Tuesday, October 17, 2006
1. Richard Branson and the Virgin Group
Virgin’s first and most obvious distinctive resource is Richard Branson and the ‘Virgin People’ that make up the organisation. Richard Branson’s charismatic style and entrepreneurial flair is an asset that other organisations are unable to replicate, and it is his personality that is synonymous with the Virgin Brand and that makes the company unique. Similarly, the Virgin group attracts ‘Virgin People,’ who are ‘only a certain type.’ Together with Branson, the Virgin People form the human capital that is distinctive to Virgin that is impossible for other firms to copy.
Related to the people who make up the firm, is the ‘Virgin culture’ that has been built over decades and that distinguishes the work environment within Virgin Group from other organisations. It is a culture that is ‘not looking for clones,’ that is ‘like a family’ and is one that requires employees to have the ‘Virgin Flair.’ These unique attributes present in Virgin employees meld together to create a distinctive corporate culture that only the Virgin Group can claim to have.
Richard Branson’s personality is synonymous with Virgin’s strong branding & reputation. The brand was ‘recognised by 96 percent of UK consumers’ and is associated amongst consumers with ‘fun, innovation, success and trust.’ Virgin has been able to sustain the Virgin identity across multiple businesses in a way that that very few other corporations have, and the pervasiveness of the Virgin brand creates unique brand equity that is difficult for competitors to replicate.
2. Corporate Synergies
The corporate strategy of the Virgin Group is to operate like ‘a venture capital firm based on the Virgin brand.’ This strategy involves non-related diversification at the individual business unit level. Meanwhile, synergies are created from hierarchical relationships and the interaction of the corporate head office with individual business units. By leveraging the Virgin Brand which has established prominence in the minds of consumers, Virgin is able to enter new business areas with a bang and shake up existing orders. The unique Virgin culture also allows Virgin to break into new markets and execute its ventures very effectively.
Virgin’s corporate strategy is best described in the Virgin Charter – the individual businesses are focused and develop as autonomous enterprises under a single unified brand name. This decentralization of organizational structure and decision making allows an entrepreneurial environment for managers to pursue their businesses effectively, while avoiding the bureaucracy associated with large centralised corporations. At the same time, the individual businesses benefit from the world-wide, inter-industrial reputation of the parent corporation’s Virgin brand and are able utilize this brand recognition in their marketing efforts. This benefit of corporate parenting would not be available to them if they were operating under their own subsidiary brands, and is perhaps the greatest source of synergy within the Virgin Group. In this manner, Virgin is able to enjoy the benefits of both smaller entrepreneurial organisations and large conglomerates without the associated problems of bureaucracy and brand conflict that can often feature in diversified corporations.
Furthermore, Virgin has been able to deal with the potential downsides of autonomy and decentralization. To prevent the breakdown of communication links and individual business units pursuing their own strategies in an uncoordinated fashion (that could potentially be detrimental to the umbrella Virgin brand), the Virgin Charter sets out a management system and internet business strategy that takes advantage of information technology and the digital age to further establish the Virgin brand. A single web address, Virgin.com, is where consumers can go to have access to all the Virgin services under a single portal. This strategy helps to reinforce the corporate parenting strategy and enhance the synergies already derived from the corporate branding of the Virgin Group. By aggregating all the services into a single Virgin portal, the customer is able to access multiple services through a single distribution channel, and is enticed to turn into a ‘Virgin Customer’ where he comes to Virgin for his telecommunications, banking, terrestrial and extra-terrestrial transportation (Virgin Galactic), entertainment and internet service needs. In this way, the disparate Virgin businesses are able to gain from the successes from their corporate siblings – Virgin Rail gains customers referred from Virgin Mobile visiting the Virgin.com portal, while Virgin Money gains customers referred from Virgin Records, and so on. In comparison, competitor banking companies would hardly dream of marketing their services to a music crowd, while competitor railway companies would be hard pressed to market to mobile customers of an unrelated company. Even though the individual business units are in unrelated fields, the unified corporate strategy allows them to contribute to each other in a synergistic manner.
3. Threats to Virgin’s corporate strategy
The success of Virgin Group hinges upon the corporate parenting strategy which is led by founder Richard Branson. The sustainability of Virgin Group’s competitive advantage depends on how well it continues to retain the Virgin culture and execute the strategy of decentralization under a unified branding. At least in the short run, with Branson continuing to lead the company, the strategy looks very strong and almost ‘unstoppable.’
