Richard Branson and the Virgin Group Case Study

Richard Branson and the Virgin Group Case Study

Assessment Prompt:
You are required to read the case on Richard Branson and the Virgin Group and prepare a 12-14 minute board-level PowerPoint presentation that addresses the following questions (support your answer in details in the Notes page of the slide):
1. What common resources and capabilities link the separate Virgin companies? (30%)
2. Which business if any should Branson consider divesting? What criteria should he use in deciding what new diversification strategy to pursue? (40%)
3. What changes in the organisational structure and management systems of the Virgin Group would you recommend? (30%)

Purpose of the Assessment
The purpose of this assignment is to
a) test the student’s knowledge of the core concepts, models and frameworks taught in the module and relevant to the strategy process
b) allow the student to apply their learning in the module to date in a case study analysis and to present their findings in a high-level board manner that captures the key issues

This case study is based on Case 20: The Virgin Group in 2015 in the book in Robert M. Grant’s book Contemporary Strategy Analysis. The case study touches on competitive strategy and innovation, strategic management.

The sample solution is presented in a PowerPoint Presentation with speaker notes (at the bottom of each slide).

Contents

  • Introduction
  • Resources and capabilities
  • Virgin companies shared resources and capabilities
  • Divesting criteria and businesses to divest
  • New diversification strategy and decision criteria
  • Organisational structure change recommendations
  • Management systems change recommendations

Richard Branson and the Virgin Group Case Study

Introduction

The Virgin Group was established by renowned entrepreneur, Richard Branson. The history of the group can be traced back to 1968 when Branson formed the Student magazine after dropping out of school. Over the years, The Virgin Group has grown to become a highly diversified organisation with operations in several industry segments and countries. The group so far operates in the UK, the United States, Australia, Russia, South Africa, and Canada among several others.  Some of the areas the group mainly focuses on are Telecoms and Media, Music and Entertainment, Financial Services, Travel and Leisure, and Health & Wellness (Virgin Group 2017).

The Group boasts of owning hundreds of companies directly or through its subsidiaries. It also boasts of having holding companies in seven main business categories. In addition, it has a stake in several companies, such stake acquired through the formation of joint ventures with other corporations.

Virgin Group has a strong asset base and its success has partly been attributed to the reputation and celebrity status of its founder, Richard Branson. Some of the Group’s notable assets include its fleets of airplanes, trains, and megastores. In addition to these, it has several resources including a strong brand name, a good reputation, talented human resources, and finances. In combination, these resources have helped the group develop capabilities and competencies in different areas. Continue reading

Harwell Zest Energy Drink

Assignment Brief:
Harwell group expresses their gratitude for the last advice you provided when they were venturing into the food and drinks business. Most of the useful advice given were taken on board and they are glad to announce that ‘Zest’, the canned energy drink is performing well in the market and gaining considerable market share within the competition. Again, Lewis and Rebecca have asked for your advice regarding their current investments going forward. Apart from the energy drink business, the other businesses (fashion, sports, events and fitness) have been in existence over 10 years and sales figures are beginning to fluctuate and perhaps dwindle. Particularly, the fashion business has been rescued twice by the sports business which appears to still be doing very well compared to others. In line with current trends, sales and marketing process systems for the entire group are about to be changed to a more responsive system which the IT department claims would enhance processing and delivery. Finally, on the new business (Zest), although, so far, market share has been increasing based on increasing sales figures, there is a need to sustain, and in fact increase this figure if the business would remain sustainable over the coming years – Harwell Zest Energy Drink.

Based on this information, Harwell group has asked for some thoughts and advice on the followings. Meanwhile, they also request that you reflect on your past advice as this may be useful in providing some fresh advice based on their current circumstances.
1. What stage of the product life cycle do you think the fashion business is currently at, based on its present circumstance? Please provide convincing justifications for your thoughts. Can you also advice on next steps?
2. Based on the strategic choices available to Harwell group, critically review a minimum of three strategic management models.
3. Advice on how consumers can become attached and remain loyal to ‘Zest’ over other energy drinks.
4. Provide three clear recommendations on how Harwell group can change its system and manage the change management process as effectively as possible and avoid disruptions to its current sales and marketing during the change process.
You are allowed to make reasonable assumptions stating clear reasons for these if you need to do so. 

Harwell Group Business Strategy

Introduction

Harwell Group is a company based in Scotland that so far has four businesses (sports, events, fitness, and fashion). Considering that it is experiencing reduced profits in these business areas and especially fashion, the business is considering the option of entering the energy drinks market. This paper reflects on previous recommendations made to the group and goes further to discuss the other strategic options that the company can take given its current situation.  

