Assignment week 14

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

Business level strategy

 The decisions involving the creation, maintaining and using its competitive advantages is known as business level strategy. In this, the company must evaluate its product line, target market and competition and identify where the competitive advantage lies. A gourmet candy company, for example, might find that it cannot compete on price; larger corporations often enjoy economies of scale that keep costs low. Instead, the small business would choose a differentiation strategy, emphasizing freshness, quality ingredients or some other attribute consumers will value highly enough to pay extra. Business strategy will affect the small company’s functional decisions such as the selection of its promotions and distribution channels. (smallbusiness.chron.com, 2013)

Corporate Strategy

The decisions involving the identification of other opportunities outside its original industry and thus considering for further diversification is known as corporate level strategy. When there is addition of a different business to the company, the business owners must consider corporate level strategy. To be effective, the umbrella company must contribute to the efficiency, profitability and competitive advantage to each business unit. The gourmet candy maker may decide to enter the dried-fruit business, for example. This corporate decision is sound only if the parent company can extend and develop a competitive advantage – say economy of scope, integrated management or procurement – over both businesses. For example, the owner may determine that her mail-order candy distribution system is perfectly suited for the dried-fruit business and that customer research indicates existing customers will purchase items from both companies. Or she may be able to negotiate volume discounts for raisins, dried cranberries and dried cherries she will use in both businesses. (smallbusiness.chron.com, 2013)

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

Virgin group is much like a parental developer as it focused on developing its own technology and strategy to expand its business empire. It believing on empowering its business units on itself further suggest that it follows parental developing.

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

Virgin Group, as a corporate parent is continuously inspiring its sub units to expand and develop on its own, giving aid and targets so that they as a whole can move further. Similarly,the leadership of Richard Branson,the founder of the Virgin group, their contacts and partners, huge number of business associations, business style, distinct belief have further added to its business value.

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

The logic behind the portfolio is to minimize loss. By investing on many sectors, rather than on a single industry, the owners can minimize their losses from one industry by covering from other industry. In the same way, the Virgin group have invested in mobile telephony, travel, financial services, leisure, music, holidays and health & wellness to minimize their risk.

The group has managed its portfolio in such a way that non of its individual invested industries are closely related with one another.

Reference:

Ø  Chron.com. 2013. The Difference Between Corporate Strategy & Business Strategy. [ONLINE] Available at:http://smallbusiness.chron.com/difference-between-corporate-strategy-business-strategy-57411.html. [Accessed 01 October 13].

Ø  Jaspal, S., 2010. [Online]
Available at: http://soniajaspal.wordpress.com/2010/11/10/risk-management-strategy-of-virgin-group/
[Accessed 2013].

turbo.kean.edu/~jmcgill/BPS4.ppt‎