In the longer run, however, Branson will have to put in place a strong succession plan and fill the corporate head office with executives who are able to understand and execute the Virgin Charter. While Branson himself might be irreplaceable, he can leave his legacy by ensuring that his vision is sustained through the Virgin Culture and Virgin People.
Virgin also has to ensure that it selects the industries it wants to enter very carefully. A single misstep could tarnish the Virgin Brand, and this could be disastrous for the group as a whole – unification under a single brand is a double-edged sword that can cut both ways. In addition, Virgin needs to continue to ensure that the individual business units perform in line with the greater Virgin brand, and not branch off in an unrelated manner. Doing so could dilute the Virgin brand if business units perform their operations in a way that lacks the fun, trust and quality that is associated with Virgin.
If Virgin is able to build a strong leadership engine, carefully evaluate future business opportunities, and retain the branding coordination between its diverse businesses, then its corporate strategy is well positioned to deliver a bright future for the company.
Dess, G., (2007) “Strategic Management: Creating Competitive Advantages,” McGraw-Hill Australia
Dick, deVries and d’Avaucourt (2000) “The house that Branson built: Virgin’s entry into the new millennium,” INSEAD, Fontainebleau, France
This essay was also published at SGE
Tuesday, October 10, 2006
I think its undeniable that Malaysian minorities suffer a form of negative discrimination ( a kind of reverse affirmative action) when compared with the majority. And factually, it would be quite hard to counter-argue what LKY said about Chinese minorities being politically defanged as in Indonesia and Malaysia. So far at least from the mainstream media - most seem to denounce the comments as inciteful and dangerous, Most Malaysian Chinese however secretly seem to be in profound agreement with LKY - namely most are disappointed that Badawi seems to have extended the priviledges in the NEP without any signs of a change in policy. LKYs comments came right after several incidents that made the Malaysian Chinese community feel vulnerable esp. after the PM's son-in-law and head of UMNO youth made comments about MCA (the Chinese party in Barisan national) as well as a concerted effort by some UMNO youth members to get rid of a Chinese politican in Penang on charges of not doing enough for the Malay population there. I doubt most Chinese would disagree with LKY about the marginalisation of Chinese.
Personally, I think the marginalisation proceeds from a policy of appeasement by the Chinese community given that they have given up most of their political presence in order to safeguard their economic interest especially after the race riots in May 69. However currently they too are finding their economic positions being under attck due to corruption, biased quotas on licenses and being muscled out on govt contracts. No doubt the Chinese community (the wealthy ones at least) mantains its economic position through buying off politicians in order to obtain contracts and cheap loans but for most of the rank and file - their economic superiority is decreasing. I see very little that can be done currently however - but a current of discontent has always been present.
I think the political reactions are quite predictable - a delayed grudging apology on LKY's side, Badawi acting as the moderate good guy while more fringe elements of UMNO making loud noises about Singapore's treatment of its own Malay minority. Nothing suprising there - the newspapers make all the right noises mixing nationalist puff-talk while ignoring the biased accounts from their own sides. Politically nothing much has changed except the continuous illustration of the fact that regionally we remain below the standards of political civility and that we cannot transcend playing the race card and prefer to enflame its attendant suspicions. Though LKY started the whole incident, discrimination was and continues to be a problem in Malaysia - the roots are complex including the fact that Chinese politicans and businessmen (sometimes they are interchangeable as those that fuel continued corruption.) It disturbs me that because we unable to transcend such dialogue - we may be fated to realise its consequences in increased and more dangerous regional tensions.
As usual the Singaproean press was completely muted over the apologies demanded by the Malaysians and the Indonesians. I just think that even though LKY might be speaking the truth it was probably an unnecessary comment that adds to strained relations, esp. considering that its coming from an 82 year old man who should be finding better things to do during his retirement than to inconvenience his son's government by inflaming sentiments around the region.