Reflection on Previous Advice and Recommendations

Based on the results of a pestle analysis done with respect to the energy drinks market, it was recommended that the Harwell Group go ahead with its plan to venture into the energy drinks business. This recommendation was made considering that the political and economic environments of the UK are stable and household spending has only slightly reduced in the wake of Brexit. The technological, legal, and environmental conditions prevailing in the country with respect to the energy drinks market were also found to be favourable. In addition, the pestle analysis revealed that the demand for energy drinks in the UK is high and growing while supply of the product is low, the market having a few major players.

Considering the social, legal and environmental factors, it was recommended that Harwell Group should especially target the young and middle aged adults as its primary market when it ventures into the energy drinks business. The company should also focus on producing energy drinks that will be marketed as a more healthy option; energy drinks with low sugar content. Based on the results of the Ansoff Matrix, (Pierce 2009), it was recommended that the company should assume diversification as its growth strategy. This strategy option was settled on considering that the company seeks to introduce a new product (in addition to other of its already existing products) into a potentially new market.

Key Assumptions

In the following sections, Harwell Group and its businesses will be analysed based on a number of key assumptions. One assumption will be that Harwell Group is financially stable but has limited resources to invest in all its other businesses after investing into the energy drinks business.  This assumption is held considering that the company has several businesses most of which have been profitable in the past allowing the company to save for future investments. The company so far has a net worth of £6.7 million, indicating that it has the capacity to raise the resources required to venture into the production and marketing of energy drinks.

Another key assumption is that the fashion business has been … continue reading

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Contents:

  • Executive Summary
  • Introduction
  • Reflection on Previous Advice and Recommendations
  • Key Assumptions
  • The Fashion Business
  • Strategic Choices for Harwell Group
  • How to Develop Zest
  • Management of Change of New IT System
  • Summary and Conclusion
  • References

Harwell Zest Energy Drink

Harwell Energy Drink Business

Prompt: Harwell ltd. was established in 1974 in Scotland by Lewis and Rebecca Harwell. Their vision is to build a chain of companies within the Harwell group. Currently they have established four different companies which are up and running in various industries, they include: fashion, sports, events and fitness. Their most recent investment was in the IT industry but this eventually became unsuccessful. Lewis and Rebecca are now set to take on a new investment and the group’s net worth has recently been valued at £6.7 million. They plan to venture into the food and drinks industry particularly focusing on the production of canned energy drinks. Although this is a highly competitive sector of the food industry, they have both chosen this because of the increase in demand for energy drinks. Based on your knowledge of strategic position, Lewis and Rebecca have requested you carry out a thorough analysis on their new investment carefully considering the followings:

  1. The external business environment and how this may influence the new investment
  2. Competitive/market forces that would impact this business both positively and negatively
  3. What marketing/penetration strategies do you think can be implemented to boost the market share of this product, hence increasing sales and profit margins
  4. Critically analyse the marketing mix and suggest the most appropriate marketing mix for this product.

Hint: Your advice should be mainly based on key strategic theories and frameworks. You are allowed to make reasonable assumptions stating clear reasons for these if you need to do so –  Harwell energy drink business –Harwell Group Investment in Energy Drink Business (below).  

Harwell Group Investment in Energy Drink Business

Introduction

Deciding on whether or not to venture into a particular business is an important strategic decision. Careful consideration guided by a thorough analysis of different factors should be done before making such a complex decision. An analysis of the internal (where relevant) and external business environments should be done to help decide whether or not it is worth venturing into the new business. It is a fact that the external business environment greatly affects the chances of a business succeeding in a given industry or market. It is also important the investor evaluates the competitive forces, penetration strategies, and market mix to be applied by their business as these also greatly affect the chances of the business’ success.  Against this background, the Harwell Group which is considering the option of venturing into the energy drinks business in the United Kingdom should analyse the external business environment and competitive forces in relation to the energy drinks market before deciding on whether or not to invest in this business. This paper analyses the external business environment in relation to the energy drinks market in the UK through a pestle analysis. A pestle or pestle analysis basically evaluates the political economic, social, technological, legal and environmental factors that make up the business environment (Kayumi 2014). A pestle analysis is chosen in this case considering its capacity to assess the prevailing business environment and changes that can potentially affect it (Kayumi 2014). In addition, the paper will analyse the competitive environment in relation to the energy drinks market. Based on the results of these analyses, recommendations will be made on whether Harwell Group should go ahead and invest in the energy drinks business, the most appropriate penetration strategy, and the best marketing mix to apply.

