Type: Process Essays
Sample donated: Bradford Cole
Last updated: July 26, 2019
IntroductionVirgin GroupVirgin group is well diversifiedcompany which has more than 200 privately owned companies under their brandname of “virgin”. Virgin is the one of the biggest brand in UnitedKingdom.
Which was established in 1970by Sir Richard Branson. They have diversified their business into variouscategories such as Virgin Atlantic Airway was the second largest airline inUnited Kingdom, Virgin holidays, Virgin rail, Virgin retail group whichoperates mega stores, virgin direct provides financial services. Other businessinclude virgin cola, record label, book and music operations, hotels, telecommunication,movie theaters and radio stations.Branson was dropped out from theschool at the age 17 in 1967, he started selling magazine and that venture wassuccessful. In 1970 Sir Branson started his second undertaking, a companycalled Virgin. Virgin initially started as Mail Order Company and it wasimmediately success. Virgin group had employed over53000 employees as of 2012 and spread their businesses over 300 brands in 25countries.
Sir Branson, Brand name, management style and least hierarchy ofmanagement level are the reason behind the success of the virgin group. StarbucksStarbucks is an American companyestablished in 1971. Three partners met in the University of St Francisco,English teacher Jerry Baldwin, Zev Siegl, Gordon Bowker were highly interestedon selling quality coffee bean. 1987 Starbucks opened its first outlet outsidethe seattle at Vancouver, British Colombia and Chicago. In 1989 Starbucks had46 outlets across the northwest and annually Starbucks was roasting 907105kg ofcoffee. Starbucks is a company thatproduce premier roaster and retailer of specialty coffee all around theworld. Starbucks employed 182000 employeesover 19747 outlets in 62 countries.
Their product mix comprises of roastedhandmade high quality coffee, tea, fresh food and other beverages. They sellvariety of coffee and tea through licensed supermarkets, groceries and nationalfood service accounts. Starbucks had recorded a revenue of USD14.89 billion in2013.Starbucks primarily complete in the food and beverage industry.
Thisindustry was faced an extremely slowdown in sales in 2009 due to financialcrisis, Industry revenue change from 6.6% to USD25.9 Billion in United states. Products of Virgin GroupProducts of StarbucksPESTEL AnalysisBusiness environment isalways govern by the external factors such as political, economic, social,technological, environmental and legal. To have an advantage in the present andthe future market it is important to reduce the inefficiency and cutunnecessary cost incurred. PESTEL analysis provide to identify varies factorsaround the business and how it affect the operations of the business. PESTELanalysis can be effectively used to identify the opportunities that availableto organizations as well as to identify risks and challenges that may face bythe businesses.
Virgin GroupPolitical AnalysisPolitical analysisinspect the influences of government, government policies, rules andregulations imposed to the industry. With refer to Virgin group, politicalinfluences can be identifies as labor laws, taxations, trade restrictionsimplemented by the government was a major concern. As per Harvey and Allard,group had faced many major political factors since they have spread theirbusinesses in Unites states of America and Australia. Some the politicalchallenges faced by the virgin group are licensing bureaucracy imposed by theforeign 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 resultednegatively impact and reduce the amount of goods that virgin group had exportto them.
EconomicalEconomic factorconsider the factors that affect whole economy. Inflation rate, price of goods,interest rates on investments, exchange rates and economic growth are the someof the economic factors. Virgin group had faced high competition among fromother competitive firms in the industry.
For an example, virgin was forced tolower their flight rates after review of prices of air travel by their majorcompetitors in the airline industry such as Qatar Airways, Emirates andAmerican Airline. Other factors that affect the virgin airline was high cost offuel and entry of new airlines such as Singapore airlines to the industry.SocialLiving standards ofpeople are getting rise all over the world and today customers are become moredemanding on their buying decisions.
Consumers have very high expectations onthe product and services they purchase. People are now more aware aboutconsumer rights they have now a days and know their power how affect theprofitability of the businesses. Beside consumers are no more buy the productsbased on its features. People need to be feel and touch on their buyingdecision process(kumar et.al.
,2009). TechnologyTechnology factor consistof new advancement of technology such as automation of production, highpossibility of technological change, research and development, acquiring newtechnology advancement, business process outsourcing. Advancement of newtechnology effect the performance of the business.
For an example company thatuse poor technology will lose their competitive advantage over theircompetitors. Similarly high quality new innovation and intervention enablecompany to enhance their production activities and increase the profit. Virgingroup had faced many technological challenges, for an example, implementing ofonline booking system for airline and online customer care agents and onlineportal.EnvironmentalGlobal warming, climatechange are the critical factors today environment is facing. Today people aremore aware about result of climate change and many of the nations had facednatural disasters such as flood, drought, record breaking hot temperature andzero temperature and rising sea level.
Virgin airline had faced operationaldisruption in 2016 June and 2017 January due to adverse weather condition andhad to cancel flights and resulted customer dissatisfaction.LegalDuring 2016 VirginPilots decided to strike against the recognition of row over union after thepilot union. Professional pilot union represent 70%, over 900 pilots demandedto recognize the only union for Virgin airlines.
