IntroductionVirgin GroupVirgin group is well diversified company which has more than200 privately owned companies under their brand name of “virgin”. Virgin is theone of the biggest brand in United Kingdom. Which was established in 1970 by Sir Richard Branson. They havediversified their business into various categories such as Virgin AtlanticAirway was the second largest airline in United Kingdom, Virgin holidays,Virgin rail, Virgin retail group which operates mega stores, virgin direct provides financial services.
Other businessinclude virgin cola, record label, book and music operations, hotels, telecommunication,movie theaters and radio stations.Branson was dropped out from the school at the age 17 in1967, he started selling magazine and that venture was successful. In 1970 SirBranson started his second undertaking, a company called Virgin. Virgininitially started as Mail Order Company and it was immediately success. Virgin group had employed over 53000 employees as of 2012and spread their businesses over 300 brands in 25 countries. Sir Branson, Brandname, management style and least hierarchy of management level are the reasonbehind the success of the virgin group. StarbucksStarbucks is an American company established in 1971.
Three partnersmet in the University of St Francisco, English teacher Jerry Baldwin, ZevSiegl, Gordon Bowker were highly interested on selling quality coffee bean.1987 Starbucks opened its first outlet outside the seattle at Vancouver,British Colombia and Chicago. In 1989 Starbucks had 46 outlets across thenorthwest and annually Starbucks was roasting 907105kg of coffee. Starbucks is a company that produce premierroaster and retailer of specialty coffee all around the world. Starbucks employed 182000 employees over19747 outlets in 62 countries.
Their product mix comprises of roasted handmadehigh quality coffee, tea, fresh food and other beverages. They sell variety ofcoffee and tea through licensed supermarkets, groceries and national foodservice accounts. Starbucks had recorded a revenue of USD14.89 billion in 2013.Starbucksprimarily complete in the food and beverage industry. This industry was faced anextremely slowdown in sales in 2009 due to financial crisis, Industry revenuechange from 6.6% to USD25.9 Billion in United states.
Products of Virgin GroupProducts of StarbucksPESTEL AnalysisBusiness environment is always govern by the externalfactors such as political, economic, social, technological, environmental andlegal. To have an advantage in the present and the future market it isimportant to reduce the inefficiency and cut unnecessary cost incurred. PESTELanalysis provide to identify varies factors around the business and how itaffect the operations of the business. PESTEL analysis can be effectively usedto identify the opportunities that available to organizations as well as toidentify risks and challenges that may face by the businesses.Virgin GroupPolitical AnalysisPolitical analysis inspect the influences ofgovernment, government policies, rules and regulations imposed to the industry.With refer to Virgin group, political influences can be identifies as laborlaws, taxations, trade restrictions implemented by the government was a majorconcern.
As per Harvey and Allard, group had faced many major political factorssince they have spread their businesses in Unites states of America and Australia.Some the political challenges faced by the virgin group are licensing bureaucracyimposed by the foreign countries, control and increased the regulations by thegovernments, political instability in certain countries such as high customtariffs. Example- increased import custom tariff in United States of Americaresulted negatively impact and reduce the amount of goods that virgin group hadexport to them.
EconomicalEconomic factor consider the factors that affectwhole economy. Inflation rate, price of goods, interest rates on investments,exchange rates and economic growth are the some of the economic factors. Virgingroup had faced high competition among from other competitive firms in theindustry. For an example, virgin was forced to lower their flight rates afterreview of prices of air travel by their major competitors in the airlineindustry such as Qatar Airways, Emirates and American Airline.
Other factorsthat affect the virgin airline was high cost of fuel and entry of new airlinessuch as Singapore airlines to the industry.SocialLiving standards of people are getting rise all overthe world and today customers are become more demanding on their buyingdecisions. Consumers have very high expectations on the product and servicesthey purchase. People are now more aware about consumer rights they have now adays and know their power how affect the profitability of the businesses.Beside consumers are no more buy the products based on its features.
