Virgin group is well diversified
company which has more than 200 privately owned companies under their brand
name of “virgin”. Virgin is the one of the biggest brand in United
Kingdom. Which was established in 1970
by Sir Richard Branson. They have diversified their business into various
categories such as Virgin Atlantic Airway was the second largest airline in
United Kingdom, Virgin holidays, Virgin rail, Virgin retail group which
operates mega stores, virgin direct provides financial services. Other business
include virgin cola, record label, book and music operations, hotels, telecommunication,
movie theaters and radio stations.
Branson was dropped out from the
school at the age 17 in 1967, he started selling magazine and that venture was
successful. In 1970 Sir Branson started his second undertaking, a company
called Virgin. Virgin initially started as Mail Order Company and it was
Virgin group had employed over
53000 employees as of 2012 and spread their businesses over 300 brands in 25
countries. Sir Branson, Brand name, management style and least hierarchy of
management level are the reason behind the success of the virgin group.
Starbucks is an American company
established in 1971. Three partners met in the University of St Francisco,
English teacher Jerry Baldwin, Zev Siegl, Gordon Bowker were highly interested
on selling quality coffee bean. 1987 Starbucks opened its first outlet outside
the seattle at Vancouver, British Colombia and Chicago. In 1989 Starbucks had
46 outlets across the northwest and annually Starbucks was roasting 907105kg of
coffee. Starbucks is a company that
produce premier roaster and retailer of specialty coffee all around the
world. Starbucks employed 182000 employees
over 19747 outlets in 62 countries. Their product mix comprises of roasted
handmade high quality coffee, tea, fresh food and other beverages. They sell
variety of coffee and tea through licensed supermarkets, groceries and national
food service accounts. Starbucks had recorded a revenue of USD14.89 billion in
2013.Starbucks primarily complete in the food and beverage industry. This
industry was faced an extremely slowdown in sales in 2009 due to financial
crisis, Industry revenue change from 6.6% to USD25.9 Billion in United states.
Products of Virgin Group
Products of Starbucks
Business environment is
always govern by the external factors such as political, economic, social,
technological, environmental and legal. To have an advantage in the present and
the future market it is important to reduce the inefficiency and cut
unnecessary cost incurred. PESTEL analysis provide to identify varies factors
around the business and how it affect the operations of the business. PESTEL
analysis can be effectively used to identify the opportunities that available
to organizations as well as to identify risks and challenges that may face by
inspect the influences of government, government policies, rules and
regulations imposed to the industry. With refer to Virgin group, political
influences can be identifies as labor laws, taxations, trade restrictions
implemented by the government was a major concern. As per Harvey and Allard,
group had faced many major political factors since they have spread their
businesses in Unites states of America and Australia. Some the political
challenges faced by the virgin group are licensing bureaucracy imposed by the
foreign countries, control and increased the regulations by the governments,
political instability in certain countries such as high custom tariffs.
Example- increased import custom tariff in United States of America resulted
negatively impact and reduce the amount of goods that virgin group had export
consider the factors that affect whole economy. Inflation rate, price of goods,
interest rates on investments, exchange rates and economic growth are the some
of the economic factors. Virgin group had faced high competition among from
other competitive firms in the industry. For an example, virgin was forced to
lower their flight rates after review of prices of air travel by their major
competitors in the airline industry such as Qatar Airways, Emirates and
American Airline. Other factors that affect the virgin airline was high cost of
fuel and entry of new airlines such as Singapore airlines to the industry.
Living standards of
people are getting rise all over the world and today customers are become more
demanding on their buying decisions. Consumers have very high expectations on
the product and services they purchase. People are now more aware about
consumer rights they have now a days and know their power how affect the
profitability of the businesses. Beside consumers are no more buy the products
based on its features. People need to be feel and touch on their buying
decision process(kumar et.al.,2009).
Technology factor consist
of new advancement of technology such as automation of production, high
possibility of technological change, research and development, acquiring new
technology advancement, business process outsourcing. Advancement of new
technology effect the performance of the business. For an example company that
use poor technology will lose their competitive advantage over their
competitors. Similarly high quality new innovation and intervention enable
company to enhance their production activities and increase the profit. Virgin
group had faced many technological challenges, for an example, implementing of
online booking system for airline and online customer care agents and online
Global warming, climate
change are the critical factors today environment is facing. Today people are
more aware about result of climate change and many of the nations had faced
natural disasters such as flood, drought, record breaking hot temperature and
zero temperature and rising sea level. Virgin airline had faced operational
disruption in 2016 June and 2017 January due to adverse weather condition and
had to cancel flights and resulted customer dissatisfaction.