Sunday, October 08, 2006
31. The internet is enabling ordinary citizens to post news and views on the web, making information available more quickly and plentifully than ever. The conventional wisdom is that the free flow of information on the internet is universally a good thing. It is undoubtedly very difficult to control information flow. But as we find terrorist groups using the internet to plan murderous attacks, and paedophiles using it to prey on defenceless children, we are learning that while the internet is a great boon to mankind, it is not an unmitigated one.For many in the blogosphere, such comments seem like a belittlement of bloggers, and an attempt to shape public opinion against internet journalism. But to what extent are these comments justified?
32. In the pre-internet age, newspapers and television stations not only reported news and opinions, they also filtered, processed and verified the information, in order to present coherent perspectives which shape the public debate and the public’s collective understanding of the world around us. The internet short circuits and undercuts this model.
33. Even in the internet age, there will still be a role for serious journalism, whether in print or on the web, because people will still seek out information sources which are reliable, verified and insightful. But it will not be easy to keep the public debate on this high plane, especially on controversial issues. For the internet also enables clever propaganda, inflammatory opinions, half-truths and untruths to circulate freely and gain currency through viral distribution, and these are not always easily countered by rational refutation or factual explanation. How to deal with this is something which every newspaper, and indeed every society, is grappling with.
While it is true that there exist 'half-truths' and 'untruths' on the internet, it is also true that these half-truths and untruths are quickly corrected, or opposition to these untruths is quickly expressed. The rapid spread of information on the internet also allows the rapid spread of counter opinion and factual corrections in response to inaccuracies and half-truths.
Furthermore, the mainstream media is not exempt from 'clever propaganda, inflammatory opinions, half-truths and untruths.' In fact, in the light of many recent events involving the mainstream media (including the comment on IJ girls, the censorship of the 'mee siam mai hum' comment on television replay, and the obvious downplaying of news critical of Singapore in the mainstream press) one would think that the Prime Minister is describing the state of the local daily and broadcast content just as much as he is describing the internet. The simple truth is, the weaknesses he criticises the internet of having are just as prevalent in established media.
The difference between the two is, however, that the ruling party is unable to monopolise the internet and impose its power structures upon it. The internet is free-wheeling and democratic, anyone and everyone with access to the computer can publish content at the click of a button. The real issue about the internet, from PM Lee's point of view, is that it presents a serious challenge to the ruling party's power.
In view of this, should we bloggers worry about PM Lee's remarks? Perhaps the best attitude we should have is one of no fear - and that is to simply continue writing and publishing quality honest opinions about the state of affairs. The best way to respond to such criticism is simply to raise the quality of internet discourse and prove to the incumbents that the internet can be, and often is, a platform for intelligent and informed debate, often more intelligent and informed than the mainstream press.
With this attitude, the internet can keep the mainstream media in check and continue to develop and establish its credibility, even in the face of criticism by the government. And in the process, it can play its crucial role as an independent voice keeping the government in check, as it should in a healthy, genuine democracy.
Saturday, October 07, 2006
Certainly, the thinking behind this new direction must surely be one of innovation and breaking new ground - the PAP has never engaged in such 'hip' acts in its history. And for some reason, it has felt that it has to engage in such activities to connect with the younger generation. But is this really what the younger generation want from our MPs? Me thinks otherwise. The younger generation is more politically aware, and has a greater thirst for substantive political debate on real issues, not trying to put up a blog which they "didn’t intend ... to be a discussion place on policies." Seriously, if politicians don't discuss politics, what do they discuss? Anything else is really out of the interest of the public sphere, and has little relevance to Singaporean citizens.
But perhaps these initiatives really show up the inexperience and naivete of our MPs. Michael Palmer's protests that the MPs are not 'trying too hard,' claims that
The idea behind doing the hip hop is not about connecting with the youth through hip hop. That’s missing the point. It’s about connecting by showing that we’re willing to have a good time and laugh at ourselves once in a while.
But seriously, does he really believe in this? There are ways to have a good time and laugh at yourselves, ways that genuinely reveal one's personality and character to the people, and activities that do not need to take one so far out of one's comfort space. Seriously, I doubt Singaporeans have any expectations of our MPs to be dancers - that's not what they voted the MPs into power for. The MPs could engage in a thousand and one other activities that are publicly visible and yet do not seem so ludicrous to the public. And none more so than generation Y will be quick to see through this marketing gimmick.
