain, create and use its competitive advantage. A strategic business unit is a semi-autonomous unit for an organization. This unit is responsible for its own price setting, budgeting and new product decision. The corporate headquarter consider Strategic Business Unit as an internal profit Center.

Bases of Competition Price Differentiation Hybrid Focus		Achieving Competitive Advantage Sustainability Hypercompetition Collaboration Game Theory
	SBU Strategies
	Detailed Choices Directions Methods

Figure: Business Level Strategies

Corporate level strategy:

Corporate level strategy is all strategic decision that affects the firm as a whole. It is concerned with overall purpose and scope of an organization. Adding value to its business unit is the main objective of corporate level strategy. The Corporate level strategies affect the matters such as deciding the size and composition of business portfolio of the overall firm.

Differences between Business Unit Level Strategy and Corporate Level Strategy:

Both business unit level strategy and corporate level strategy are important to a firm. They should be employed efficiently and effectively by any firm. However, they need to be used differently. A business level strategies needs to be used to solve specific problems whereas corporate level strategy needs to be used when the matter is about broader issues.

Further, business level strategy can be changed regularly depending upon the time and changes in the markets. While corporate strategies on the other hand should not be changed frequently as they deal with long term planning.

Business level strategies are very much focused, however corporate strategy always deal with broad issue.

The issue of corporate strategy is very much complex and have higher impact on the firm as compared to business level strategy.

Corporate level strategy requires more resources as well as consideration.

2.      Discuss the corporate parenting style of Virgin group.

Source: http://www.robabdul.com/the-virgin-group-case-study.asp

 The Virgin group is one of the one of the UK’s largest private company. According to 1996 survey, 96% of UK consumers were aware of the brand Virgin.

Virgin has been described as a “keiretsu” organization. Further, the Virgin Group had controlled by Mr. Richard Branson. His approach to management style was one that decentralized decision making and responsibility of the own development. Branson ruled by delegating power to managers, however when it came to marketing and promotion, he would take more involved role.

The name Virgin was chosen so that the brand can be remained virgin in every business it enters. Virgin’s expansion into new markets had been through a series of joint venture whereby Virgin provided the brand name and the partner provided the majority capital. It is involved in mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. It partners with others and transfers and combines skills, knowledge and operational expertise from a wide range of industries. Also, Virgin Group Company is able to run their business by their self. Further the company actively helps each other to solve problems.

Virgin is involved in not only commercial activities but it is involved in finding solutions to world major issues or problem. With the help of Virgin Unite, a nonprofit foundation, it is organizing campaign like health, economic empowerment, conservation and climate change.

By observing the ownership, the corporate structure and the management style of Virgin Group, we can say that Virgin is following the Synergy manager corporate parenting style. The synergy manager is a corporate parenting style looking to enhance value across business units by managing synergies across business units. We can easily say that Virgin is following synergy manager corporate parenting style because of the following reasons:

Resources and activities are shared:

Virgin group use common distribution system across its business. It uses the same from brand name for each of its products and services. In many of the countries its offices are shared by its smaller business units depending upon the geographical diversity.

Skills are transferable:

Virgin Group also actively transfers their skills to the required industry. For example Virgin Music can transfer its skill to Virgin Cinema and vice-versa to improve its technology. Further, Virgin Group has its own value adding capabilities by which one business unit help each other in sharing technologies, skills and knowledge. The accumulated knowledge and skills learned in one business is utilized in another business unit in the Virgin Group. This has helped Virgin Group to increase its performance. In addition, marketing and R&D are the expertise skills which are used by Virgin Group to improve the performance of the newly launched products.

Source: http://earthandindustry.com/2010/04/7-international-companies-with-a-strong-green-gene/virgin-group-green-business/

Source: http://www.cascadiaprospectus.org/2010/11/bransons_virgin_group_step_int.php

Source: http://centreforaviation.com/analysis/industry-watchers-are-now-focused-on-the-fate-of-virgin-atlantic-46229

Source: http://www.justwirelesscoupons.com/category/wireless-coupons/virgin-mobile-promo-code/

Source: http://blogs.ubc.ca/cindywenyicui/2010/11/15/an-entrepreneurial-company-virgin/

Source: http://www.businessinsider.com/richard-branson-fails-virgin-companies-that-went-bust-2012-4?op=1

References:

• Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 1 

• Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 7 

• De Wit, B and Meyer, R (editors) (2010). 4th Edition Strategy: Process, Content, Context, Thomson International Business Press: London. Chapter 6 

• The Economist, ‘Cross his heart’, 5 October (2002) 

• ‘Virgin on the ridiculous’, 29 May (2003)

• P. McCosker, ‘Stretching the brand: a review of the Virgin Group’, European Case Clearing House, 2000.

