Discuss how the below corporate strategies align with growth Strategies such as
ID: 395054 • Letter: D
Question
Discuss how the below corporate strategies align with growth Strategies such as market penetration,market expansion,product expansion,diversification and acquisition would be appropriate.
Cost Leadership: As can be seen Virgin mobile at the time of its launch made it a point to offer contract-free deals along with the Mobile Number Portability feature. The offering with Virgin Money too was to eliminate all unnecessary fees, with insurance all unwanted excesses charged to the customer was removed. Cost advantage won to the consumers through the Virgin Credit Card which would provide an array of options and privilieges.
- Differentiation: Virgin Atlantic airlines pioneered some features that helped them to differentiate themselves from other airlines. Offerings with customized and flexible services to its customers resulted in delighted customers with a high level of satisfaction. Daily flights between important locations, additional privileges to Virgin card holders and tailor made offerings to business class and economy class passengers.
- Focus: The focus for Virgin had always been to enter the niche markets. The Health club segment through Virgin Active was an effort to reach out to a finite number of customers but with a potential of a scale far higher than that of a mass market. When it came to Virgin Life care, the approach was to focus on improving health through effective lifestyle management and not the usual means of offering treatment. The experience is more personalized and one with a lasting impression.
Explanation / Answer
Based on Virgin Group’s activity in South Africa, the business growth can be easily summarized as per the Ansoff Matrix (Product/Market Expansion Grid):
1. Existing Market – Existing Product or Service: The strategy here would be of a Market Penetration, Virgin Atlantic Airlines had to operate in an existing South African Airline industry with multiple players. However, it planned to expand its offerings to come up with some pioneering features to penetrate the market. Customized and flexible services to enhance customer experience was their sole objective. The offerings varied from connectivity to key locations on a daily basis, privileges and rewards to loyal customers and differentiation of offering to the Business class and the Economy class passengers.
2. Existing Market – New Product or Service: Virgin Money operated in the banking and financial services industry along with many active banks and lenders. In order to differentiate themselves from other players, they went for a Product Development. A product that catered to the needs of its customers without really causing a hassle for them. Therefore, the launch of Virgin Money Credit cards with no unnecessary fees or hurdles and a rewards program offering them benefits in allied companies like Virgin Atlantic Airlines for preferential treatment.
3. New Market – Existing Product: Virgin Music had its presence in UK and to expand further it needed to move to markets that would allow some Market Development. Hence, with Virgin Record, Virgin group entered the South African mainland through an acquisition of a troubled company at the request of Nelson Mandela. This acquisition would be a good fit for its existing portfolio and result in decent synergies with its Music Division.
4. New Market – New Product: Despite its presence in many industries and markets, the next big leap for any company lies in Diversification. Virgin beautifully integrates Virgin Active into its portfolio and ventures into the niche segment of Health Clubs and Health care as a whole. It had a unique objective to improve health through an effective lifestyle management. This for sure was not a mass market entry strategy but one with a high potential finite customer base.
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