Posted at 11.22.2018
The overall strategy of Virgin is to penetrate new markets that enjoy strong progress in order to supply products or services. The goal is to compete with companies already present in the market by offering top quality at less price and producing new ground breaking products and principles.
Branson's strategy aspires to create value-added for products and services that they unveiling into market to be able to constantly strengthen the Virgin brand image and create authority and reputation. Indeed, the Virgin brand can be an important and valuable asset for the conglomerate since it is dependant on values rather than on a particular business sector (no central business). It really is difficult for consumers to connect the brand to a specific product.
The Virgin Group has found ways to lower the barriers of entrance of some large sectors and sectors by producing and launching new offerings on mature marketplaces where the leader companies weren't caring for their customers and were not innovating.
The Virgin conglomerate is managed mainly by Richard Branson and his financial partners. The managerial policy is carried out by decentralized decision-making and accountability of managers of every major activities of Virgin.
The purpose of the conglomerate is to set-up completely autonomous companies under one brand "Virgin". This organization based on decentralization of forces and decisions results in a greater accountability of managers, but also avoids the unwanted effects of bureaucracy and allows swift and effective decision-making.
Diversification is a mean of development that involves an development into new domains of activity and therefore to acquire new skills and integrate them. Diversification is recognized through a new set of key success factors unique to one or more new website of activity.
In order so go for potential new domains of development, Virgin is enthusiastic about two conditions:
Potential of the market: is this sector of activity interesting? Is this sector growing?
Intensity of your competition: will there be a lot of competition?
The strategy of Branson, which has became effective, is usually to be in the right place at the right time. We cannot say that the performance of a firm relies only on external factors related to its environment. You'll find so many other factors that allow a firm to become more productive than its competition such as invention, quality of service or product offered, price etc. Those are the main property of Virgin to be competitive on new market segments.
As an outcome, Virgin targets area of activities where there aren't many competitors that not create enough value for his or her customers, either owing to inefficiency or excessive concern for challengers. Virgin focuses on different and various activities and generally succeeds in penetrating new market segments with overconfident rivals that create a white space to provide products and services at lower prices with higher quality.
Certainly, the development strategy of Virgin is dangerous and dangerous. However, they start new activities only if they are sure those four conditions are satisfied:
The new market present good development opportunity
Virgin would have the ability to challenge the expert of rivals by creating value added
Provide higher quality
The diversification strategy of Richard Branson has 3 dimensions
Horizontal diversification: the firm has various business activities in areas that have little if any synergy. However, for conglomerate, even though there is absolutely no hyperlink between activities, there are still interesting synergies related to financial and management skills that the group will have on its procedures.
Geographical diversification: Virgin expands globally, creating joint projects and acquiring businesses about the world. As rules and distribution systems are specific to each country, factors of success are also different.
Investment diversification: Virgin tries to diversify its business profile. This allows in a single hand, higher profitability through the deal and acquisition of subsidiaries according to opportunities, and second it reduces risk and frees up cash flow for potential investment funds.
The development doesn't benefit from any synergies; in fact it is a development through opportunities. Thus, there is a low engagement of the headquarter in the many activities and each activity is fiscally independent and isolated. However, we can note a dependence of each product vis- -vis the image of the Virgin Group. When a division damage the image of Virgin, others can are affected as well. Furthermore, the subsidiaries of the group share common ideals and a vision of long-term extension.
The diversification strategy of Virgin is made on the success of its differentiation strategy.
Strategies of differentiation usually form the competitive advantage of the company because of the specificities of its offer.
To get into new markets, Virgin usually uses its capacity to offer services or services with high added value and competitive prices. To take action, Virgin analyses offers of the competition on a specific market and then identify the flaw or the weakness it may use to conquer the marketplace. Deep market research and marketing research are conducted to help the group Virgin to identify consumer needs and objectives.
We can identify two differentiation strategies used by Virgin:
Differentiation through the value: Virgin aspires to provide good-quality products that have features or components different from those proposed by competitors and at cheap.
Differentiation through the image: advertising, branding, popularity and expert of Richard Branson. Marketing is orienting consumer tastes.
The whole strategy of the conglomerate is made on development. Indeed, development is the key asset which allows Virgin to penetrate new markets and to meet the needs of customers dissatisfied. Also, technology is an effective way to undermine rivals and impress potential clients. This also contributes to fortify the name and image of the brand "Virgin".
In terms of invention with Virgin Galactic, Virgin was the first ever to launch space tourism.
Development Process at Virgin
Little is known about the real idea era or development process. Alas, neither Will Whitehorn, the leader of Virgin Galactic, nor Sir Richard Branson, chief executive of the whole Virgin group haven't stated in any interview how they came about to target the space tourism industry as their hottest venture. It is, however, probably not said too much that the idea of space travel meets well with the hugely diversified profile of the group, as well much like the culture of the complete company.