• Strategic Direction, ‘Virgin Flies High with Brand Extensions’, vol. 18, no. 10, (October 2002).

• R. Hawkins, ‘Executive of Virgin Group outlines corporate strategy’ Knight Ridder/Tribune Business News, July 29 (2001a).

• R. Hawkins, ‘Branson in new dash for cash’, Sunday Business, 29 July (2001b)

• C. Vignali, ‘Virgin Cola’, British Food Journal, vol. 103, no. 2 (2001), pp. 131–139.

• M. Wells, ‘Red Baron’, Forbes Magazine, vol. 166, no. 1, 7 March (2000).

CASE STUDY OF WEEK 14

1.      What type of corporate parent is Virgin (portfolio manager, synergy manager or parental developer)?

Virgin Group is a portfolio manager corporate parent. The Virgin group is one of the one of the UK’s largest private company. According to 1996 survey, 96% of UK consumers were aware of the brand Virgin.

Virgin has been described as a “keiretsu” organization. Further, the Virgin Group had controlled by Mr. Richard Branson. His approach to management style was one that decentralized decision making and responsibility of the own development. Branson ruled by delegating power to managers, however when it came to marketing and promotion, he would take more involved role.

The name Virgin was chosen so that the brand can be remained virgin in every business it enters. Virgin’s expansion into new markets had been through a series of joint venture whereby Virgin provided the brand name and the partner provided the majority capital. It is involved in mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. It partners with others and transfers and combines skills, knowledge and operational expertise from a wide range of industries. Also, Virgin Group Company is able to run their business by their self. Further the company actively helps each other to solve problems.

Virgin is involved in not only commercial activities but it is involved in finding solutions to world major issues or problem. With the help of Virgin Unite, a nonprofit foundation, it is organizing campaign like health, economic empowerment, conservation and climate change.

All the business in the Virgin Group is strategically targeted towards a “five pillar” empire system that Sir Richard Branson is eager to create. At “the heart of Virgin’s core strategy to develop the five pillars of the business empire: travel, leisure, mobile phones, entertainment retailing and personal finance”. (Press Releases 30/01/02, http://www.virginmoney.com/newscentre/news2002_3.html) 

By observing the ownership, the corporate structure and the management style of Virgin Group, we can say that Virgin is following the Synergy manager corporate parenting style. The synergy manager is a corporate parenting style looking to enhance value across business units by managing synergies across business units. We can easily say that Virgin is following synergy manager corporate parenting style because of the following reasons:

Resources and activities are shared:

Virgin group use common distribution system across its business. It uses the same from brand name for each of its products and services. In many of the countries its offices are shared by its smaller business units depending upon the geographical diversity.

Skills are transferable:

Virgin Group also actively transfers their skills to the required industry. For example Virgin Music can transfer its skill to Virgin Cinema and vice versa to improve its technology. Further, Virgin Group has its own value adding capabilities by which one business unit help each other in sharing technologies, skills and knowledge. The accumulated knowledge and skills learned in one business is utilized in another business unit in the Virgin Group. This has helped Virgin Group to increase its performance. In addition, marketing and R&D are the expertise skills which are used by Virgin Group to improve the performance of the newly launched products.

2.      How does the Virgin Group, as a corporate parent, add value to its businesses?

Virgin as a portfolio manager corporate parent it is adding value by sharing resources and activities, technologies, etc.

Resources and activities are shared:

Virgin group use common distribution system across its business. It uses the same from brand name for each of its products and services. In many of the countries its offices are shared by its smaller business units depending upon the geographical diversity.

Skills are transferable:

Virgin Group also actively transfers their skills to the required industry. For example Virgin Music can transfer its skill to Virgin Cinema and vice versa to improve its technology. Further, Virgin Group has its own value adding capabilities by which one business unit help each other in sharing technologies, skills and knowledge. The accumulated knowledge and skills learned in one business is utilized in another business unit in the Virgin Group. This has helped Virgin Group to increase its performance. In addition, marketing and R&D are the expertise skills which are used by Virgin Group to improve the performance of the newly launched products.

