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Unit 6 Business and Business Environment HND in Business Level 4

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Business Environment of Virgin Group

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INTRODUCTION:

A group of people who have come together for a specific purpose forms an organization. It is a formal structure which highlights the role and responsibilities of the individual working in it. Finance, marketing, human resource and operations are four major business activities in the organization. The internal structure of the organization is represented with the help of organization chart. It tells how the different departments within the organization are linked to each other and the role expectations of the employee. Depending on the type of the organization, the organization structure of the organization changes.

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P1: Types of Organization:

There are four type of business organization.

  1. Sole traders: It is a business in which there is no separation between the business and the owner. The owner is responsible for all the legal transactions. The decision is made by a single person so it is quick and there is regular interaction between the customer and the owner. Since you must arrange for the finance yourself therefore the liability is not limited. It is the simplest way to do business in UK. You must get registered with HM Revenue and Customs. All the recordshave to be maintained and the sole trader has to file the tax papers.
  2. Partnership: It is an agreement in which two or more parties come together for starting a business of common interest. The parties are the partners who can be a individual or other business organization. In UK there is limited partnership. In this one of the partners contributed the maximum amount so it has the right of withdrawing that amount during his lifetime. He has the maximum part in the management.
  3. Companies: A company has its individual identity which is different from the individual owners. It has its own legal identity and seal. In company there is limited liability. Owners areliable for the amount they have contributed. There are four types of companies in UK
    • Public limited companies
    • Private Companies who are limited by guarantee
    • Private companies who are limited by shares.
    • Non-profit companies who donot have share capital.
  4. Franchising: It is giving your own creative idea to other company with your licence. The other person the product but by using your name. The person must give some initial money for obtaining the licence of franchise. The franchisor is the people who have sold the licence of selling the product. The franchisor gets a percentage from of selling the product. With the help of this you can spread your business to every corner of the world.

P2: Growth of International Business Environment

International Business is when the company expand its boundaries i.e. it starts carrying its business across different countries.This can be done in for of FDI, export import trade, franchisee and contract by management. Because of international business there is more innovationand creativity with respect of business. There are some factors that lead to the growth of international business as discussed below:

  1. Expansion of technology: With the advancement of technology the boundaries in between the countries has been removed. You can exchange your ideas, thoughts and product sting at home. Telephones, internet, transport etc. has provided a medium to increase the business activities.
  2. Liberalization and globalization: The restriction on the international boundaries has been removed. The paper work for starting a business in the other country has been decreased favouring the flow of business activities.
  3. International Financial Markets and Institutions: Support from the financial market has helped the common man to enter the business world. Exchange of currency doesnot take time as a result the delays in transfer have been removed.There is transparency in the system.
  4. International culture: We are now open to live in diverse culture. This has allowed the people to come and settle in different parts of the world and start their own business organizations.

This report put forward the vision, mission, organizational structure, strategies, PESTLE analysis and SWOT analysis of Virgin group. A multinational company Virgin group has its origin in London, United Kingdom. It was started by Richard Branson in the year 1970 and now it has spread in different parts of UK, Canada, Australia and USA. In 21 century is one of the well-known brands of Britain. It has different product like travel, financial service, mobile, retail, music and cosmetic (Azar, Schmalz, and Tecu, 2017).

Virgin group consist of differentcompanies. It consist of Virgin Active which deals in Gym chain, Virgin Atlantic which deals in travel, Virgin Australia Holdings which deals in travel, Virgin Care which deals in health, Virgin Connect which deals in media, Virgin Experience days which deals in entertainment, Virgin galactic which deals in aerospace, Virgin health bank which deals in Health care, Virgin holidays which deals in travel, Virgin Hotels which deals in hospitality, Virgin Hyperloop One which deals in high speed rail, Virgin Limited Edition which deals in hospitality, Limobike which deals in travel, Virgin Megastores which deals in retail, Virgin Mobile which deals in communication, Virgin Money which deals in banking, Virgin Oceanic which deals in leisure, Virgin Orbit which deals in aerospace, Virgin Pulse which deals in Business service, Virgin Radio which deals in entertainment , Virgin Rail Group which deals in travel, Virgin Unite and virgin Start up which deals in charity, Virgin sports which deals in sports, Virgin Voucherwhich deals in retail, Virgin Voyages which deals in cruise line and virgin trans east cost which deals in travel.

Vision and Mission of Virgin Group:

Vision and Mission of the company is based on the changing environment. They believe change is good for the company.They believe that change in the organization will always bring long term benefits to the organization. They fix targets which are clear, achievable and measurable. This brings a positive environment in the organization, customers and the people who relate to the organization. They have same values in different products business. They look at Sir Richard Branson as their leader and will always remain an inspiration for all. Sir Richard Branson values and believes can been seen in different strategies the organization take. They believe in their values and this is what which make them different from other organizations. The want to be a customer focus organization. When Sir Richard Branson was a student he used to publish a magazine. From there he started his first business of mail order records. In the year 1971 he opened his first store on London Street (Williams, 2017).. The further expansion of the business started new company virgin records. In the year 1984 he started with Virgin Atlantic. In 2006 Sir Richard started Virgin media and entering to the field of entertainment.