External Business Environment (Pestle Analysis)

Political

Given that Harwell Group is based in Scotland, it is subject to the political environment of the United Kingdom as a nation. The UK has enjoyed political stability for a long time and is governed by the rule of law and with respect for democracy. The political environment of the nation is such that  Continue …

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Contents

  • Introduction
  • External Business Environment (Pestle Analysis of the energy drinks market/industry)
  • Competitive/ Market Forces
  • Marketing/Penetration Strategies
  • Marketing Mix
  • Conclusion

Keywords: Harwell external business environment, Harwell Competitive forces, Harwell  market forces, Harwell Marketing Strategies, Harwell Penetration Strategies, Harwell Marketing Mix, Harwell Energy Drinks. 

Harwell Energy Drinks Business

Main Features of Haier’s Internationalization Strategy

What are the main features of Haier’s internationalization strategy since early 1990s and how does it differ from the pattern of international typical of Western enterprises? How successful has Haier’s internationalization strategy been and why? What are the principal features of Haier’s management system? In what ways do Haier’s principles and methods of management differ from those deployed by Western companies? What lessons might be drawn by a) other Chinese companies and b) by Western enterprises? – Haier Group Internationalization Strategy and Management System (below).

Key text: Grant, R (2016). Contemporary Strategy Analysis.

Haier Group Internationalization Strategy

Haier Group’s Internationalization Strategy and Management System

Introduction

Haier Group is a multinational company that manufactures and markets home appliances and consumer electronic products. Simply referred to as Haier, the group started off as a small bankrupt company called Qingdao General Refrigerator Factory before growing to become a global leader in the production of house hold appliances. Today, the company markets its products in well over 100 countries across the world (Haier UK 2014). While the company has its global headquarters in Qingdao China, it has a number of regional headquarters (including Paris and New York) to serve its clients in the respective regions. There is wide agreement among business experts and scholars that Zhang Rumin contributed greatly to the growth and success of Haier. As CEO of the company, Zhang saw the company transform from the bankrupt Qingdao General Refrigerator Factory to the highly successful and leading brand that it is today. Under his leadership, the company focused on producing high quality products and began applying a management system that was customer centric with product development focusing greatly on fulfilling consumers’ needs. The company also began and greatly advanced its internationalisation journey under Zhang’s leadership. Haier’s internationalisation strategy and management methods have been a subject of great praise and admiration worldwide given their contributions to the Group’s success. However, they have also been criticised by pundits who feel that the strategy was not as orderly and not as integrated as it should have been. Questions have also been raised regarding the cohesiveness of the strategy and its rationale especially considering its uneven performance in different markets. These criticisms notwithstanding, there is wide consensus that the strategy was a success and that it presents important lessons for companies that wish to internationalise. This paper discusses Haier’s internationalisation strategy and the Group’s management system as established by Zhang Rumin. More specifically, the paper answers the questions: What are the main features of Haier’s internationalization strategy since early 1990s and how does it differ from the pattern of international development typical of Western enterprises? How successful has Haier’s internationalization strategy been and why? What are the principal features of Haier’s management system? In what ways do Haier’s principles and methods of management differ from those deployed by Western companies? What lessons might be drawn by a) other Chinese companies and b) by Western enterprises?

The Main Features of Haier’s Internationalization Strategy and How the Strategy Differs From the Pattern of International Development Typical of Western Enterprises

Companies can expand beyond national markets through internationalisation. An internationalisation strategy is basically the strategy that a firm applies to sell its products in foreign markets. It involves applying one or more modes of international business (Chryssochoidis and Clegg 1997). Some of the modes of international business include exporting, licensing, franchising, partnering or strategic alliance, acquisition, establishing new, wholly owned subsidiary, and joint venture (Shaker et al. 2000; Azuayi 2016).  In different situations, Haier applied different modes of international business. To enter the U.S. market, for example, the company initially exported manufactured products to the country and relied on a strategic partner (Wellbilt Appliances) to distribute the products. To market its products in the Netherlands, Germany, and Italy, the company exported its products under the Haier brand (Grant 2016). In countries such as Malaysia, Indonesia, and Philippines, the company formed joint ventures with local companies and relied on them to produce and sell products such as refrigerators and air conditioners (Grant 2016). For Haier, the goal behind its internationalisation was to build a global brand and to become an internationally competitive brand, rather than merely to exploit China’s low manufacturing costs (Grant 2016). In addition, the company sought to create the famous brand of China in the world through its internationalisation. Furthermore, it was aimed at challenging the company to raise to word-class level its standards of marketing, customer service, manufacturing, and product development (Grant 2016). The internationalisation strategy applied by Haier had certain key features which will be discussed in the following sections. Read more

One key feature of Haier’s Internationalisation strategy was its focus on entering and tackling difficult or more sophisticated markets first before tackling easy or less developed ones. As noted by Yan and Guanli (2011), in the process of internationalisation, companies have two modes or options. Continue …

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Contents

  • Introduction
  • The Main Features of Haier’s Internationalization Strategy and How the Strategy Differs From the Pattern of International Development Typical of Western Enterprises
  • The Uppsala Model in Relation to Haier’s Internationalisation Strategy
  • The Success of Haier’s Internationalization Strategy
  • Principal Features of Haier’s Management System
  • Haier’s Principles and Methods of Management
  • Lessons that can be Learnt from Haier
  • Conclusion
  • References

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How Jeff Immelt Redirected the Strategy of GE

In what ways has Jeff Immelt redirected the strategy of GE?