StarbucksPoliticalRegional integration isone of the political factor that faced by the Starbucks and it allow them toexpand the global business. All governments around globe enhancing the infrastructureof their countries create opportunity for Starbucks to achieve more markets andsuppliers. However due to bureaucratic red tape continue in most of thecountries. This factor is a treat to Starbucks for their expansion of businessespecially in developing countries.
EconomicalDue to high economicgrowth and low unemployment in developing countries provide more opportunity toStarbucks to earn more revenue from more markets. However the increase in laborcost increase cost for production and reduce the profit margin of the companyand it increase the cost of ingredients. Firm source their most of coffee beansfrom developing countries.SocialFirm has theopportunity to increase revenue while increasing the demand for their specialtycoffee. This is because of increase in the coffee culture among the middleclass people around the world. Also, firm can enhance their product range andintroduce more health related product to attract health conscious peopletowards them.
TechnologicalStarbucks hasopportunity to enhance their mobile application and linked services to increasethe online purchases. Same can be used to enhance its supply chain efficiencyby using the advance technology for their coffee farmers. However, latestcoffee making machines making a threat to Starbucks because consumers are usingthese machines at their home to make variety of coffee which create substituteto them.EnvironmentalBusiness process shouldlook always to focus on minimal environmental pollution. Starbucks hasopportunity to enhance the performance in this area, while already havingresponsible policies, Starbucks have opportunity to offer their products in arecyclable packaging.LegalStarbucks hasopportunity to obtain the approval for their ingredients from geneticallymodified organism (GMOs). However, the increasing labor laws in developingcountries restricting them to access the labor market. As result of that laborcost is high and affect their profit margin.
SWOT AnalysisIt is a major step towardsstrategic planning, is to find out the internal factors which provides you veryimportant source of information to identify the current situation of thecompany. As per the Johnson(2005) SWOT is a useful tool to identify thefinancial Account and developing environment of a firm.Virgin GroupStrengthFirm’s main strength istheir strong brand name. Greatest advantage virgin group has is they areexperienced in two different kind of distribution of mail ordering andstationary industry. Group is very less integrated with each other compared tobig companies since very flexible comparing to others. Virgin brand nameassociate with their billionier Sir Branson who has vast expierence inintroducing new product to the competitive market and it has high budgetinvesting which allow to pay for quality labor, product and service.
WeaknessIts own strength hasbecome their weakness. With the introduction of train and credit card service,now the brand name has diluted. Even customers are confused about the identificationof the brand and also known as brand for young crowd.
With the introduction ofvirgin cars and Atlantic image has changed.Virgin product rangeand expansion of businesses appears to be creating image problem to the firm.Services and products such as train, records, cola, flights, mobile phones andhotels, message from each product seems confusing to their clients.OpportunityOpportunity is there toexpand into new markets such as Australia.
Virgin airline can still competewith other established brands with their low rates of flights.ThreatsVirgin is not theleading brand in any format of business of flights, train, electricity, music,cola and they never the market leaders all these areas. May be they areinternationally recognized but not all their products and services.Virgin very rarely doinnovation, what they do is copy an existing product or service and provide ata lower price. Virgin is a strong business but not a strong brand name.
StarbucksStrengthsQuality, profitabilityand ethically:Starbucks had establishtheir name as a superior coffee making chain, despite their worldwide branchnetwork comparable to other fast food chains. Products are very high quality,environmental friendly and relatively consistent in worldwide outlets. Sincethey are charging high prices and most of the consumers are willing to pay forthe quality of product. Starbucks are making high profit and they areinternationally recognized as specialty in coffee.Efficiency andreinvestment strategy:Greater portion of theprofit had been used to expand the business globally by increasing consumeroutlets.
It clear firm has a well-planned strategy and seems working good forthem.Employee managementStarbucks had beentreating well for their hundreds of employees very well and they have beennominated as top 100 of places to work for. WeaknessHigh prices of products:Own strength had beentheir weakness too. High prices of their products discourage people to use moreoften, otherwise make Starbucks products as their daily consumption. Theirpremium quality and values are very attractive but most of the people don’thave money to spend that much of on a coffee.
Lack of uniqueproducts:Starbucks has productssuch as frappucinos, pumpkin spice lattes, and big chocolate chip cookies butthey are unique to them, other coffee shops too have these products selling intheir outlets.OpportunitiesGlobal Expansion:Starbucks doesn’t havemany coffee outlets in internationally, most of the shops were located inUnited States of America. There are locations available in many regions toopening of new branches to gain more profit.
Such as India, Europe and Africa.Introducing new productand Co-branding:Starbucks can thinkabout selling their products in supermarkets among the global. Selling theirproducts other than their own outlets would be greater advantage enhance theirreputation.ThreatsCompetition from otherbrands:Dunkin donuts andMcDonald’s are major two brands that compete with the Starbucks products.
Thesetwo brands are not pride on selling coffee and tea, they provide similar typeproducts for the Starbucks price. One can say consumers may favor them infuture.Specific Market:Starbucks wereselling coffees, teas and snacks, is their success. If one day their clientsare to be change, then Starbucks are in trouble.