Week 14

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

However, it could be a difficult task to understand if there is a difference between Business unit level strategy and corporate level strategy, but as a matter of fact there is a difference. For the accomplishment of best strategy implementation and avoiding communication problems, it is really very important for the strategy makers and managers to clearly understand the difference between business unit level strategy and corporate strategy.

Business Unit Level Strategy

The way a business competes in a particular business sector is business strategy. Marketing and manufacturing efficiency, pricing etc. are the matters that concerns the business unit level strategy during strategic decision making. Gaining a competitive advantage in the market is the primary objective that the business strategy is concerned about.

Corporate Strategy

The decisions that are made regarding the direction of an organization as a whole is what the corporate strategy is involved in. The matters that affect the overall firm such as deciding the size and composition of its business portfolio are the concerns of corporate strategy.

And,

The Difference

“Scope of Strategy” is the main difference between business unit level strategy and corporate strategy. Business unit level strategy is concerned with tangible problems and is narrowly focused on specific business unit. While, corporate strategy is broadly focused on issues that will affect the entire company. Generally, business unit level strategy are and can be formed by individual line managers, while corporate strategy is developed at a senior level by board of directors.

Reference:

EHOW ARTICLE (2013) Wendel Clark [Online] Available from: http://www.ehow.com/info_7904252_difference-corporate-strategy-business-strategy.html  [Accessed on 1 March, 2013]

2. Discuss the corporate parenting style of Virgin group.

Image source: http://blogs.ubc.ca/cindywenyicui/files/2010/11/virgin-logos-1.jpg

By practicing the corporate parenting style, Virgin Group has been able to add value to its business. Any advantages that accrue to the brand as a whole are equally enjoyed and benefited by each and every business that are operating under the Virgin company’s umbrella. Virgin company as a parent company has been able to win the confidence of more consumers and investors, because as a group it doesn’t have to depend on just one industry or area for its economic health and profitability. Each company shares in those benefits in more than one way.

Economies of scale in another area where the Virgin companies that are similar in nature benefits from. Purchasing of the resources such as raw materials can be done in large quantities that helps in reducing the marginal cost and hence allows each company to increase revenue. The corporate parenting style of Virgin group has benefitted them in many ways.

Use of the “VIRGIN” brand name is another area in which a company could benefit from being affiliated with the Virgin group. The consumers and investors that already have a trust and confidence in the brand are likely to have the same confidence and trust in a new company that have the Virgin name. This helps the company to reduce the time and money it could have taken the new companies to establish their brands and names with the consumers. Hence, the new Virgin-affiliated company starts out with a name that is already known to and trusted by the consumers.

Virgin brand and reputation has become a synonym to Richard Branson, its founder. Realizing public image and views of the organization and Branson became the most important company’s advertising and promotion force. The success of Virgin group is based on the corporate parenting strategy, i.e. every new business units inherits company’s brand name, support, management style, values and access to resources not expending resources to create them. 

Reference:

Virgin Group. (2012). “Virgin Corporate History.” London: Virgin Management, Ltd. Online]  Available

from http://www.virgin.com [Accessed on 1 March, 2013]

Mightystudents (2013) "Does the Virgin Group, as a corporate parent add value to its business? If so how" [Online] Available from: http://www.mightystudents.com/essay/Virgin.Group.corporate.18924 [Accessed on 1 March, 2013]

Mariah Bond (2012) "A Company Profile: Virgin" [Online] Available from:http://www.examiner.com/article/a-company-profile-virgin [Accessed on 1 March, 2013]