P3: Organization Structure of Virgin Group

Virgin group organization structure is complex. The separate companies have their individual structure with their chairman as to be Sir Richard Branson. The main company holds 20 companies. It has a keiretsu organization structure. It is a structure in which the organization own stake in the different companies and all the companies together form a group company. The organization structure helps the organization achieve the vision of change. Each independent company is considered as a department which produce different good and service. The organization works on the principle of product departmentation. As virgin group is a big organization therefore one type of departmentation is not sufficient as different companies have operation in different countries. Another departmentation that the organization follows is geographical departmentation based on the country in which it operates. Presence of different kind of departmentation makes to a hybrid organizational structure. This helps the organization to adapt to the diverse culture in which it operates.

The hierarchy in the organization plays an important role in decision making of the organization. The different companies in the group work separately and have their own hierarchy level. Sir Richard has always believed in intuition in decision making than following a chain of command (Williams, 2017). This makes the employee empowered and confident. The organization favour communication in different level of management. This develops a feeling of part of a family. Sir Richard takesinitiative to interact with the employees regularly. The organization structure helps in quick decision making within the organization and fat communication. It has a flat structure in the organization which helps to expand the business operations (Murphy, 2017). It works on the principle of decentralization and wider span of control. The decentralized structure helps in quick decision making and empowerment of the employees. They have the authority in decision making. Sir Richard believes that the employees are the important pillar of the organization. The level of bureaucracy in the organization is minimum. They donot believe in the tradition system of being orthodox.

The virgin group believes in the importance of the customers. It has a non-formal organization structure which helps in maintaining a good organizational culture in the organization. It has decentralised structure and less authoritative structure as Sir Richard believes in casual nature in the organization. He believes in hard work and responsibility, which can be found in his employees also. The culture within the organization helps to create a motivation that helps the employee to work hard and feel committed towards the organization. The organization has a flexible structure because of which employee feel comfortable to work for long hours within the organization. Incentive system varies from work to job. It has culture of company fun culture. They have regularly parties, weakenedgateways and social get together. This is helpful in creating a family culture in the organization. Employees get well with each other and the conflicts within the organization are less. This helps in creating a better relationship between the company and the employees.

This culture has been created with the period of time. Virgin group is like family who have common value and culture. This helps in better communication and coordination in between the employees. This helps in faster decision making within the organization. The values and the culture havestrengthened over the period of time. Since the size of the company is very large more efforts are required to build such kind of culture. Virgin group founder always belief that the employees should be treated with respect. The same is followed by the employees for their subordinates. The give a free environment to the employee as a result they work with free mind. It works in a culture that motivates the employees to work hard and feel committed towards the organization. Virgin group believes in taking new opportunities. It believes in risk taking but the decision which they have taken been always fruitful. The do full research and then take the decision. They took right decision at right time. This is the reason for the success of the organization.

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Most of the people assume that the Virgin Group is a multinational company however it is not the case. As almost all the 300 companies which are under Virgin group are operating separately and they have their own employees, departments, assets and services. Thus, the role of marketing, Human Resource, Customer service and finance department is specific to each of the companies. All these departments are interlinked and are working towards serving the end customer. Human resource department is de-centralized in Virgin group however the direction to each individual unit is to ensures the key people are onboarded in the companies who work towards vision and mission of the group. Marketing department plays a vital role as unlike the usual belief the virgin group companies does not have a huge budget for marketing activities and their sole objective is to target the right audience to maximize the result.

P4: Pestle Analysis for Virgin Group

There are internal and external factors which impacts the organizations and the companies must develop strategies around them to be successful. The macro environment are the external factors which impact the organization and have a great influence on the strategies and their decisions. There are mainly six main macro environment factors which impact the companies be it positively or negatively. And there are various strategic tools to assist the organizations to understand their impacts better such as PEST, PESTLE, SWOT and Porter’s Five forces.PESTLE analysis is an analysis of an organization with regards to political, economic, social, technological, legal and environmental. The PESTLE analysis helps in evaluation of different areas which surrounds the business and how they will impact the business and its operations. PESTLE analysis is related to the interpretation of the external factors of the organization. PESTLE analysis can be used for the analysis of entire industry as well. This analysis has been used efficiently to determine the various opportunities which can be use of the organization also it helps to ascertain the risks and external forces which the organization can come across.

