Richard Branson

Richard Branson’s Virgin Group has founded over 200 companies.  The focus on establishing new businesses instead of acquiring existing operations has helped Virgin Group obtain a competitive advantage in entrepreneurial skills.  Another advantage has come from an increased return on equity when compared to the industry:  because of the focus on creating a company from the ground up.  The skills required to develop a profitable organization from the ground up is different than the skills required to manage an acquired business.  “As much as you need a strong personality to build a business from scratch, you also must understand the art of delegation” (Be A Good Leader).  Capital commitments for start-up organizations can be scaled up as the business model proves itself.  Faulty concepts do not receive additional capital.  Additional capital contributions are deployed to business models that are showing promise in achieving the business plan’s objectives.

The culture of an entrepreneurial business is much different than that of a slow-growing industrial company.  Managers at Apple Computer think much differently than their counterparts at the United States Social Security office.  Virgin Group embraces the entrepreneurial spirit in all of its endeavors.  This helps the Virgin Group establish new business lines and rapidly establish a solid market position.  “Branson has taken his own brand of basic business model, recreating it again and again, to manufacture a series of highly successful business ventures” (Morgan).  Creativity is celebrated and failure seen as a growth opportunity.  Branson’s entrepreneurial personality seems to flow through the entire organization.

Virgin Atlantic Airlines was established after Randolph Fields pitched the idea to Branson.  The concept needed the better financial base that Branson could bring to the airline.  Fields and Branson entered into a partnership that remained until Virgin Atlantic Airlines purchased the remaining 25% from Fields.  The airline was able to cut through obstacles because of Richard Branson’s entrepreneurial experience and business reputation.  Branson was able to establish competitive routes against British Airlines after much opposition by ceasing the openings during the early 1990’s recession.  Branson’s ability to think outside of traditional business decisions in the airline business helped Virgin Atlantic Airlines become profitable in its first year.  The company also managed to earn a profit in 2009, which was one of the most challenging business climates for travel.  “By 1992, Branson had no choice but to sell his beloved Virgin Records to ThornEMI for $ 1 billion.  With this, he was able to purchase Virgin Atlantic outright” (Carmichael).  Branson continues to push for innovation, high quality service, and new ideas within Virgin Atlantic Airlines.  This has led to the establishment of several new routes and airlines with the help of Branson’s employees at the airline.  The passion for an entrepreneurial company can be felt as the stewardess offers a passenger a glass of champagne on his transcontinental flight aboard Virgin Atlantic Airlines.

Virgin Megastores opened its first large music store in London in the 1970’s.  Branson was instrumental in creating a culture of knowledgeable staff that were part of the hip music industry.  The similar name with Virgin Records and synonymous ownership by Branson’s Virgin Group helped create a vibe that made customers feel like they were closer to the artists than what competitors could offer.  The Virgin Records brand was sold to an outside group, but still retained some of the branding.  Branson is very skilled at inspiring people and generating creative energy within an organization.  “You can’t be a good leader unless you generally like people.  That is how you bring out the best in them” (Wharton).  Yet, his inability to foresee the demise of the traditional music business model is one of the larger business blunders in his career.  “The Titanic that is physical media started slowly sinking in 2000,’ said Michael McGuire, an analyst with Gartner, a market research firm, when asked about Virgin. ‘Certainly this is a traumatic event for those who worked there, but it’s an expected product of the digital transition” (Sisario).  Virgin Megastores had tremendous brand recognition and power within the industry.  The majority of ongoing operations were sold to an investment group for less than the value of the preceding boom era.  The value in the business at that time was in the property only.  Virgin Megastores may have continued to be a dominant force in the retail music business if it had adapted to technological changes facing the industry.  Digital music and online delivery of music to customers eliminated the purpose of a retail establishment.  Branson should have aggressively sought a partnership with Apple Computer’s iTunes.  The retail storefronts could have provided Branson’s Virgin Megastores with a venue for displaying the new technology created by iTunes.  A revenue sharing agreement could have given both companies a reward for the venture.  Apple Computer’s iTunes has become the largest retailer of music in the world.  Virgin Megastores has been reduced to a handful of stores in France, Australia, Greece, Spain, and the Middle East.  The life of these stores is short-lived.

 

  1. “Lesson #1: Be A Good Leader (richard bransons entrepreneurial skills),” http://www.evancarmichael.com/Famous-Entrepreneurs/592/Lesson-1-Be-A-Good-Leader.html.
  2. “Richard Branson – The Virgin Empire,” http://www.islandconnections.com/edit/branson.htm.
  3. “Richard Branson Articles (richard branson),” http://www.evancarmichael.com/Famous-Entrepreneurs/592/summary.php.
  4. “The Importance of Being Richard Branson,” http://knowledge.wharton.upenn.edu/mobile/article.cfm?articleid=1109&page=1.
  5. “Last Virgin Megastore in New York Closes – NYTimes.com,” http://www.nytimes.com/2009/06/15/arts/music/15virgin.html?_r=1.

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