1. In what ways has Jeff Immelt redirected the strategy of GE? 
2. To what extent is the strategy aligned with
         a. The requirements of the 21st century business environment?
         b. GE’s resources & capabilities?
3. What organisational changes has the new strategy necessitated? Will GE         be able to successfully execute the new strategy?
4. What alternative strategies should GE consider?

There two sample papers that answer the above questions: Here is the first sample paper: 

The Strategy of General Electric Under the Leadership of Jeff Immelt

IntroductionThe Strategy of GE Under Jeff Immelt

Strategy, according to Chandler (1963), relates to the determination of long term business objectives and goals and the adoption of actions and allocation of resources that are necessary if these objectives and goals have to be achieved. Johnson and Scholes (2011) define the term as the long-term direction taken by an organisation. Strategy has been linked to the pattern of decisions made by an organisation. The strategy that a firm assumes and applies is meant to help it gain competitive advantage in the market in which it operates. This paper focuses on the strategy that Jeff Immelt applied during his time as CEO of General Electric. Among other issues, the paper discusses how Jeff Immelt redirected the strategy of GE.

How Jeff Immelt Redirected the Strategy of GE

Jeff Immelt greatly changed the strategic direction of General Electric during his time at the helm of the company. Soon after assuming the role of CEO of GE, the business environment experienced shocks as a result of major events including a financial crisis, 9/11, and the collapse of energy giant, Enron. Even though the company’s performance under the leadership of Jack Welch was commendable, changes in the business environment necessitated changes in the company’s strategies if its performance as a top performer had to be maintained. In appreciation of this fact, Immelt made a number of strategic changes to the company and how it operated.  

One of the strategic changes that Immelt made to GE related to its shift in focus from the maximisation of shareholder value to growth in long-term earnings. Before Immelt, the company put a lot of focus on short term earnings and in maximising shareholder value such as through ensuring the company had high stock prices. Immelt, however, emphasized that the way to go was to manage the company properly which would ultimately drive the company’s stock prices (Grant 20151).   This move by Immelt was driven by the realisation that traditional sources of value such as the elimination of under-performing assets and cost reduction had been exhausted. Continue reading … 29-45

Alternative link … (code 29-45).

Here is the second sample paper:

General Electric Case Study

General Electric Case StudyIntroduction          

The term “strategy” comes from the Greek word “Strategos” which means “generalship” (Nickols 2016). Strategy is a common term or concept in the business field today, having been borrowed from the military. The term has been defined in different ways by scholars and experts. Johnson and Scholes (2011) define the concept as the long-term direction that a firm assumes. On the other hand, Chandler (1963) defines it as the determination of long-term objectives and goals of an organisation and relates it to the actions and allocation of resources needed for the achievement of the organisation’s goals and objectives. On his part, Steiner (2008) associates strategy with the actions that one takes to counter the predicted or actual moves of an opponent. According to Mintzber (1994), strategy is commonly applied in four different ways; as a position, as a pattern, as a plan, and finally as a perspective. Business organisations develop and apply different strategies to achieve their objectives and goals, respond to changes in the business environment, and to counter the moves taken by their competitors. This paper will focus on the strategy of General Electric (GE) under the direction of Jeff Immelt. The paper will begin by providing a background to General electric and its strategy under the leadership of Jeff Immelt before discussing the how the company’s Strategy was aligned with the 21st century business environment. The paper will then discuss GE’s strategy alignment with the company’s resources and capabilities and organisational changes in the company concluding with a brief discussion of alternative strategies that General Electric could have adopted. Continue reading: 30-64.

Alternative link … (code 30-64). 

The Launch of a New Product Under Consideration

1. Solved: The launch of a new product is under consideration. Its unit variable costs will be £30 and it is estimated that incremental fixed costs of £250,000 will be incurred if production is commenced. Forecast sales are 50,000 units. At what level of price for the new product will the organisation break even? If the actual planned selling price is £48 per unit, what will be the organisation’s margin of safety? 2. The following information is about two organisations, A and B. Organisation A Organisation B £ £ Fixed costs 60,000 12,000 Variable costs per unit 0.20 0.50 Unit selling price 0.60 0.60 Expected sales levels (units) 160,000 160,000 Which firm has higher operating gearing? What is the expected net income of both firms? What would expected net income be for both firms if sales were a) 140,000 units and b) 180,000 units? Which firm is facing more risk in terms of its current sales predictions?