Speaking of marketing, this brings me to my next point. Are the MPs really simply about putting up fronts? I certainly hope not, for then our future is in a precarious position. When Lee Hsien Loong talked about being a more inclusive and open government, this was certainly not what Singaporeans expected. In fact, the behaviour seems absolutely baffling and incomprehensible. That the MPs are willing to dedicate precious time and effort into such relatively shallow activities as hip-hop dancing, at the expense of other more important activities, is really no laughing matter.
But perhaps, given the we-know-all attitude of the PAP and the Yes-men culture within the political party, perhaps the initiatives are not so surprising after all. Couple this with a tendency for top-down policy making by leaders out of touch with the common populace, and you get 12 MPs hip-hopping away. These activities that the PAP are trying to pursue are simply showing up more and more the cracks and weaknesses in the power structures behind the ruling party. And while not yet disastrous, the overall direction that the PAP is taking is cause for concern.
Perhaps Singaporeans should step back and challenge the notion that a parliament full of PAP MPs is the best for Singapore. Just like so many other policies like the 4 million smiles campaign or the attempts to create love amongst singaporeans, the hip strategy doesn't look good to me. And if Singaporeans continue to let them engage in such intitatives, Singapore may soon start to look rather unhip.
Thursday, October 05, 2006
Text of email attributed to Andy Xie:
I participated in the panels on Commodity (sic) and China-India and in some obligatory dinner parties. On Friday night the Singapore prime minister invited the speakers at the meeting that the Singapore government organized. Trichet, Larry Summers, Paul Volker (sic) Chuck Price, the finance ministers of ASEAN countries were there. No government official from China was there …guess I was there to make it look like China was represented.
The dinner was turned into an Oprah with PM Lee Hsein Long (sic) at the center. The topic was on the future of globalization. People fawned him like a prince. Of course, he is. There are two reigning princes in the world that the Davos crowd kiss up to, Jordan and Singapore. The Davos crowd are Republican on economic issues and democratic on social issues. Somehow they manage to put aside their moral misgivings and kiss up to Lee Hsein Long and Abdullah.
I tried to find out why Singapore was chosen to host the conference. Nobody knew. Some thought it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would have been a lot more appropriate. ASEAN has been a failure. Its GDP in nominal dollar terms has not changed for 10 years. Singapore’s per capita income has not changed either at $25,000. China’s GDP in dollar terms has tripled during the same period.
I thought the questioners were competing with each other to praise Singapore as the success story of globalization. Actually, Singapore’s success came mainly from being the money laundering center for corrupt Indonesian businessmen and government officials. Indonesia has no money. So Singapore isn’t doing well. To sustain its economy, Singapore is building casinos to attract corrupt money from China.These western people didn’t know what they were talking about. Aside from the nauseating pleasantries some useful information came out of it. Trichet sounded very bullish on euro-zone economy (sic). He noted that euro-zone was catching up with the US in growth rate (sic) and talked about further gain in 2007. His tone was much more bullish than our house view. As Japan is surprising on the downside, I don't see how the rise of euro-yen could be stopped.
Larry Summers and Paul Volker (sic) were very worried about the US economy. As you probably know, Alan Greenspan is talking the same way. At the CLSA conference last week, he talked like one of his critics. There is fear of a US collapse. Many Americans think that an RMB reval (sic) would save the US. This is just a dream, in my view.
Most were worried about the future of globalization due to income inequality. As average workers in the west are not seeing wage increase (sic), they may vote against globalization. I thought that they were understating the benefit from cheap consumer goods. However, as inflation comes back, it does diminish the benefits for western consumers.
No-one was worried about the growth outlook for China and India. The Indian Planning Minister was very bullish, talking about 9% forever.
My sense is that policymakers are relexed (sic) about the short-term economic outlook but anticipate a US collapse at some point. Americans think that RMB reval could save the US. So they would keep pressuring China."
Courtesy of Asia Sentinel
The original source is here
Morgan Stanley's Andy Xie Quit After E-Mail Attack on Singapore
By Netty Ismail
Oct. 5 (Bloomberg) -- Andy Xie's resignation as Morgan Stanley's chief economist in Asia last week followed an e-mail in which he characterized Singapore as an economic failure that is dependent on illicit money from Indonesia and China.
Xie, who worked at Morgan Stanley for nine years, sent the e-mail to his colleagues after attending the International Monetary Fund and World Bank annual meetings last month in the Southeast Asian island state. He questioned why Singapore was chosen to host the conference and said delegates ``were competing with each other to praise Singapore as the success story of globalization.''