Peopleneed to be feel and touch on their buying decision process(kumar et.al.,2009).
TechnologyTechnology factor consist of new advancement oftechnology such as automation of production, high possibility of technologicalchange, research and development, acquiring new technology advancement,business process outsourcing. Advancement of new technology effect the performanceof the business. For an example company that use poor technology will losetheir competitive advantage over their competitors. Similarly high quality newinnovation and intervention enable company to enhance their productionactivities and increase the profit. Virgin group had faced many technologicalchallenges, for an example, implementing of online booking system for airlineand online customer care agents and online portal.EnvironmentalGlobal warming, climate change are the criticalfactors today environment is facing. Today people are more aware about resultof climate change and many of the nations had faced natural disasters such asflood, drought, record breaking hot temperature and zero temperature and risingsea level.
Virgin airline had faced operational disruption in 2016 June and2017 January due to adverse weather condition and had to cancel flights andresulted customer dissatisfaction.LegalDuring 2016 Virgin Pilots decided to strike againstthe recognition of row over union after the pilot union. Professional pilotunion represent 70%, over 900 pilots demanded to recognize the only union forVirgin airlines. StarbucksPoliticalRegional integration is one of the political factorthat faced by the Starbucks and it allow them to expand the global business.All governments around globe enhancing the infrastructure of their countriescreate opportunity for Starbucks to achieve more markets and suppliers. Howeverdue to bureaucratic red tape continue in most of the countries. This factor isa treat to Starbucks for their expansion of business especially in developingcountries.
EconomicalDue to high economic growth and low unemployment indeveloping countries provide more opportunity to Starbucks to earn more revenuefrom more markets. However the increase in labor cost increase cost forproduction and reduce the profit margin of the company and it increase the costof ingredients. Firm source their most of coffee beans from developingcountries.SocialFirm has the opportunity to increase revenue whileincreasing the demand for their specialty coffee. This is because of increasein the coffee culture among the middle class people around the world. Also,firm can enhance their product range and introduce more health related productto attract health conscious people towards them.
TechnologicalStarbucks has opportunity to enhance their mobileapplication and linked services to increase the online purchases. Same can beused to enhance its supply chain efficiency by using the advance technology fortheir coffee farmers. However, latest coffee making machines making a threat toStarbucks because consumers are using these machines at their home to makevariety of coffee which create substitute to them.EnvironmentalBusiness process should look always to focus onminimal environmental pollution.
Starbucks has opportunity to enhance theperformance in this area, while already having responsible policies, Starbuckshave opportunity to offer their products in a recyclable packaging.LegalStarbucks has opportunity to obtain the approval fortheir ingredients from genetically modified organism (GMOs). However, theincreasing labor laws in developing countries restricting them to access thelabor market. As result of that labor cost is high and affect their profitmargin.
SWOT AnalysisIt is a major step towards strategic planning, is tofind out the internal factors which provides you very important source ofinformation to identify the current situation of the company. As per theJohnson(2005) SWOT is a useful tool to identify the financial Account anddeveloping environment of a firm.Virgin GroupStrengthFirm’s main strength is their strong brand name.Greatest advantage virgin group has is they are experienced in two differentkind of distribution of mail ordering and stationary industry.
Group is veryless integrated with each other compared to big companies since very flexiblecomparing to others. Virgin brand name associate with their billionier SirBranson who has vast expierence in introducing new product to the competitivemarket and it has high budget investing which allow to pay for quality labor,product and service.WeaknessIts own strength has become their weakness. With theintroduction of train and credit card service, now the brand name has diluted.Even customers are confused about the identification of the brand and alsoknown as brand for young crowd. With the introduction of virgin cars andAtlantic image has changed.Virgin product range and expansion of businessesappears to be creating image problem to the firm. Services and products such astrain, records, cola, flights, mobile phones and hotels, message from eachproduct seems confusing to their clients.