Although the business's fields of activity are broadly multiply and the id of center competencies is difficult to impossible, three main domains of activities that the company pursues can be filtered out:
Obviously, the undertaking of Virgin Galactic suits best into the first category and integrates itself into a long list of other travel related businesses. Neither of the other business however is quite as 'flashy' or 'alluring' as this. Such a status comes mainly from the novelty and highest exclusiveness that space travel represents. Therefore, additionally it is - to a smaller extent - integrated into the other two areas of business, particularly entertainment (in the sense of providing the overall masses something to dream of) and lifestyle (in the sense of actually wedding caterers to the most prominent members of world).
They group has - excluding Virgin Galactic - by themselves ten major brands (discounting smaller or similar brands) which shows evidently how interconnected this subject matter is within the large Virgin Group. Travel is one with their strengths so it is not at all astonishing that they choose to expand in this route.
Another factor I mentioned above deals with the culture of the company. To comprehend the culture, you have to learn that it was generally shaped (but still is today) by its creator and chief executive, Sir Richard Branson.
"My curiosity about life originates from arranging myself huge, obviously unachievable difficulties and trying to go up above them. . . from the perspective of wanting to live life to the full, I felt i had to attempt it. "
Sir Richard Branson (1998), Burning off My Virginity
Richard Branson is known the world over as a very successful businessman who may have founded and still leads his conglomerate of over 300 companies under the proceeding of the Virgin Group. In addition, and a lot more interesting in regard to the culture of his companies is his personality and the troubles he models himself outside the business area. He is known to be very ambitious, daring, and open to all new and fascinating things. His above quoted statement underlines that he tries to exist to the fullest and does not shy from a challenge or a chance. This frame of mind has moved over in the organization culture of his companies. Furthermore, he quite often tries to realize his personal obstacles through the use of a new business venture.
This is where Virgin Galactic comes into play. It really is a daring endeavor; to show that it is possible for an exclusive company to enter space commercially after space having been 'governed' for so a long time by governments only. The sky and beyond is something that has ensnared people for quite some time and Sir Richard, as he likes to be called, is not a exception. He's, however, indeed an exclusion as he has the money, the competencies, and especially the willpower to create a (hopefully) successful business endeavor out of the.
The real R&D as well as the engineering of the carrier airplanes as well as the shuttles is not completed by Virgin Galactic itself. For the development and production process, a jv was developed by Burt Rutan and Richard Branson in 2005. Burt Rutan is an American space and aircraft engineer who have been lauded for his efficient designs and is currently the head of Scaled Composites. This new company is - simplistically - called 'The Spaceship Company' (TSC). It is jointly held by Virgin Group and Scaled Composites, an aeronautic development company. TSC will own all the technology that is developed for this job for potential future marketing. The first customer of the company will - unsurprisingly - be Virgin Galactic, having positioned an order for five SpaceShipTwos and two WhiteKnightTwos. Virgin Galactic gets the "exclusive use of the systems for the initial 18 months of commercial passenger operations".
The aforementioned company 'Scaled Composites' is the one which actually designs the complete carrier and spaceship systems. They can be responsible for the study and development of new technology to work with for the Virgin Galactic procedure. The business has intensive experience in the creation and development of aeroplanes as well as some experience as it pertains to rockets and space reentry vehicles. Largely, however, the company has concentrated before on developing specialized aircraft for special uses, e. g. in the agricultural business. It appears as though Virgin Galactic has found an able and also enthusiastic spouse to develop not only their first, but also the current second generation of SpaceShips. It really is furthermore rumored that the Scaled Composites is already working on one third version of the WhiteKnight carrier plane as well as focusing on the SpaceShip3.
External Examination of Virgin Galactic
The Porter's Five Pushes evaluation was conducted in order to identify structural variables influencing competition and profitability in the commercial space travel and leisure industry. It targeted to determine what business type Virgin Galactic is about to go into. As this is relatively new industry, still in the phase of creating, Virgin Galactic will also have an opportunity to form this industry to some extend as the first market entrant.
Commercial Space Travel and leisure is a fresh subsector of the area tourism industry. It offers the opportunity to allow many common people, who don't necessary have any space of traveling practice, to see space and non-gravity feeling. Up to now, less than 500 folks have experienced space travel, but almost without exemption these were all the participants of the governmental methodical expeditions. Commercial space tourism is looking to bring this experience to a way higher participants quantity than previously.
