3.3 Basis of the success of Virgin conglomerate diversification strategy
Once a virgin company is up and running, several factors contribute to making it a success.
The power of the virgin name and good company image: Virgin - the third most recognised brand in Britain. In customers' eyes, virgin stands for value for money, quality, innovation, fun and a sense of competitive challenge. Group deliver a quality service by empowering our employees and we facilitate and monitor customer feedback to continually improve the customer's experience through innovation.

Value concepts of customer care and service: Virgin emphasizes high-value activities. Satisfy customers with superior quality, value and service. Virgin look for opportunities where company can offer something better, fresher and more valuable, and company seize them. In all ventures, Virgin is ultimately about service, value for money, and simple products. With each new venture, Branson asks, how can Virgin offer a better product or service at a better price?

Richard branson's visionary insights and entrepreneurial leadership style. Contrary to what some people may think, Branson constantly expanding and eclectic empire is neither random nor reckless. Each successive venture demonstrates branson’s skill in picking the right market and the right opportunity.

Good corporate culture-motivation and innovation. You can keep embracing the new and the different over and over again. That's what Branson has done throughout his life. Virgin is pro-active and quick to act, often leaving bigger and more cumbersome organisations in their wake. Branson often take measures such as empower to ignite the entrepreneurial passions of their own people.
“People matter” business philosophy- the collective wisdom of the company: Branson even solicits comments and suggestions from customers and employees at every opportunity in order to use the brain of every employee fully.

The way talent is empowered to flourish within the group- Design an Open Market for Ideas. Virgin is able to draw on talented people from throughout the group. New ventures are often steered by people seconded from other parts of virgin, who bring with them the trademark management style, skills and experience. Virgin Bride, Britain's largest bridal emporium, is a persuasive illustration. A first-line employee buttonholed the chairman and got permission to start this new business.

The virgin management style; virgin has minimal management layers, no bureaucracy. Virgin’s companies are part of a family rather than a hierarchy. They are empowered to run their own affairs, yet other companies help one another, and solutions to problems come from all kinds of sources. In a sense Virgin are a community, with shared ideas, values, interests and goals. The proof of Virgin success is real and tangible.

Unrivalled network of friends, contacts and partners-accessing resources of partners: Virgin frequently create partnerships with others to combine skills, knowledge, market presence and so on. This enables Virgin to secure critical complementary resources.

3.4 Limitations of Diversification
3.4.1 over expansion
Profitability does increase with diversity, but only up to the limit of complexity, beyond which this relationship reverses. The management has its limit of coping with large and diverse organization. If the Group keeps on diversifying all the time, the system will collapse. An over tall company structure will make the decision making inefficient. The internal communication will be a big problem.

3.4.2 insufficient support of the key resources and competencies
When a Group keeps on expanding, the people embodied the core competencies may lose their reasons of existence and also lose their connection with the Group because they thinks that they are no longer in the business they belong to. Maybe they will join your competitors in the business you just moving out.

3.4.3 short SBU life cycle
Every time a SBU does something, it is imitated and taken over by others. So they have to renew their SBUs. The life span for their SBUs is very short.

Part 3 Strategy Adjustment and Strategy Implementation

1. Facing the New Millennium
Virgin’s Core Industry Strategy Adjustment: from diversification to focused strategy.
Reasons:
In the year 2000, Richard Branson had been leading Virgin for 32 years. People wonder whether such a company that was founded on youth, fun and anti-establishment sentiments can be run by someone with retirement on the horizon. And whether Branson will want to retire? Moreover, if he does retire, is there someone to step into his shoes?
For the above reasons, Virgin’s industry should be adjusted. It would need many conglomerate strategies. So Virgin’s core industry will be:

(1) Virgin Atlantic Airways
It is a niche player in an industry dominated by global carriers and state airlines. Since its founding it has relied on service, value-for-money and innovation, dished up with panache and flair to differentiate itself. At first cabin crew in business class were dressed as butlers, serving bought in food from Maxims. Later in-flight magicians, masseuses and musicians were used, a limo service to the airport for the upper-class passengers was instituted, and multi-channel music and video systems were installed. Lately, Virgin set up luxurious clubhouses at important airports. In 1999 Virgin announced a deal with Singapore Airlines in which Singapore Airlines would acquire 49% stake in Virgin Atlantic and the two would work in partnership.
(2) Virgin Rail
Virgin Rail consists of twenty-year franchises to operate Cross Country and West Coast. Virgin Rail inherited rolling stock, ticketing offices and staff all previous under British Rail ownership and management.
(3) Virgin Net
Virgin Net is a joint venture between Virgin and the UK subsidiary of NTL. Virgin Net targets the UK consumer market and wants to compete on ‘value-for-money, speed, excellent customer service and compelling content’. Much of the content comes from specialist suppliers.
(4) Virgin Retail
It operates, in partnership with W. H. Smith, Megastores in the UK. It also owns Caroline International and has an interest in Sound & Media.
(5) Virgin Direct and Virgin Direct Personal Finance
Virgin founded the two to get into the personal financial services market, because Branson saw there were reasons for reform: poor service, high charges, disreputable practices, dissatisfied customers and also market growth.