Week 14

WEEK 14 – LEARNING JOURNAL

In your own words and using referenced quotes describe the difference between “business unit level” strategy and “corporate level” strategy.

Strategy is the long term goal which each business prepares. Every business set targeted goals and operates accordingly to achieve that goal. Business strategies are hierarchically divided into three groups. They are: Corporate Level Strategy, Business Unit Level and Functional Level Strategy.

  Corporate Level Strategy: Corporate level strategy is establishes at the corporate level of an organization. It is the long term plan of an organization concerning its direction and scope. The process of establishing corporate level strategy begins by preparing the goals, objectives and scope by considering the internal and external environmental factors of the organization. (Donald W. Beard and Gregory G. Dess, 1981)

Business Unit Level Strategy: Business unit level strategy involves the process of pricing, promotion etc. Hence, we can say that business unit level strategy is related with facilitating customers with goods and services along with that gaining competitive advantage. (Donald W. Beard and Gregory G. Dess, 1981)

 Difference between ‘business unit level’ and ‘corporate level’ strategy.

BUSINESS UNIT LEVEL STRATEGY	CORPORATE LEVEL STRATEGY
ü  Line managers of each business unit develop this strategy. ü  Concerned with the performance of each business unit. ü  Concentrates only on specific business unit i.e. strengths and weaknesses. ü  Usually is short term because it changes with the change in the market and demand.	ü  Top level executives like BOD and CEO develop this strategy ü  Concerned with the organization’s structure, unit and size ü  Concentrates on broad areas which affect the entire organization. ü  Are long term in nature and does not change frequently. (Amanda L. Webster, 2013).

Discuss the corporate parenting style of Virgin group.

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

The reason for the success of Virgin Group is because of the reputation and name of Sir Richard Branson. Virgin group emphasizes on their own innovation and capabilities in order to add value to their business. Virgin group gives authority is completely to each operating business unit respectively. Hence, it falls under parental developers and follows the developer type of corporate parent. (Dess G, 2007).

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

All the companies which operates under Virgin group shares similar and common kind of ideas, goals, values and interests so they are able to solve their problem by combining their similar ideas, goals, values and interests which helps them to create good rapport with each other. Along with that, it is a parent company so its even its competitiveness adds value to their business and even Sir Richard Branson’s reputation, style of management and partners also helps a lot to add value to their brand and the business. In these ways, the Virgin Group, as a corporate parent adds value to its businesses.

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

We know that if there is high risk then there will be high return but usually businesses want to achieve high return with low risk. Portfolio is the diversification of investment on different products which minimizes risk and increases the possibility of return. Hence, businesses maintains portfolio so that they can recover the loss of one business from another and portfolio even enables a business to enroll in every segment of business which helps to make strong brand image. Virgin Group are in mobile telephony, travel, financial services, leisure, music, holidays, and health & wellness because Virgin is the well known brand name so even the name attracts many customers and there many loyal customers of the brand Virgin. (Dick and Avaucourt, 2000)

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

One of the main asset or we can say the popularity of Virgin is because of Sir Richard Branson. They are able to maintain brand image and brand value because of Sir Branson. If anything happens with Sir Branson then the company will have to face with difficulties in spite of strong and expert management team.

References:

1. Amanda L. Webster. (2013). Difference Between Corporate Level Strategy & Business Level Strategy Read more: http://www.ehow.com/info_7829547_difference-strategy-business-level-strategy.html#ixzz2rlwcawWZ. Available: http://www.ehow.com/info_7829547_difference-strategy-business-level-strategy.html#page=0. Last accessed 2/10/2013.
2. studymode. (2010). Strategic Management - Virgin Case Study. Available: http://www.studymode.com/essays/Strategic-Management-Virgin-Case-Study-286757.html. Last accessed 2/10/2013.
3. Donald W. Beard and Gregory G. Dess. (1981). Corporate-Level Strategy, Business-Level Strategy, and Firm Performance. Available: http://www.jstor.org/stable/256169. Last accessed 2/10/2013.
4. Guest Contributer. (2007). Virgin Corporate Strategy. Available: http://www.techinasia.com/virgin-corporate-strategy/. Last accessed 2/10/2013.