STRATEGIC RELATIONSHIPS BETWEEN BUSINESSES WITHIN THE

VIRGIN GROUP

The Virgin Group is formed by various strategic business units (SBU). A strategic business unit is a part of an organization for which there is a distinct external market for goods or services that is different from another SBU. Basically, there are 56 strategic business units in the Virgin Group. For example, there are Virgin Travel and Virgin Trading in the Virgin Group. The Virgin Travel consists of Virgin Atlantic, Virgin Holidays, Virgin Aviation and Virgin Balloon. The Virgin Trading consists of Virgin Megastores, Virgin Enterprises, Virgin Clubs and Virgin Cosmetics.

Companies within the Virgin Group are part of a family rather than a hierarchy. Every SBU in the Virgin Group are ring-fenced, separated and independent. Companies within the group did not even share a common accounting year-end. Each of them operates their own business-level strategies to achieve their own competitive advantages in their own segmented markets. Since decision making are decentralized within the whole Virgin Group, each SBU is empowered to run their own affairs, yet other companies help one another, and solutions to problems come from all kinds of sources. However, it doesnt mean that each SBU are allowed to influence other SBUs decisions. Lenders to one company had no rights over the assets of another, even if that company went bankrupt. Being run as a series of independent businesses, Virgin is precisely to keep people focused on managing their individual companies and keeps the decision process fluid. More interesting, a failure of one SBU may not have a negative effect on the reputation of the other SBU, not to mention the whole Virgin Group.

As Richard Branson said in 2005, Our model is to develop each business separately with its own shareholder and management. In this way we can concentrate on the job in hand, rather than be part of some enormous and faceless conglomerate. At the same time, all of these SBUs operate under the same corporate parent. They enjoy the same valueadding activities provided by their corporate parent. In that case, it cannot be said that these SBUs are completely separated. Instead, they are related by the corporate parent. In a sense the Virgin Group is a community, every SBU in it share ideas, values, interests, goals, and the most important, they share the same brand. As McQuade said in his research Virgin has been described as a keiretsu organizationa structure of loosely linked autonomous units run by self-managed teams that use a common brand name.

Thank you