2. Solved: The following information is about two organisations, A and B.

Organisation AOrganisation B
££
Fixed costs60,00012,000
 Variable costs per unit0.20.5
Unit selling price0.60.6
Expected sales levels (units)160,000 160,000
  • Which firm has higher operating gearing? What is the expected net income of both firms?
  • What would expected net income be for both firms if sales were (a) 140,000 units and (b) 180,000 units?
  • Which firm is facing more risk in terms of its current sales predictions?
    Be sure to demonstrate your numerical workings.

Launch of a new product …

Solutions

1 (a)  At what level of price for the new product will the organisation break even?
Variable cost per unit = £30
Fixed costs = £250,000
b (in terms of price) = ?
Total sales revenue = fixed costs + total variable costs
50,000 units x b = £250,000 + (£30 x 50,000)
b = (250,000+ 1,500,000)/50,000
Break-even price =                          Read more …..

b) If the actual planned selling price is £48 per unit, what will be the organisation  Read more ….

2 a) Which firm has higher operating gearing?
An activity with relatively high fixed costs compared with its variable costs has a high operating gearing (Atrill and McLaney 2006, p. 229). According to Cima Global (2006), one way of determining operational gearing is by evaluating the contribution-to-sales ratio (C/S ratio). A low C/S ratio indicates that a business has low proportion of fixed costs and vice versa (Cima Global, 2006).

The contribution per unit for organisation A is £0.4 (0.6-0.2) while that for organisation B is £0.1 (0.6-0.5).
Contribution‑to‑sales ratio = (Contribution per unit / Sales price per unit) as a percentage
Contribution-to-sale ratio for:

Organisation A = (0.4/0.6) x 100= 67%
Organisation B = (0.1/0.6) x 100= 17%
 Read more … 

b) What is the expected net income of both firms?  Read more ….

PESTLE Analysis for Air Pollution Eating Bikes

PESTLE Analysis for Air Pollution Eating Bikes in Poland

Introduction
As part of its growth strategy, ABC Bicycle Company, a company based in London, seeks to enter the Polish market with its pollution eating bicycles. In order to establish the suitability of the Poland market with this product, the company needs to evaluate the external business environment of this market. The external environment of the country was evaluated by conducting a PESTLE analysis. This report presents the results of the PESTLE analysis and recommendations for ABC Bicycle Company
regarding the market – PESTLE Analysis for Air Pollution Eating Bikes in Poland. The report is limited to the Political, Economic, Social and Environmental factors and does not include the Technological and Legal factors.

Search Results Web results PESTLE Analysis for Air Pollution Eating Bikes in Poland

Political Factors

Poland has a stable government and a stable political environment and is governed by the rule of law (Radio Poland, 2018). Recently, there has been growing concern that the country is experiencing declines in democratic freedoms. However, the country has a functioning judiciary and strong institutions. Corporate tax in Poland is 19% although start-ups (businesses in their first year of paying corporate tax) and small businesses (those that did not achieve a turnover more 1.2 million euros in the previous year) are taxed at the rate of 15% (Price Waterhouse Coopers 2018). The lower tax paid by start-ups and small businesses serves to promote entrepreneurship as well as increase chances of business survival and success. The Polish government has no special policies governing cycling or the bicycle industry although it appreciates the riding culture in the country and is taking measures to improve cycling infrastructures in some cities and towns (Rigitano, 2015).

Economic Factors

Bicycle Sales

According to Mayne et al. (2016) Romania, France, Sweden, Germany and Poland have been experiencing a rise in bicycle sales since 2012. Of these countries, Poland experienced the highest (20%) increase in bicycle sales between 2012 and 2015 as can be seen from figure 1 (Mayne et al., 2016). In 2010, Poland’s bike sales stood at 750,000, sales exceeding the country’s manufacturing capacity (Utkin, 2016). Read more …

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PESTLE Analysis for Parcel Delivery Using Drones

PESTLE Analysis for Parcel Delivery Using Drones in the UK Market

1.0 Introduction
SFS Express is a Chinese company that provides logistics and parcel delivery
services. Having witnessed a lot of success in the Chinese market with its parcel delivery services that relies on drones to make last mile deliveries, the company intends to expand by venturing into the UK market. Being a foreign market, SFS Express needs to understand the external business environment of the UK and its suitability for parcel delivery and courier services using drones. This report presents a PESTLE analysis of the courier and parcel delivery service market as applies to the UK.