  1. Political Factors: In the aviation industry, the prevalent political factor is with regards to terrorism and the recent attacks by terrorists. There have been conflicts between the west with certain Islamic groups due to the ideology or political stances of West. Terrorism has become a serious issue in today’s world. Due to the terrorist’s attacks and threats issued by these groups, the aviation industry has to deploy more resources in other to ensure the safety of the passengers. This leads to additional expenditures for the organization as capital is spent on getting the relevant safety systems on the planes. All this adds to the financial expenditure of the Virgin Atlantic which is part of Virgin Group.
  2. Economic Factors: Economies worldwide is weak and is going through tough times, the growth has slowed down since 2012 and has shown no sign of recovery in recent years. In United Kingdom, one of the biggest concerns is the rate of unemployment being very high which has led to the customers being very cautious with their spending habits. Also till the time the economy doesn’t start showing signs of recovery the citizen will continue to cut down on their expenditures and that has a direct impact on their leisure travels (Lambert, Bassell, and Friedman, 2017). The frequency of the flights has also been impacted due to low demand. Further with slowdown in the economy the customers look for cheaper options for flying and low-cost carriers get the traffic. The aviation and tourism industry also has a seasonality attached to it and during the lean seasons there is passenger volume drastically going down and in times of recession this is further impacted. For virgin group, most of their business units are running with association with other partners and they add to only limited amount of funds to expand their business. With competitive world, the companies have to take care of the particular services with regards to its customers. With every fluctuation in the global and local market they have direct and different level of impact on the operations of the business and can lead to possible losses
  3. Social and Cultural Factors: We can see the standard of living going up around the world. With that there is also developing economies growing at a pace. This also has led to the customers of the organizations being more demanding and set up high expectations with services levels expected from the companies. The consumers are also becoming more and more aware of their rights and they know that as a consumer what impact they can have on the business of an organization. In today’s world, the consumer wants to buy a product which they can feel or make them feel good and it plays a big role in their decision-making process. As an organization, it is their duty to provide world class services and products to their customers. Virgin group has issues with their punctuality and that is an area which they need to work on to satisfy their customers. Virgin mobile has to offer different kind of offers to their customers depending up country to country and local laws.
  4. Technological Factors: There are up gradation of technologies happening every moment and in the aviation industry there has been an equivalent impact of the new technologies on the Virgin group companies. With the increase in demand for the internet and e-commerce around the world, the Virgin mobiles and internet see this as a boom and has been able to enjoy on its success. However there are both positives and negatives impact on their group companies. With regards to Virgin Airline they are now able to reach to broader markets and able to reach to larger audience through internet. However, with internet their consumers have also become smart over the time and they use these services to compare the prices of different airlines and may or may not book on Virgin Airline. With increase in the users of internet and social media the companies are able to market their product in a more effective way and are also able to offer another means of promotes their companies on social media. Internet also helps them to reach out to the world in much lower costs than other mediums of advertisement. Virgin group is known for being technological advanced and also, they keep updating their software’s to provide best in class services to their consumers. Virgin Rail every time keeps their passengers informed of the status of trains through their applications and messages. Virgin group also is leading in the internet services and always keep upgrading to the latest technologies to provide fastest internet services. The policies of the Virgin group also changes with regards to new technologies in the market.
  5. Environmental Factors: Environmental concerns are a big agenda item for any company in the world and even global warming is also seen as a threat to our future generations. People are now getting awareness on the companies which try to achieve short term success or profits by impacting the long-term environment. The laws of many countries are getting stricter and stricter on the companies to be environment friendly and their operations should not harm the surroundings in any means. They also demand the companies to do work towards their corporate social responsibility. There is need for more sustainable means of development and an effort to keep the natural environment intact. This has an impact on both Virgin Airlines and Virgin rail as the carbon emissions from both is seen as one of the main concerns for global warming today. Virgin rail has also started their first train which runs on the bio-diesel which is the first train of its kind in entire Europe.
  6. Legislative Factors: Every country has its own laws which need to be adhered for running their operations in that country smoothly. Thus, with a group like Virgin which is too diverse and is spread over hundreds of countries it becomes very important to keep a tract of such rules and regulations and ensuring that these local laws are adhered. Also, they should also keep a track of any change in the law to modify their current operations.

Overall, it can be said that the success of Virgin group is also dependent on how well they are able to react on all the factors under PESTLE and thus that will also allow them to further expand their operations in new countries and also enter into new product lines depending upon needs of a particular country. As in their respective fields they want to be the first choice of their customers thus they need to be very agile to adapt themselves on these factors and give services to their clients based on that. Richard Branson the key stakeholder of the company has lot of ideas and good hold on the markets around the world and surely as a leader he keeps a close watch on these factors (Williams, 2017). For every business new or existing the PESTLE analysis is carried out and then they ascertain the opportunities and threats which the company may face in the existing and new markets.

