Navigating the Rise and Fall: Analyzing Richard Branson's Virgin Group

 

ENTREPRENEUR WEEK 9

THINKING THE UNTHINKABLE

Examining the Virgin Group

By OPM Group

 

Introduction:

By So Matthew Christian (TP075241) on May 19, 2024

Every business has its rise and fall conditions to specific times. Even the greatest or the most successful entrepreneurs often face difficult times, resulting in near bankruptcy due to unexpected circumstances. Entrepreneurs are marked by their clever innovations and ambition, they know how to maintain a sustainable business that could be competent and rival companies. But what if there are odd feelings that could overcome or take control of entrepreneurs' passion and achievement? Our group has analyzed one of the wealthiest entrepreneurs, the founder of Virgin, the global growth investor, and the one and only Richard Branson. 

 

The Journey of Richard Branson:

Born in 1950, Richard Branson started venturing at a young age, his first career was a magazine called “The Student '' of pop culture and Vietnamese war civilization. As its popularity grew, youngsters were impressed by the magazine, which sold over one hundred thousand copies. Besides that, he even improved his cash flow by monetizing his magazine as he put advertisements when customers used the mail-order, creating a discount price towards brick-and-mortar stores, which implies a traditional physical store that offers services or products to its customers face-to-face (Murphy, 2023). Subsequently, he didn't stop innovating after his first accomplishment at such a young age, and he created an airline called the Virgin Atlantic, which drew a significant market share. This first airline features a seat-to-bed conversion facility in the first class category as the other airlines' businesses are crumbling down; in fact, one of the airline companies “British Airways” tried to ruin Virgin's reputation by bypassing the system of Virgin and spreading false stories about the near bankruptcy that virgin company had experienced. As a result of an evil act, British Airways was diminished, as opposed to Virgin's victory, which won over 935.000 dollars. Richard Branson gave all the money to the employees. Still, his cleverness won't stop; he took all the profits from Virgin Atlantic to host various businesses called the Virgin Group, which includes Virgin Active, Virgin Mobile, Virgin Wine, and Virgin Games. Following his story was a big inspiration to our group as we further analyzed the series of events of the Virgin Group.

What wrongs with Virgin:

By Adrico Corson Mulia (TP073788) on May 19, 2024

The Virgin Group is a large conglomerate that operates airlines, mobile networks, and other businesses (Kubovsky, 2021). Led by Richard Branson, the Virgin Group has faced numerous challenges that highlight its companies' weaknesses.

The passenger air industry has declined over the years, negatively affecting Virgin Atlantic Airways, one of its principal subsidiaries. The COVID-19 pandemic has triggered a considerable fall in the number of people traveling by air to some significant extent, affecting income levels. Interestingly, the airline industry felt the grave impact of the COVID-19 virus; it led to the loss of income, and some governments had to resort to bailouts and loans (Cirium, 2024).

Secondly, ambitious projects that need significant resources create pressure. For example, Virgin Galactic, the space tourism company, has faced delays and problems, using financial resources without achieving the desired results. Furthermore, a comparison to Elon Musk may have inspired Richard Branson to pursue fame and riskier projects. However, the lack of strategic direction and focus on high-risk ventures has exacerbated Virgin Group's financial problems, raising the risk of bankruptcy. The severity of the pandemic and the short-term focus on core business are also reasons for Virgin Group's lack of financial staying power.

How to prevent the inevitable:

By Brandon Indradjaja (TP072931) on May 19, 2024

The Virgin Group, led by Richard Branson, is having some financial loss due to the failure of projects that the group was investing in. There are many options for the Virgin Group to recover from this economic loss. The first option would be to sell one of the Virgin Group's companies. This was done by Richard Branson in the past when Virgin Records was sold for 1 billion to fund one of the new companies that Richard Branson has invested in (Huddleston, 2024). In this case, Richard Branson could sell one of his companies if he wants to invest in a new field of companies.

The second option is to stop investing in the companies completely. Although Richard Branson had some success in the past in investing in companies outside the field that he understands, Richard Branson needs to realize that investing in a field that an entrepreneur doesn’t know would be very risky, especially when there’s already an alternative to the product (Funds Europe, 2020). Furthermore, one of the companies, Virgin Orbit, while carrying out a project that was sending six satellites into orbit failed, which led other companies to be hesitant to launch their satellites with Virgin Orbit.

Conclusion:
By Evan Ferdinand Xie (TP073921) on May 19, 2024

Under Richard Branson's leadership, the Virgin Group has achieved remarkable success, especially in the airline business (Rifkin, 1998), but now it is facing financial challenges. By selling one of its companies and focusing on areas of expertise, the group can ride out the storm of these challenges and secure a sustainable future. Additionally, restructuring its operations to enhance efficiency and exploring new market opportunities could further stabilize the company's financial position. 

References:

Cirium. (2024, January 12). Virgin Australia seeks $865m in financial support from the government. Flight Global. https://www.flightglobal.com/airlines/virgin-australia-seeks-865m-financial-support-from-government/137634.article

Funds Europe. (2020, March 23). Challenges in Attracting New Investors. https://www.funds-europe.com/challenges-in-attracting-new-investors/

Huddleston, T., Jr. (2024, April 29). Richard Branson says this decision helped build his $2.5B net worth: “I don’t think I would have gone to space” otherwise. CNBC. https://www.cnbc.com/2024/04/29/richard-branson-tough-business-decision-helped-me-build-virgin-group.html

Kubovsky, D. (2021, December 9). Lean Management in the service sector - David Kubovsky - Medium. Medium. https://medium.com/@DavidKubovsky/lean-management-in-the-service-sector-46af31783f4a

Murphy, C. B. (2023, August 21). Brick-and-Mortar Stores: Types, advantages, and disadvantages. Investopedia. https://www.investopedia.com/terms/b/brickandmortar.asp

Rifkin, G. (1998, October 1). How Richard Branson works magic. Strategy+Business. https://www.strategy-business.com/article/13416