During 2016 Virgin
Pilots decided to strike against the recognition of row over union after the
pilot union. Professional pilot union represent 70%, over 900 pilots demanded
to recognize the only union for Virgin airlines.
Regional integration is
one of the political factor that faced by the Starbucks and it allow them to
expand the global business. All governments around globe enhancing the infrastructure
of their countries create opportunity for Starbucks to achieve more markets and
suppliers. However due to bureaucratic red tape continue in most of the
countries. This factor is a treat to Starbucks for their expansion of business
especially in developing countries.
Due to high economic
growth and low unemployment in developing countries provide more opportunity to
Starbucks to earn more revenue from more markets. However the increase in labor
cost increase cost for production and reduce the profit margin of the company
and it increase the cost of ingredients. Firm source their most of coffee beans
from developing countries.
Firm has the
opportunity to increase revenue while increasing the demand for their specialty
coffee. This is because of increase in the coffee culture among the middle
class people around the world. Also, firm can enhance their product range and
introduce more health related product to attract health conscious people
opportunity to enhance their mobile application and linked services to increase
the online purchases. Same can be used to enhance its supply chain efficiency
by using the advance technology for their coffee farmers. However, latest
coffee making machines making a threat to Starbucks because consumers are using
these machines at their home to make variety of coffee which create substitute
Business process should
look always to focus on minimal environmental pollution. Starbucks has
opportunity to enhance the performance in this area, while already having
responsible policies, Starbucks have opportunity to offer their products in a
opportunity to obtain the approval for their ingredients from genetically
modified organism (GMOs). However, the increasing labor laws in developing
countries restricting them to access the labor market. As result of that labor
cost is high and affect their profit margin.
It is a major step towards
strategic planning, is to find out the internal factors which provides you very
important source of information to identify the current situation of the
company. As per the Johnson(2005) SWOT is a useful tool to identify the
financial Account and developing environment of a firm.
Firm’s main strength is
their strong brand name. Greatest advantage virgin group has is they are
experienced in two different kind of distribution of mail ordering and
stationary industry. Group is very less integrated with each other compared to
big companies since very flexible comparing to others. Virgin brand name
associate with their billionier Sir Branson who has vast expierence in
introducing new product to the competitive market and it has high budget
investing which allow to pay for quality labor, product and service.
Its own strength has
become their weakness. With the introduction of train and credit card service,
now the brand name has diluted. Even customers are confused about the identification
of the brand and also known as brand for young crowd. With the introduction of
virgin cars and Atlantic image has changed.
Virgin product range
and expansion of businesses appears to be creating image problem to the firm.
Services and products such as train, records, cola, flights, mobile phones and
hotels, message from each product seems confusing to their clients.
Opportunity is there to
expand into new markets such as Australia. Virgin airline can still compete
with other established brands with their low rates of flights.
Virgin is not the
leading brand in any format of business of flights, train, electricity, music,
cola and they never the market leaders all these areas. May be they are
internationally recognized but not all their products and services.
Virgin very rarely do
innovation, what they do is copy an existing product or service and provide at
a lower price. Virgin is a strong business but not a strong brand name.
Starbucks had establish
their name as a superior coffee making chain, despite their worldwide branch
network comparable to other fast food chains. Products are very high quality,
environmental friendly and relatively consistent in worldwide outlets. Since
they are charging high prices and most of the consumers are willing to pay for
the quality of product. Starbucks are making high profit and they are
internationally recognized as specialty in coffee.
Greater portion of the
profit had been used to expand the business globally by increasing consumer
outlets. It clear firm has a well-planned strategy and seems working good for
Starbucks had been
treating well for their hundreds of employees very well and they have been
nominated as top 100 of places to work for.
High prices of products:
Own strength had been
their weakness too. High prices of their products discourage people to use more
often, otherwise make Starbucks products as their daily consumption. Their
premium quality and values are very attractive but most of the people don’t
have money to spend that much of on a coffee.
Lack of unique
Starbucks has products
such as frappucinos, pumpkin spice lattes, and big chocolate chip cookies but
they are unique to them, other coffee shops too have these products selling in
Starbucks doesn’t have
many coffee outlets in internationally, most of the shops were located in
United States of America. There are locations available in many regions to
opening of new branches to gain more profit. Such as India, Europe and Africa.
Introducing new product
Starbucks can think
about selling their products in supermarkets among the global. Selling their
products other than their own outlets would be greater advantage enhance their
Competition from other
Dunkin donuts and
McDonald’s are major two brands that compete with the Starbucks products. These
two brands are not pride on selling coffee and tea, they provide similar type
products for the Starbucks price. One can say consumers may favor them in
Starbucks were selling
coffees, teas and snacks, is their success. If one day their clients are to be
change, then Starbucks are in trouble.