Other value-adding skills of Virgin Group

Envisioning (developing strategic mission, clear external image)

Intervening (Challenging/ Developing Strategy)

Coaching and Training (Developing strategic capabilities, achieving synergies)

Central Services (Scale advantages, Transferring managerial skills)

Expertise (Knowledge sharing, leverage, brokering)

3.      What’s the logic of portfolio? Why do you think they are in mobile telephony, travel, financial services, leisure, music, holidays and health & wellness?

The main aim of portfolio is to balance the business. It will help your business to adjust your profit and loss. There are different risks in different types of business, some have higher risk and some have lower risk. To solve this portfolio exist. It will help the investor to invest in different business rather than a single business where the risk is higher. There are several portfolio models available which will help corporate parent to manage their portfolio business. They are Boston Consultancy Group (BCG) matrix, the directional policy matrix, parenting matrix, etc.

Virgin is involved in different sectors such as mobile telephony, travel, financial services, leisure, music, holidays and health and wellness. As some of the businesses are more risky it has invested in another business to adjust the loss from another business. Virgin Atlantic was the big success in 2003, but as it is a cyclical nature of business it might reach to worst condition by which not only the Virgin Atlantic will be affected but as a whole Virgin Group will be affected .So in order to minimize that risk Virgin Group might have been involved in more than 250 businesses. Further, by increasing the business unit, it can make more profit as well as minimize the loss for risky business. With the beginning of 21^st century, Virgin expanded its business to telecommunication, financial services. Hence, Virgin is increasing its portfolio investment in order to minimize the risk.

4.      What are the main risks facing Virgin Group as a result of their strategy? How might they be reduced?

Every company faces risk as a result of their strategy. The most important asset of Virgin Group is its brand. The strategy of boosting up the brand might be dangerous. For example a customer enjoying a nice holiday’s package on a Virgin Holidays may be happy to use Virgin Mobile, but a customer who has a bad experience in any one of the product and services might avoid all the products and services of Virgin Group.

A real time example of Virgin can be shown by which it will be clearer. In the UK, the excellent service of Virgin Airlines and the terrible reputation of Virgin Railways remained unsolved by 2004, by which the loyal customer of Virgin Group were in dilemma whether to consider Virgin group a good or bad company.

Another issue relating to Virgin group is Branson himself. He was closely linked with Virgin Brand, there is also risk of weaken the value of Virgin brand if some of his high profiled marketing ventures failed. The main issue is what will happen to Brand Virgin after Richard Branson.

In order to face with the above risks Virgin Group needs to develop new strategy by which the risk might be minimized. The leadership and control over Virgin group should be more decentralized so that the impact of Branson can be lowered. Also Virgin needs to be less diversified. in addition, every effort should be made to bring in line the accounting year end date for all businesses in the Virgin Group to be on the same date. 
References:

•  Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 1 De 

• Wit, B and Meyer, R (editors) (2010). 4th Edition Strategy: Process, Content, Context, Thomson International Business Press: London. Chapter 6.
• The Economist, ‘Cross his heart’, 5 October (2002) 

• ‘Virgin on the ridiculous’, 29 May (2003)
• P. McCosker, ‘Stretching the brand: a review of the Virgin Group’, European Case Clearing House, 2000.
• Strategic Direction, ‘Virgin Flies High with Brand Extensions’, vol. 18, no. 10, (October 2002).
• R. Hawkins, ‘Executive of Virgin Group outlines corporate strategy’ Knight Ridder/Tribune Business News, July 29 (2001a).
• R. Hawkins, ‘Branson in new dash for cash’, Sunday Business, 29 July (2001b)
• C. Vignali, ‘Virgin Cola’, British Food Journal, vol. 103, no. 2 (2001), pp. 131–139.M. Wells, ‘Red Baron’, Forbes Magazine, vol. 166, no. 1, 7 March (2000).

GROUP VIDEO PRESENTATION

 Topic of the presentation:
Analysing Strategy of Nepal Telecom

Team memebers:
Saurav Shahi
Bipin Lamichanne
Prasant Timilsina
Bicky Gauchan
Narayan Sapkota