The sector of space tourism looks promising but also very demanding for the business. To get into this industry a heavy opportunities and capital is necessary and not just in monetary terms, but also in conditions of knowledge and experience in the aviation/space industry. The costs of the vacationer space program are extremely high - Virgin Galactic needs that the start a space tourism program will cost $100 million as an initial investment, later more costs will be added up related to maintenance of the spacecrafts and infrastructure etc. Virgin is the first company whose spacecraft was developed by the wholly private company (a jv between Paul Allen and aviation companies), other existing spaceships were recognized by governmental funding.
Also the know-how is important, and companies without experience and highly informed and skilled people cannot simply gain access to this new market. Another issue is the fact that very soon some legislation changes are expected, which will probably further limit the market entrants.
Very expensive to get into the industry - high capital requirements
Extremely high technological barriers to enter into the industry
Experience and knowledge needed and training very hard available
Highly developed and incredibly costly infrastructure needed
Economies of scale
Possible legislation obstacles soon
Very limited number of suppliers for the aircraft
Limited ability to improve the supplier
Unique products - Aircrafts offered by various suppliers are not the same
Locked directly into one supplier effect - high switching costs
Low capacity to substitute
Very few competitors in the pipe - low concentration
Relatively small size of rivals assessing to BG
High costs of giving market, high leave barriers
Low differentiation of services proposed by various companies
No big variety of competitors
No substitution to the service of commercial space tourism possible
At the moment - no substitution for VG services
Substitution for VG will be possible soon that will change the existing situation
Easy to substitute by experiencing the space with other space traveling company
Low price sensitivity
Buyer willingness - unknown
Low cost of moving over (Onetime orders mainly)
Low customer loyalty
Very low buyers volume
The positive aspect of having your money committed to the commercial space travel and leisure is the actual fact that any substitution to the service is almost not available. Currently, the only way to buy a trip into space is to pay for a chair on the Russian Soyuz launcher. Tickets purchased through Space Escapades cost more than $20m and take the client to the International Space Train station for a short holiday. However this program is individually designed and can scarcely be called commercial due to the extremely high costs and long time of prep for the trip, plus in most cases the person is required to do some technological researches. There are also some governmental programs, but the standard people cannot be a part of them or just book their seat tickets via the phone or Internet. To sum up - this service is very new and unique and there reaches this moment in time any replacement that may help every person to experience non-gravity condition and start to see the Earth from the space.
Supplier Ability is estimated to be high as there aren't many makers of the ultra hi-tech spacecrafts. Virgin solved this problem by establishing its own joint venture with the aviation companies, but many other companies that are trying to enter the forex market have to cooperate with the governmental organizations, like NASA, to be able to own their spacecrafts developed. There aren't many companies that the area travel and leisure company can cooperate with, the firms that are interacting start are large (Boeing, Russian company - Energiya etc) and the merchandise they offer are very unique, so that means it is harder to improve the supplier. Which makes the suppliers strong in the terms of their electric power regarding the space travel and leisure industry.
Buyer power is assessed as medium. The purchase price sensitivity of potential customers is not so high - individuals who are willing to pay around $200, 000 for 15 tiny experience in the space rather will be centered on getting the most rewarding experience and will not be so price delicate. Also the clients switching cost generally aren't related to this industry, such as almost all of the cases the space travel is a very short, but also very costly one-in-the-lifetime experience. This might change later, when the industry are certain to get into the older phase and it'll be common to visit more than once a life. A dark area of this part is the very low customers' level, so every potential customer will be very very important to the company in this sector. A smart area for VG currently is the actual fact, that currently there are not others who are mailing people to space on the regular basis, so there isn't substitution for his or her services.
Industry Rivalry is low, as there are only very few opponents who are prepared to start out their operation soon. Also Virgin is the major private company on the market and the sector is not very diversified. Another factor will be the high potential exit obstacles, that are mainly linked with the utilization of the used spacecraft, infrastructure etc.
To conclude, the space tourism sector is still in statu nascendi, but it looks like a highly requiring industry limited to the companies that will be able to become a member of together the highest technology and the most worthwhile experience. Currently this is typical monopoly - where one company, Virgin Galactic overran the slowly developing market, but it could be expected that it'll be soon progressed into the oligopoly and the industry will be dominated by the small amount of major companies.
Pest research was conducted to be able to recognize the macro-environmental factors that effect on the space tourism industry and in the same time will have an effect on on the Virgin Galactic's business.
The cold war was facilitating the space exploration by a long time. Currently one of the key factors of growing the area technology is money orientation. Private companies together with the governmental agencies are working in close cooperation in order to design new alternatives for the satellites or space carry. This assistance of the private firms with the governmental body and organizations (US, Western, China, Russian) can have a great impact on the future of the commercial space traveling, mainly due to access to the new scientific development and choices to share risk and costs of Research and Development.