2.0 Political
A stable political environment is important for business and provides a conducive environment for economic activities. The United Kingdom is a peaceful country with a stable political environment. The country’s postal and courier industry is liberalized so that any interested person can easily enter the industry (Brown and Conway 2017). The industry is widely unregulated, a factor that has led to the poor services by some industry players (Tims 2014). Operators may, for example, provide postal and courier
services without a license or without prior authorization from Ofcom, the industry regulator (Brown and Conway 2017). Although the industry generally remains widely unregulated, shipping products to and from international destinations outside the European Union requires custom clearance and is highly regulated (Parcel Hero
2015). Several legal hurdles make international shipping both expensive and difficult, which has rendered international shipping unattractive for relatively small firms (UK Government 2017). While the liberation and limited regulation of the parcels industry makes it easy for businesses to venture into the industry, it also gives room for the entry of many players in the industry, which potentially makes the industry highly competitive.

The courier and parcel delivery market in the UK is taxed the same way as other industries. While corporate tax has been set at 19% since 2017, this rate is set to be reduced to 18% as from April, 2020 (with a possible further reduction to 17%) (HM Revenue and Customs 2018). Continue …

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PESTLE Analysis for Parcel Delivery Using Drones

Segmentation Targeting and Positioning Volkswagen

Segmentation, Targeting and Positioning by Volkswagen

Introduction

Many successful companies across the world apply segmentation, targeting and positioning (STP) as part of their marketing strategies. Volkswagen (VW), a company that makes cars is one of the successful companies that apply STP. Established in 1937, the company manufactures several car brands including Audi, Seat, Lamborghini, Skoda, Porshe, Scania, Man, Bentley, Bugatti, and Volkswagen (Volkswgen, 2018a; Bhasin, 2017; Volkswagen, 2018b). While its headquarter is in Wolfburg, Germany, the company has several branches and plants spread out in different parts of the world. This enables it to meet the needs of its global clientele, with the help of a robust distribution network. This paper briefly discusses segmentation and targeting before focusing on how Volkswagen has segmented its market, its target markets (segments), and how the brand is positioned.

Related Article: Market Segmentation, Targeting & Positioning (STP) with Company Examples

Segmentation and Targeting

Market segmentation, according to William Stanton, is the process of dividing the heterogeneous market for a product into several sub-markets or segments, each of which tends to display homogeneity in all important aspects (Rudani, 2010; Tabavar n.d., p. 63).  Philip Kotler, on the other hand, defines segmentation as the process of dividing a market into discrete groups of buyers based on factors such as needs or characteristics, behaviour, marketing mixes, or who might require different products (Rudani, 2010). A company’s market can be partitioned or divided based on different bases. Some of the bases commonly applied in segmenting a market are demographic, behavioural, geographic, and psychographic characteristics (Anand, 2016). …

Targeting, according to Bihani (2004), is the process of evaluating how attractive market segments are and choosing the segment(s) to enter. It involves making choices taking into consideration available and necessary resources. Firms have a number of options with regard to the targeting strategy to apply. …

Segmentation and Targeting by Volkswagen

Volkswagen applies segmented marketing and has its market partitioned based on a mix of psychographic, … and behavioural factors to meet the specific needs of different groups of customers. The following section discusses Volkswagen’s market segmentation based on these factors/bases.

Psychographic segmentation involves partitioning a market based on customers’ values, beliefs, interests, attitudes, lifestyles, personality traits, social status, or other psychographic factors. Volkswagen has partitioned its market based on customers’ interests, … and lifestyles. In this regard some of the segments the company targets include consumers who simply need mobility, … enthusiasts, and consumers who need … and comfort.  These will be discussed in the following paragraphs. …  

The compact or small cars that VW manufactures such as the beetle, polo, and golf are aimed at catering to the needs of consumers who simply need mobility or who simply wish to enjoy the utility value of a car … The cars targeted at these consumers are simple in design, …, and are cheaper to buy and maintain. …

Positioning of Volkswagen/ Volkswagen Brand Positioning

Market positioning, according to Wilkinson (2013), is the process of establishing the identity or image of a product or brand so that it is perceived in a certain way by consumers.With regard to positioning, Volkswagen takes pride in being a leader in … and to this extent uses the
tagline “….”. … Volkswagen mostly positions itself as … that produces … vehicles which attrac
t … compared to most car brands with more or less similar specifications. Whichever place the Volkswagen car is marketed, it is positioned as a vehicle that promises … 