``Actually, Singapore's success came mostly from being the money laundering center for corrupt Indonesian businessmen and government officials,'' said Xie, who was based in Hong Kong before leaving Morgan Stanley on Sept. 29. ``Indonesia has no money. So Singapore isn't doing well.''
Singapore's $118 billion economy is recovering from three recessions since the 1997 Asian financial crisis, and is expecting growth of as much as 7.5 percent this year. The city- state is grappling with growing competition from China and India, two of the world's most populous nations, where labor costs are less than a quarter of those in Singapore.
Prime Minister Lee Hsien Loong said in September that Singapore's economy may sustain annual growth of 3 percent to 5 percent for the next 10 to 15 years as the country expands industries from information technology to tourism.
``To sustain its economy, Singapore is building casinos to attract corruption money from China,'' Xie said.
Singapore is ending a four-decade ban on casinos. The government plans to triple tourism revenue to $19 billion and double visitors to 17 million by 2015.
Officials from the public relations departments of the Monetary Authority of Singapore and the government's information service declined to comment on the contents of the e-mail. They also declined to be identified.
Morgan Stanley confirmed the contents of the e-mail and said the New York-based firm doesn't elaborate on the reasons behind employee departures.
``This is an internal e-mail based on personal suppositions and aimed at stimulating internal debate amongst a small group of intended recipients,'' Cheung Po-ling, a Hong Kong-based spokeswoman for the world's largest securities firm by market value, said in a written statement. ``The e-mail expresses the views of one individual and does not in any way represent the views of the firm.''
``Morgan Stanley has been a very strong supporter of Singapore and has a great deal of respect for Singapore's achievements,'' Cheung said.
Morgan Stanley ranks sixth among merger advisers in Singapore this year, handling $1.5 billion of deals, according to data compiled by Bloomberg. It advised Temasek Holdings Pte., the Singapore government's investment company, in its purchase of a 9.9 percent stake in Mumbai-based Tata Teleservices Ltd. in March. Morgan Stanley, which ranks third among stock sale arrangers in Asia outside Japan this year, hasn't underwritten any deal in Singapore this year, according to Bloomberg data.
``I tried to find out why Singapore was chosen to host the conference,'' Xie wrote in the e-mail. ``Nobody knew. Some said that probably no one else wanted it. Some guessed that Singapore did a good selling job. I thought it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would be a lot more appropriate.''
At a dinner party hosted by Singapore Prime Minister Lee Hsien Loong, ``people fawned him like a prince,'' Xie wrote. ``These Western people didn't know what they were talking about,'' he wrote, describing the praise for Singapore as ``nauseating pleasantries.''
Xie declined to comment on his departure when contacted on his mobile phone on Oct. 2.
Xie, who said in September that the U.S. economy may fall into a recession in 2008, worked at the corporate finance division at Macquarie Bank in Singapore before joining Morgan Stanley in 1997. He spent five years as an economist with the World Bank, overseeing the bank's programs in Indonesia and other countries in the Asia-Pacific region, according to the New York-based firm's Web site.
Xie holds a doctorate in economics and a Master's degree in civil engineering from the Massachusetts Institute of Technology.
To contact the reporter on this story: Netty Ismail in Singapore.
Monday, October 02, 2006
For Singaporeans, Lee Kuan Yew's comment has really been an embarrassment. The elder statesman has done no favours to the country's international relations with his provocative statements about inter-racial relations in the neighbouring countries. And even though there are inequalities, LKY should know better than to make such sensitive remarks, especially when his government seems paranoid about racial harmony in his own backyard.
As for the Malaysians, LKY's comment has probably incited feelings about racial quotas and positive discrimination in favour of the native Malays, and should fuel discussion amongst the Chinese community. It also highlights to the Chinese the kind of environment they live in and how perhaps Singapore might be a nice place in Southeast Asia to be.
Even though LKY is apologised, both sides have lost out, Singapore because of the ill feelings the comment has engendered, and Malaysia because of the racial tensions the comment has stirred. Indeed, the comment was 'uncalled for,' and LKY should seriously think about his words before rattling off such comments mindlessly. In his twilight years, it would be better to finish the race on a positive note, rather than be remembered for such clumsy commentary.