Presentation Transcript
Globalisation of services: Globalisation of services Virgin Case Study
Multinationals: Multinationals An organisation that has operations in a large number of countries. Research and development take place in MEDCs, assembly in LEDCs and less well off areas within MEDCs.
Virgin isn’t a classic MNC:
It employs 20,000 globally but…..
Very little manufacturing
Successful diversification
c) Made up of numerous Virgin companies operating fairlt independently
Why go global?: Why go global? Lower production costs, esp labour
Can avoid tariffs and quotas
Opportunity to tap world market
Exchange rate advantages
Ability to avoid strict environmental regulations in certain countries.
Economic Power: Economic Power Ownership of assets eg Hotels, warehouses.
Control of assets. If assets not owned MNC can control marketing and transport of goods
Employment. Over 50million are employed by MNCs.
Government incentives. Duty free imports of raw materials, provision of infrastructure, cheap land rents
Survival strategies: Survival strategies Rationalisation
Reduce workforce – replace with machines
Reorganisation
Improve administration, marketing
Diversification
Development of new products (eg finance) to make them less vulnerable to economic collapse. These MNCs are called conglomerates
Timeline – key events: Timeline – key events
Major operations: Major operations Virgin Travel
20 aircraft operating worldwide focussing on service, value & innovation
Virgin Holidays
Mainly Florida – Virgin is Disney Hotels’ biggest customer
Virgin Retail
Over 50 megastores, in partnership with WHSmith
Virgin Rail
Main route from London to Glasgow
Virgin Net
Internet Service Provider, a joint venture with NTL
Virgin Direct Personal Finance
Joint with Royal Bank of Scotland – unique “One” account
Future….: Future…. Highly reliant on Branson
Usually entrepreneurs don’t pass ont their heritage successfully
But Branson argues that each company could stand alone led by strong management
Uncertain future of Virgin Atlantic after 9/11, and Railtrack* failures
*Railtrack owns the Tracks and is under constant criticism for poor track maintenance