Business Management Assignment: Virgin Group
Virgin group is considered to be one of the most rapidly expanding, flamboyant and innovative organization. Virgin group is the leading private player of United Kingdom with annual revenue of almost $ 4 billion (Allinson, 1999). The major part of revenue is contributed by virgin Atlantic – International airline business of Virgin group. The Virgin group spans over 200 businesses from entertainment store to railways and from soft drinks to condoms. This Business Management Assignment will discuss the challenges faced by Virgin group and how the top leadership manages the Virgin group.
The structure of the group is very complex and as it is a private owned organization, it is very difficult to consolidate the revenue and balance sheet of all the organization. So it becomes very difficult to calculate the consolidated profit and loss of the virgin group as whole. This organization also does not have yearend common accounting for the whole firm (Kornberger & Pitsis, 2005).
The subsidiaries or individual units which are loosely interlinked and run as autonomous organizations with self managed group and uses the parent brand name of Virgin, thus the organization structure is defined as ‘keiretsu’ organization. The emphasis and attention is laid on temporary goals or short-term motive of high chargeable earnings as well as vigorous dividends.
Generally a bureaucratic or formal organization can be distinguished by a number of attributes like (Avolio, Bass and Jung, 1999):
- Distinct prototype of commotion.
- Different management layers or hierarchy.
- Incorporated job where decisions flow from top to bottom.
- A widespread managerial objective and goal.
- The continuation of regulations, policies and actions at every level of hierarchy.
Above discussed points makes very clear that virgin group is not an organization which can be said as mechanistic, formal or bureaucratic. It is very innovative as well as supportive for their employees. In fact it has been said that Richard Branson supports the employees with new ideas of business and thus garner the idea by investing in it after having thorough financial feasibility study as well as competitive analysis (Symon, 2000).
A crucial characteristic of this informal organization and management lies within the well established core essence i.e. “Virgin culture”. Virgin culture is distinct because of the unique management approach and self defined values and beliefs of Richard Branson (Starkey, Barnatt & Tempest, 2000). It replicates the peculiarity, fun loving, hatred for chain of command in the organization and a recognized supreme head of the function, assurance to internal customers as well as external consumers, belief in capability and accountability of the employees. The Virgin group make available conducive atmosphere in which brilliant, determined employees are encouraged to endeavour for an advanced echelon of performance (Symon, 2000). While the functioning situation is casual, non- bureaucratic, and organic in nature thus potential expected from the employees as well as all the individual organizations is very high. Expectation from the group because of the offerings from their side is also very much. Motivation in the form of financial or monetary reward is not very high for most of the employees (Hecksher, 1994). The encouragement factor for employees is reimbursement which comprises of communal activities, company-paid weekend leaves as well as unplanned social gatherings.
The flat structure of the Virgin group helps the communication to be faster and clearer. The group of companies within the umbrella brand of Virgin helps to communicate the value, belief, policies and procedures faster and with a clear understanding of the issues of all the organization (Clegg, Kornberger & Pitsis, 2005). Informal or casual structure is not an easy task to sustain for long term growth. In casual structure employees have less pressure compared to bureaucratic environment where the pressure flows from top to down. Thus employees become more complacent and needs certain amount of motivation to achieve high level of proficiency and excellent performance management. Thus Virgin group has maintained very well its casual way of working and thus creating a great working culture for employees as well as very conducive corporate culture for top management (Fiedler, 1967).
Within the individual subsidiary units, Richard Branson has espoused his own approach of administration and management, by vigorously linking all the employees of all the groups and looking for their thoughts and to deliver more value to existing customers as well as attracting other potential customers (Howell, 1988). Employees are anticipated to imbibe the values and then perform according to the set principles and belief of the organization. Internalization of company values and standards means a deeply condensed requirement of external training and supervision, but then also employees are held liable for their performance (Moynihan and Peterson, 2001).
Thus from the above discussion, we can conclude that the organization structure of the Virgin group is (Janis and Mann, 1992):
- ‘keiretsu’ organization
- Informal or casual
- System 4
The prevalent organizational culture in the Virgin group is because of the charismatic leadership of Richard Branson. Observing the growth of the Virgin kingdom as well as the style of Organizational leadership confirmed by Richard Branson, a number of developments come out. These developments include the following:
- Continued existence through hardship and slowing down of incredible self belief and fortitude to accomplish something.
- Recognition of his own particular strengths as a leader is transparent and thus maintaining a group around him whose weakness complement the strength of whole Virgin group.
- He is very ethical and responsive towards the feelings of his employees, investors and customers thus generating credibility inside all the stakeholders.
