The Virgin group strategy is essentially the idea that there are always new business opportunities; “opportunities are like buses – there’s always another one coming!” (Branson n.d.). Due to Virgin’s large number of subsidiary companies, they are able adopt an Emergent strategy where they ‘trial and experience’ products and services, without putting the whole Virgin Group at risk (Mintzberg, 1990). It is important with this strategy that the success of other subsidiaries exceed the loss of any failed ones. This strategy has worked, and Virgin have entered the leisure, travel and money markets to name a few. However, Branson has had a few business flops, one of the biggest being Virgin Cola. A SWOT analysis of Virgin Cola shows that the Strengths are
- Brand name
- New innovative packaging
and the opportunities are
- Expand the Virgin Brand
- Enter a large market
Although the strengths and the opportunities of Virgin Cola are attractive, Branson underestimated the threats and weaknesses of the business, specifically what Michael Porter states as one of his 5 Competitive Forces; “the intensity of rivalry among competitors” (Porter, 2008). Coca Cola and Pepsi, two leading soft drink brands, took this potential competition very seriously. Coca Cola doubled their spending on advertising and promotion in response to Virgin Cola (Hayman & Giles, 2015). This along with a few other factors, forced Virgin Cola out of the market. This demonstrated the importance of understanding the competition when entering a new market.
Conversely, competition can be positive. I am currently part of the University Hockey Club, and the competition between players striving to play for the highest team is what drives us to train harder, consequentially producing better results for the University. This theory is relatable to co-workers in the same company, suggesting that internal competition can be as beneficial as external competition.