Another very essential aspect that may impact the area travel and leisure industry is the legislation. Currently there is absolutely no clear international or local rules that would control the space tourism industry. However some early on signs or symptoms of changes in the problem can be already discovered. In the long run of 2005, the government has announced a set of proposed polices for space travel and leisure, which included testing techniques and training for emergency situations but didn't refer to any health requirements. These rules are still along the way of design and presently any of the countries have launched any specific guidelines that would control this industry. However this will be the issue that ultimately will be dealt with by the national and international decisive body and which can impact the industry to a great level.
The current financial factor that is impacting on the area traveling industry is the inexpensive slowdown and tough economy. US has recently cut their expenditure for the NASA and many companies considering entering the market of space moves (for example Amazon, Paypal etc) must postpone its plans of expansion and cut the purchases for the R&D to conserve money and battle with the lower consumption of the clients. Also acquiring the credit for even more development can become more difficult as banks and governmental organizations may be less happy to borrow funds.
Economic problems can also take its toll on the number of clients - at the days of the tough economy and financial instability many interested clients will postpone for later or resign from experiencing the space and consider this as an unnecessary spending.
Also the olive oil and oil prices can affect the space tourism industry as the spaceflights are reliable on the olive oil as the petrol. In this sense this is a very sensitive industry, as without huge amounts of olive oil this business simply cannot function, so international turmoil, wars and all other factors that are impacting the costs of essential oil will have an indirect influence on the space travel and leisure industry as well.
At this second, as space travel and leisure is a comparatively new sector with the non-constituted market yet, it's very difficult to assess exactly what will be the true desire for this service. However travel and leisure has been growing steadily and effectively within the last 50 years. The industry makes up about a high percentage of the gross annual GDP in many countries and signifies one of the most crucial and quickest growing sectors on the globe. The number of English and Irish guests grows. Also the facial skin of tourism has changed over the last 50 years - people are going more and more a long way away from their home location. The reason for that keeps growing transport and vacationer infrastructure but also the desire to explore other areas of the world. These changing travel behaviors of individuals have very large implications for the space tourism.
Another point is the fact that the potential market for space travel and leisure and its own development relies not only on the number of folks who are willing to happen to be space and who have also the money to do so but also on the physical and mental ability for space travel of the interested people. The basic principle health requirements for space holidaymakers in conditions of fitness and years will have to be used under the awareness by the firms while accumulating their fleet, infrastructure and new space programs because of their clients.
Technology seems to be one of the very most important, if not the most crucial, factor that affects the space tourism industry. Research and Development atlanta divorce attorneys company through this sector should be centered on providing the new alternatives that could make the space travelling less expensive, so even a little upgrade may bring an enormous difference for the business. For instance Virgin has integrated an innovative gas saving system, that helps not and then use less gasoline but also is more green (the carbon footprint for each and every customer soaring to the space is approximated to be the same as one way journey from the US to European countries). The fuels and energy preservation technologies are very important in relations to the problems of the natural resources' scarcity. Also it can improve the revenue by cutting down the big area of the expenditures.
It will probably be worth also to mention the possibilities of the various forms of assistance between various organizations, both governmental and nongovernmental. Virgin Galactic has established a successful jv with other aviation and hi-tech companies in order to make a spaceship that is technologically advanced compared to existing once. That is an example of the successful cooperation between your companies on the R&D field.
Future of Virgin Galactic
It remains to be seen if the idea of Virgin Galactic adds up over time. These are off to a appealing start, but whether the market is big enough to recover the huge primary ventures is difficult to evaluate at this point in time. As long as the technology will not evolve swiftly to, for example, provide far better energy efficiency, the price is likely to stay static in the same region it is now. Should it, however, drop then we could be looking at a fresh mode of transport in the foreseeable future. Obviously, the technology will stay costly, so even a decrease by 50%, although more than significant, would still exclude almost all of the world human population. Nevertheless, such a lowering could create enough bonuses for sufficiently prosperous visitors to view the executing of Virgin Galactic as something else than a once in a lifetime experience. It could in fact become a fantastic quick method of travel. The inherent time savings that might be employed are staggering.
A very important part of not only this potential future strategy, but also today's marketing attempts is, however, the option of start and getting bases across the world. As of now, the only real start, as well as getting, base is located in the Mojave Desert in California, USA. The build has a very limited cross-range capacity and until other designed spaceports are built worldwide, it has to land in the region where it started out. Further "Spaceports" are organized in Dubai and somewhere else, with the intention that the "spaceline" will have a worldwide availability and commodity in the foreseeable future.