- He has amazing skills to negotiate and deal with any type of situation in spite of destroying loyalty using hi interpersonal skills.
Core of the success of Virgin group as well as Richard Branson lies with selection of his team. Current researches have exposed that top management teams have very positive effect on the future of organization as its help in carving strategic initiatives (Zaccaro, 2001). Group dynamics is a phenomenon which is increasing the benefits for organizations and it has been proved. Top management teams must be very careful in designing the business strategy by weighing all the risks associated and thus developing emergency plan to support the main initiative if anything goes wrong in the middle, this type of top management team always have profound effect on organization (Janis and Mann, 1992). There are many live examples of Richard Branson exhibiting the concern of him towards employee’s suggestion. Once he distributed his personal number to flight crew members inviting suggestions from them. One very important aspect of the leadership of Richard Branson is attainment or pursue of goals irrespective of obstacles occurred. Leaders have completely different view of goals when compared to managers and the main difference lies in the fact that leaders are active rather reactive (Janis and Mann, 1992). It was Richard Branson’s persistent shaping of future of his organization and encouraging some aspiration to accomplish the desired performance, which helps Virgin group to achieve sustained development and triumph, regardless of any unconstructive external state of affairs.
Organizational communication is the flow of information from sender in the organization to the receiver of either same or different organization through a medium after processing at certain point of time (Daft & Lengel, 1986). The sender encodes the message which he wants to transmit and the receiver decodes the same message. To decode the message, receiver has to know the about the process and knowledge about the information which is being transmitted. In any organization, proper, clear and transparent communication is very essential to remove any chance of misunderstanding and also increase the efficiency of overall process. Communication is a process which becomes effective when both the sender as well receiver is dedicated towards the process. Effective communication also needs effective listening skill (Felipe & Sommer, 1996).
In Virgin group, the communication is mainly upward communication. The communication is in the form of ideas, suggestions and feedbacks from the employees towards the management. Upward communication is generally applicable in organic organizations where employees are empowered enough to take their decision for overall benefit of the organization. Also the communication which takes place in this manner in Virgin group is like dialogue or two way communication which helps in understanding the matter from both the sides (Gudykunst & Ting-Toomey, 1988).
In virgin group, horizontal communication also takes place as the top management from different groups or subsidiary units of Virgin brand name helps in taking the strategic decision of the organization. Virgin group is in the hand of Richard Branson who is very open in nature and loves fun thus he wants to flow the culture of proper communication in his organization where suggestion from each and every member of the company is heard by its boss (Harris & Moran, 1987). Staff meetings are also held regularly to assess and monitor the workings of the individual business units of virgin group. Virgin also conducts attitude surveys which help the organization to better understand the need and requirement of the employees. They also help the employees to raise their voice against the company if some injustice is done and that too in anonymous way (Raacke, 2008).
Inside Virgin group, communication has four principal as well as common occupations:
Processing of raw data collected from various sources and then converting it into useful information which is utilised for decision making.
- Effective communication helps in achieve perfect coordination between various activities and flow of information starts taking from one function to another function.
- Effective communication helps in the proper understanding of mission, vision and values by the employees of virgin. This helps them to attain goals and organization objective in smooth manner (Panteli & Dawson, 2001).
- Personal expression is also a common principal which is shared in Virgin group and thus helps the employees to express their opinions freely.
Thus the effective organization communication process which is imbibed at every level of Virgin group is helping it to achieve grand success in every arena it places its position. This communication is helping the individual employees to devote their 100% and help in the growth of the organization (Robbins & Hunsaker, 1996). Effective communication concept is derived from the leadership of Richard Branson who has amazing negotiation skill as well as interpersonal communication skill. This skill has been transferred to each and every node of the organization and its member (Zajonc, 1980). Virgin group is known for its innovative initiatives which are very important for the sustained growth of the organizations attached with it directly or indirectly.
Virgin group is experiencing high growth and expansion in its empire because of the informal, flat and organic organization structure which empowers the employees and top management to take part in decision making. Employees and group team leading individual subsidiaries are the key success factors. Leadership of Richard Branson has also transformed the business culture. Transformational leadership has helped Virgin group has helped it to stand out of the crowd and constantly innovate new offerings for customers. Organization communication is very transparent which helps employees in absorbing the organizational values and understanding goals.
Employees in different groups of companies are stuck in the same company for lifetime thus provoking employees to shift firm. Virgin group should consider shifting the employees from one vertical to another vertical and improving the job satisfaction of employees. It should also consider of spreading inter-organizational communication will help in understanding the values of beliefs of all the group companies as well as it will increase the competition between the firms. This will increase the profitability of group and will make the Virgin group more competent.
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