Findings from the case study of the Virgin Group
Case Study: Organizational Structure and Culture of Virgin Group
[
](mbaknol.com/management-case-studies/case-st..)Business Overview
From a small mail-order record retailer founded by a school dropout in the 1970s to a globally acclaimed conglomerate responsible for groundbreaking innovation in various industries. A conglomerate, home to over 300 companies fully operational in 30 countries and employing over 50,000 people, The Virgin Group has a track record of success under the leadership of Richard Branson. This success has been evident since, as far back as 1983 when the conglomerate was earning profits of 2 million pounds on total revenues of just under 50 million pounds. More recently, its revenue exceeded US$18 billion in 2009 after significant expansion into various fields, cementing its presence in the global market as a group with a very diverse portfolio that is successful and thriving. It is a one-of-a-kind organisation, with a structure so complex, and yet, so fine-tuned.
How Decisions are Made (Centralization vs Decentralization)
In The Virgin Group, autonomy of decisions is granted as the various companies are independent of each other, and at the same time, partner to help each other out. Each of the companies — about 300 of them, operate separately from each other, with about 20 holding companies overseeing them, and Richard Branson being the chairman. As mentioned previously, these companies work to the best of the others interest which depicts a somewhat interconnected system, and at the same time, they have a flexible structure. This flexibility enables changes to be made in the organisation without going through too much chain of command, while also enabling affected parties to adapt quickly. The method highlighted here depicts a decentralised system. This is very evident in Divisional Structures, which is a structure that can be found in the complex structure The Virgin Group practises.
Interestingly, as the article suggests, The Virgin Group runs a complex system, and aside from the keiretsu structure, we see that it still incorporates the Flatarchy. This is seen in the parts where employees have the authority to make decisions out of their intuition in their day-to-day activities. This is another form of decentralization. This peculiar system, of being centralised by having a chain of command, and various divisions, while also being decentralised, because the various divisions have autonomy, has made The Virgin Group what it is today. A very beautiful mixture of structures that work well for the conglomerate.
Organizational Structure of Virgin Group
- Synthesis
My inference from the article is that it is very evident that the structure of The Virgin Group is created to have some sort of “organised flexibility”. There is provision for autonomy of decisions, even down the employees, as they are encouraged by Richard Branson to act on their intuition as opposed to waiting on a chain of command. Also, because the organisation has a diverse range of goods and services, and serves in different locations, the structure is applied in the Divisional Organisational Structure. This structure gives provision for businesses that have a variety of products, are in various geographical locations, and target different markets. In addition to that, the flexibility and decentralised nature of The Virgin Group denotes that it works with the Multi-divisional Structure, where the support function is decentralised.
In summary, the business Leader — Richard Branson, built the company on the strength of ownership, confidence, and quick adaptability. This has resulted in groundbreaking success, and enabled the employees of the group, regardless of their departments be in control of their work, while also looking out for the company’s best interest. 300 companies and 30 countries later, with billions in revenue, it is evident that this structure is the best suited for The Virgin Group, despite its size.
References:
- mbaknol. (n.d.). Case study: Organizational structure and culture of Virgin Group. mbaknol. https://www.mbaknol.com/management-case-studies/case-study-organizational-structure-and-culture-of-virgin-group/