Conclusion

Volkswagen segments its market based on a mix of psychographic, … factors to meet the specific needs of different groups of customers. With respect to psychographic segmentation, the company has segmented its market based on customers’ interests, … and lifestyles. …. The company applies … given that it has segmented its market based on how consumers intend to use vehicles. There are consumers who need vehicles for … use while others need them for …. use. Going by …., Volkswagen positions itself as a …. brand that produces … efficient vehicles.  Continue reading

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Related article: Market Segmentation, Targeting & Positioning (STP) with Company Examples

Outline
Introduction
Segmentation and Targeting
 – Segmentation and Targeting by Volkswagen
       – Psychographic Segmentation
       – Demographic Segmentation
       – Geographic Segmentation
       – Behavioural Segmentation
– Positioning of Volkswagen
– Conclusion
– References

Segmentation, Targeting and Positioning by Volkswagen

 

Pestle Analysis Sample: Small Law Firm in the U.K.

External Business Environment of Fenwick & Co. LLP

Economic Environment

The economy of the UK was greatly affected by the 2007-2008 financial crises. Ever since mid 2009, the country has been recovering from the crisis (Price Waterhouse Coopers 2016). Its recovery, although slower by historical standards, has been faster than that recorded by most of the other G7 economies over the same duration. While the country’s GDP growth dipped slightly in 2015, consumer spending remained relatively strong, the situation further boosted by lower oil prices. Analysts estimate that the country will achieve a GDP growth of 2% in 2016 as noted by Price Waterhouse Coopers (2016). It is also expected that consumer spending will remain strong during the year much as food and energy prices will remain low. Economists estimate that the inflation rate will gradually rise to the 2% mark from the current zero% later in 2017, which could prompt the Monetary Policy Commission (MPC) to raise the interest rates (Price Waterhouse Coopers 2016). For almost seven years, the interest rate has been maintained at almost zero percent.

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According to Spence (2016), the UK has a public debt in excess of £1.5 trillion. While this is the case, the government is steadily on track in repaying this debt. Analysts note that in 2015, the UK emerged as one of the fastest growing major developed economies. The rate of unemployment steadily fell during the year steadying at 5.4% while the housing market thrived (Elliott 2015). Consumer spending during the year also grew, a trend that will most likely continue in 2016 going by experts predictions. The country has also benefited from the strengthening of the pound against major currencies including the Euro and the US dollar in 2015 according to Elliott (2015). Although the first half of 2016 seems promising for the nation in economic terms, the second half is quite uncertain as noted by Elliott (2015). The uncertainty in this respect revolves around the impending referendum on Brexit.

Social-Cultural Environment

The UK has a population of more than 65.6 million people according to the Office for National Statistics (2018). Of this population, those ages 0-14, 15-24,25-54, 55-64 and 65 years and over account for 17.3%, 12.6%, 41%, 11.5% and 17.5% respectively (Index Mundi 2015). The population growth rate stands at close to 0.54%, the population comprising different ethnic groups, majority of which is White (87.2%). Close to 80% of the population of the UK lives in urban areas with London hosting over nine million residents (Index Mundi 2015). The nation has a literacy level of 99% according to Index Mundi (2015). The aging population in the country is steadily growing which also means that spending on the aging population by government and individuals is steadily rising (Kingsfund 2016).

London has a population of more than 8.8 million individuals according to Prynn  (2017). Majority of people living in London are in the 16-34 age bracket (Trust for London 2016). The city has a growing population of persons aged 65 and over. Reflective of national statistics, the city has a literacy level of 99%. The population of the city is mixed with ethnic groups including Whites, Blacks, and Asians (Trust for London 2016). Being a global business hub, London has a high population of foreigners from both EU and non-EU countries. The level of migration to and from London remains high at different times of the year. The prominent presence of foreigners in the city has seen residents of London embrace different lifestyles and cultures as influenced by visitors.

In general, people in the UK have divided opinions regarding whether the country should withdraw from the European Union. They are also divided on the net effects of a UK withdrawal from the EU in the immediate, medium and long terms. A recent opinion poll indicated that 46% of UK nationals want the UK to remain in the EU against 43% opposed to this view (Financial Times 2016). The population enjoys a lot of freedom in choosing what individuals do and where they work. Most individuals however work in urban areas where job opportunities abound.

Technological

One of the technologies that affect how business is conducted anywhere in the world is Information Communication Technology. Statistics indicate that over 90% of adults in the UK use computing devices on a daily basis (Office of National Statistics 2015). Statistics further indicate that close to 38 million adults, accounting for 77% of the country’s adult population, have access to the Internet on a daily basis (Office of National Statistics 2015). Between 2010 and 2014, usage of mobile phones to access the Internet grew from 25% to 58% (Office of National Statistics 2015). Well over 91% of UK households currently have access to broadband Internet.

