Vivendi & Virgin Group

Virgin

The fundamental issue of forming any strategy for any firm is to decide what business it should be in. Richard Branson’s continuous endeavor to create exceptional brand equity has facilitated Virgin’s presence in the vast number of businesses it is in. The flamboyance and the lavishness of the “Virgin” brand together with Richard Branson’s gallant and outlandish acts has somehow managed to create certain amount of competitive advantage over others.

Richard Branson’s peculiar manner to approach a business has to some extent worked for Virgin whether the decision to enter the Air Cargo business or to open bridal boutiques in Europe all have been created on the basic premise of the Brand Value of Virgin. Brand equity may in fact be the most difficult element of business to establish and Branson, through his team of core strategists, has done this successfully. When compared to other global brands, few if any have experienced the success of Virgin Group with a single brand. (Think how well McFinance or Sony Water would be received).

While the brand of Virgin is one of the major resources that Mr. Branson has been able to leverage he with his own persona has managed to create an enormous network with Private as well as public/ Government bodies. Through this resource Virgin has demonstrated extra ordinary capability of forming successful Joint ventures and acquiring businesses.

The financial strategy of Virgin was backed by the premise that accounting profits were irrelevant for private businesses. Long term growth and brand value were more important for the business. Each Virgin company was financed on a standalone basis and Richard Branson argued that consolidation of income and assets was unrelated. Avoiding short term taxable profits and seeking long term capital growth were two theories strongly believed by Branson.

Virgin’s Organizational structure was also one of its kinds. It was structured as if it was a mix of 150 different companies. Branson did not believe in big �fiefdoms’. His theory that there was no practical logic behind this made him to create a Virgin �umbrella’ under which he operated small diversified companies. The corporate work culture in Virgin where key executives played a much more important role than their formal function was synonymous with Branson’s disrespect for hierarchy and formal authority.

Richard Branson’s capability of identifying emerging trends and continuous innovation in building his own and Virgin’s brand along with the company’s unique corporate culture all have elucidate its existence in diverse industries.

Vinvendi

After experienced a serious financial problem in the mid-1990s, the new young CEO of Vivendi started to deliberate upon how to revitalize this company and whether there is a fundamental problem in the direction of the company. To come back to former glory, there are a lot of things need to do before a radical reformation of this company.

The company’s new operating principle is that CGE must return to its core activities and no longer to pursue volume but rather profitability. As a result, there were two things the company needs to do. First, a complete divestment could help the company to solve the serious financial problem it met, improving its debt equity ratio. Next was to create alliance with cash rich partners to supplement CGE’s resources in fast growth area with high capital requirements.

In addition to financial issue, Messier, the company’s new CEO, planed to restructure the organization structure and system. He focus on five topics- Synergy, Leadership, Organization structure, Human resource and reporting. First, parallel consolidation were occurring in the company to achieve efficiencies and raise return on investment by eliminating a serious of overlapping operations, return on investment and so forth. Second, to increase transparency of performance of each business, improve productivity in operation and eliminate internal competition, the company establishes a corporate office. Also, CGE can handle asset and resource allocation at the corporate level. Under this new system, the independence of each subsidiary’s treasury would also be great reduced. Second, For the HR issue, the company’s policy is to create employee mobility and establish the “Internal Job Transfer Charter”

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