The Virgin Company
The Virgin Company as a parent company does add to the businesses under its umbrella any advantages that accrue to the brand as a whole. The diverse aspect of the Virgin Group allows for more consumer and investor confidence, as the Group does not depend on just one area or industry for its profitability and economic health. In fact, investors are especially aware of the benefits of such a diverse portfolio.
Each company shares in those benefits in more than one way. First of all, from each of these many and various companies that form a part of the group, the capital to be gained is more readily available to any one of the Virgin companies (than to an unaffiliated company) in case financial problems should arise in the future. The Virgin companies that are similar in nature also benefit from economies of scale.
When resources such as raw materials are being sought, purchasing can be done in large quantities that allow each company to increase revenue by reducing marginal cost. Further benefits that accrue to Virgin companies from being affiliated with the Virgin parent include close ties to other companies in a related industry. For example, Virgin Vacations has the ability to form partnerships with Virgin Atlantic and in so doing offer cheaper vacation packages to their customers (Virgin, 2007).
In that way, Virgin Atlantic is guaranteed more business while the tour company (Virgin Vacations) can guarantee its customers flexible flights that allow them to take full advantages of the services (for example, by allowing them to extend their stays at the hotels without incurring extra airline fees). Another area in which a company can benefit from being affiliated with the Virgin Group is in its use of the Virgin brand name.
If consumers already trust the brand, they are likely to automatically trust a new company that bears the Virgin name. This effect serves as a method of reducing the time it takes for new companies to establish their names and brands with the consuming public. Thus, the new Virgin-affiliated company starts out with a name that is already known to and trusted by consumers.
Virgin. (2007). “The whole story. ” Virgin. com. Retrieved on January 21, 2007 from http://www. virgin. com/aboutvirgin/allaboutvirgin/thewholestory/default. asp