Statistics show that over the years, use of ICT to procure or offer services has steadily grown among UK nationals (Office of National Statistics 2015). Some of the activities that people across the nation perform using the Internet include Internet banking, reading news, finding information regarding products, sending and receiving emails, buying or selling products, playing games, downloading software and social networking (Office of National Statistics 2015). The advent of social media has transformed the way businesses market themselves and interact with current and potential customers. Many businesses in London today have an online presence both in the form of a website or on social media. Businesses rely on social media to reach and respond to clients in real time. In general the Internet and social media have helped reduce the costs businesses have to occur in marketing their products, banking and in communicating with different persons. It has also made communication more efficient and effective. According to the Office of National Statistics (2015), close to 95% of households have televisions and roughly 93% of adults own a mobile phone in the nation.

Law firms in the UK and indeed other countries are fast adopting modern ways of doing business. Some of the law firms in London are going paperless as a way of reducing costs (Law technology Today 2015). The law firms are also using practice management software to schedule their activities and manage their resources for greater efficiency. As a way of reducing the risk of losing important information, many businesses are opting to store their data on the Cloud (Law Technology Today 2015). By backing up data on the Cloud, businesses are assured of having their information back in the event that the printed or soft copies they have locally are intentionally or accidentally destroyed or lost.

Legal Environment

The United Kingdom has a stable and reliable legal system. The country also has a reliable court system. Legislations and policies are instituted by the national and local governments through elected leaders. Several laws apply to businesses in the UK and London specifically. Some of these legislations relate to employment laws, contract laws, and environmental laws.

The national and local governments of the UK are concerned about the maintenance of a clean and safe physical environment. The Environmental Protection Act 1990 demands that domestic, commercial and industrial wastes be properly disposed to ensure that the environment remains clean (Tromans 1991). The law also aims at preventing harmful or unauthorised activities. The law places the duty of care on specific persons with a view of ensuring that wastes are properly managed without contravening on other people’s rights (Defra 1996). The London County Council has also instituted laws to ensure that the physical environment is conducive and that all kinds of pollution are minimised. Appreciating the fact that climate change is a serious global issue, the different levels of government of the UK are taking measures to ensure that nationals minimise emission of greenhouse gases.

Some of the policies and regulations that have been enacted recently and that will affect the operations of Fenwick & Co. LLP include the Pre-Action Protocol for Personal Injury Claims (2013), the Children and Families Act 2014 (CFA 2014), and the Finance Bill 2016 (Ministry of Justice 2013; UK Parliament (2016).

Environment

Being a major city, London has a huge population of people. The city has a good transport network comprising road, rail and air transport systems (London County Government 2016). In spite of the huge population of people in the city, the city’s environment is generally clean and well planned. More than 50% of the area in the city is covered in plants making the air quality much better that it is in most cities around the world (London County Government 2016). With parks and green spaces covering a huge part of the city, people in the city have several options to choose from when it comes to resting and leisure. The city has a reliable supply of clean water and well maintained sewer and drainage systems. In general, the city has a good infrastructural network that is vital for the success of businesses.

Recommendations

Fenwick & Co. LLP is operating in a business environment that is both politically, economically, and socially stable in spite of the changes that could result from the UK’s withdrawal from the European Union. The huge population of London, its position as a business hub, its good environment and infrastructure together make it a strategic location for doing business. With the UK experiencing steady recovery from the effects of the global financial crisis, low interest rates, low inflation, increasing consumer spending power, and a growing population of elderly individuals, there are high chances that in the foreseeable future, small law firms like Fenwick & Co. LLP are bound to experience good economic times. Although the effects of the UK’s withdrawal from the EU are yet to be fully appreciated, there are high chances that small law firms in London will gain significantly from a withdrawal. This is the case given that many law firms owned by foreigners may exit the market as a direct result of the withdrawal leaving fewer players in the market.

The company needs to take a number of measures to position itself as an emerging leader in the market. One of the measures that the company should take is strengthen its online and social media presence as a way of attracting more customers and creating awareness of its brand. The company should also purchase and make use of practice management software as a way of increasing its efficiency. Although storing information on the Cloud comes at a cost, the business needs to go this direction as a way of insuring itself against the effects of losing vital information. The company should also take every measure to align its activities with legislations such as the employment laws. Recent changes in laws relating to crime, family, and Personal Injury Claims call for an update of the employees’ knowledge of the laws and their effects on the business and its clients. Fenwick & Co. LLP which intends to establish other branches in the near future may not be able to do so in other EU countries easily in the event that the UK withdraws from the EU. The company should consider seeking alternative sites as soon as the results of the referendum indicate that the UK will withdraw from the EU.

References

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