OpportunityOpportunity is there to expand into new markets suchas Australia. Virgin airline can still compete with other established brandswith their low rates of flights.ThreatsVirgin is not the leading brand in any format ofbusiness of flights, train, electricity, music, cola and they never the marketleaders all these areas.
May be they are internationally recognized but not alltheir products and services.Virgin very rarely do innovation, what they do iscopy an existing product or service and provide at a lower price. Virgin is astrong business but not a strong brand name. StarbucksStrengthsQuality, profitability and ethically:Starbucks had establish their name as a superiorcoffee making chain, despite their worldwide branch network comparable to otherfast food chains. Products are very high quality, environmental friendly andrelatively consistent in worldwide outlets.
Since they are charging high pricesand most of the consumers are willing to pay for the quality of product. Starbucksare making high profit and they are internationally recognized as specialty in coffee.Efficiency and reinvestment strategy:Greater portion of the profit had been used toexpand the business globally by increasing consumer outlets. It clear firm hasa well-planned strategy and seems working good for them.
Employee managementStarbucks had been treating well for their hundredsof employees very well and they have been nominated as top 100 of places towork for. WeaknessHigh prices of products:Own strength had been their weakness too. High pricesof their products discourage people to use more often, otherwise make Starbucksproducts as their daily consumption. Their premium quality and values are very attractivebut most of the people don’t have money to spend that much of on a coffee.
Lack of unique products:Starbucks has products such as frappucinos, pumpkinspice lattes, and big chocolate chip cookies but they are unique to them, othercoffee shops too have these products selling in their outlets.OpportunitiesGlobal Expansion:Starbucks doesn’t have many coffee outlets ininternationally, most of the shops were located in United States of America. Thereare locations available in many regions to opening of new branches to gain moreprofit. Such as India, Europe and Africa.Introducing new product and Co-branding:Starbucks can think about selling their products insupermarkets among the global. Selling their products other than their ownoutlets would be greater advantage enhance their reputation.ThreatsCompetition from other brands:Dunkin donuts and McDonald’s are major two brandsthat compete with the Starbucks products. These two brands are not pride onselling coffee and tea, they provide similar type products for the Starbucksprice.
One can say consumers may favor them in future.Specific Market:Starbucks were selling coffees, teas and snacks, istheir success. If one day their clients are to be change, then Starbucks are introuble. Business Strategies of Two CompaniesVirgin GroupBusiness StrategyCompany first resource available to them is theirchairman Sir Richard Branson who bought the company to top position. His styleand fascinating way brought people towards the Virgin group. Secondly thepeople of the virgin group are the key success of the company and it has uniquebrand recognition in other business that is difficult copy by others. Virginhas many number of business under one brand name. Management of the virgin grouphas freedom to provide their idea about ongoing business and make innovationfor the development of the company.
Management of the company is heavily dependon the market analysis and customer requirements as they understand their needsand serve them perfectly. They have very creative staff to fulfill the requirementsof their clients as well as the company.Sir Branson adopted policy with his managers andallow his managers think freely, encourage for innovative ideas so managersfeel they are responsible and owners of the company. Managers try to makechanges in their strategy and taking company towards success to earn moreprofit.Brand strategyVirgin has used their brand name for every newproducts they launched because already there is market value for the brand. In UnitedKingdom virgin has high brand value and products that manufactured are sold outunder their brand. Branding under one name allow customers to buy repeatedly andfeels they are loyal supplier.Selling products under one brand name does not need unnecessaryadvertisement that is because brand name already exist and people are aware aboutthe value of the brand.
This strategy can be affect negatively also because ifone product fails in the market then that can be adversely affect the brandname too.Corporate structureMain strategy of the company to work with differentsector of business under one brand name. They have decentralize structure andallow managers to understand the business tricks and take decision by own. Alsovirgin has a centralize unit to handle the business strategy and to control allcompanies under one place. A common web site to the company allow people toaccess the products and services and they have internet business strategy whichallow to coordinate with all the companies and control as per the strategiescoming from head office.