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P5: Strength And Weakness Of Virgin Group

It is detail analysis of the organization which tells its strength, weakness, opportunities and threats. It helps in business competitive planning of the strategies. It basically highlights the objective that the organization can cover in the coming period. When we write strength and weakness they are internally related to the organization and threats and opportunity are externally related to the organization. Strength of the organization is the advantages that the organization has. Weaknesses are the disadvantages present within the organization. Opportunities are the advantages that the organization can explore in the external environment and threats are the disadvantages present in the external environment for the organization. This report does a detail SWOT analysis for the Virgin group.

P6: Swot Analysis Of Virgin Group

  1. Strengths: The biggest advantage of the Virgin companies is its brand name. It is globally present brand in Australia, Canada, USA and UK. If the brand name is popular then less efforts has to be done for the marketing of the product. People are branding conscious and they prefer to buy such brands. They believe that Virgin group products are good in quality therefore less promotion has to be done if new products are launched by Virgin group. Less cost is incurred on advertisement of the product. As a result overall profitability of the organization increases. The second advantage is variety in distribution unit. Virgin group uses two type of distribution. They sell the product online and with the help of retail stores. Depending on the preference of the customer they can use both the options. The level of quality of both the distribution is good and the customers are satisfied. Thirdly, Virgin has a good transportation system for the export of goods. It uses airways and seaways for exporting goods. It has international airport channel and two seaways. Fourthly, in today’s digital world information technology plays a very important role. It has high skilled IT professional who are working very hard to provide best customer service. Lastly, Virgin group has a high capital investment. Therefore, it is able to expand its business with its own capability. Because of the good brand name huge investors are also ready to invest money in it.
  2. Weakness: The biggest disadvantage of Virgin group is the informal structure. Because of this structure there is less supervision on the employees of the organization. The employee does not fear from their boss as a result some of the employee take advantage of it and do not do their work properly. Secondly, since the organization is quite big therefore there is communication gap in-between the organization. Therefore there is lack of coordination between different departments. Thirdly, though there is good international transport but the group lacks in domestic transport by means of roads and the railways. There is delay in trains as a result the goods do not reach in time and the company has to bear lot of loses. The production of the organization also suffers because there is delay in the arrival of the raw material. Lastly, the organization needs to change the machinery used froe the production of goods and service. Technology changes day by day. If the organization uses old machinery the quality of the good may suffer.
  3. Opportunities: Firstly, there is a opportunity to expand its operation overseas. Secondly, since Virgin is a good name it has a chance of getting better deals from other countries also. Thirdly, because of the good organization culture talented workforce is ready to work with the organization. Lastly, if the organization changes its technology better quality product can be produced.
  4. Threats: The biggest threat to the organization is innovation the competitors are innovating their products and Virgin group has to move in pace with it. The ideas adopted by the Virgin have spread in other organization and they are using it to their best. The next generation of employees is losing the values given by Sir Richard Branson.

CONCLUSION

Virgin Group has managed to grow their ventures into many parts of the world and also been able to increase their size of operations in the markets. Over the last fifteen years the company has entered into many ventures and developed new products matching to the needs of the consumers who are based out of many countries. Virgin has become a very big brand name and is known for their services to the customers that have ensured the name of the company remains at top spot in future as well. Further the structure of their organization and working culture has also helped virgin group to achieve these milestones and their targets. Their employees are far more motivated and stick to the organization due to their work culture. Motivated work force has also helped them to deliver very high standards of customer satisfaction. The effective leadership skills and application of management theories has also helped Richard Branson to achieve such success with many businesses in a short period of time. The Virgin group has been very successful in growing themselves in competitive industry landscape. The Virgin group also operates in multiple types of environments which are impacted by economic situations, cultural factors, local laws etc. and has to perform considering all of them. As the group companies are working into different fields thus the impact of these environmental forces is different on all of them and is there on different markets as well.

REFERENCES

  • Azar, J., Schmalz, M.C. and Tecu, I., 2017. Why Common Ownership Creates Antitrust Risks.
  • Lambert, S., Bassell, M. and Friedman, H.H., 2017. Leadership in a Knowledge Economy: Building an Innovative Marketing and Branding Organization (pp. 256-265).
  • Williams, D., 2017. Richard Branson as a Global Magnate. What to learn from him about Business.
  • Fernando, A.M., Nicholas, J.S., O'Brien, P., Shabani, H., Janabi, M., Kisenge, P., Ellegala, D.B. and Bass, R.D., 2017. A new source of nonprofit neurosurgical funding.World neurosurgery,98, pp.603-613.
  • Murphy, F., 2017. Do Firms Alter Foreign Organizational Structure in Response to Changes in US International Tax Policy? Evidence From TIPRA 2005.
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