Virgin Organizational Structure

  • Virgin’s organizational structure draws inspiration from the Japanese keiretsu model where each company in a group holds shares in every other company. This has numerous benefits for Virgin, including takeover resistance and better access to information or finance.
  • Virgin also structures its over 300 companies according to the products and services they offer. Virgin Hotels and Virgin Atlantic – which houses the company’s commercial aviation products – are two examples.
  • In some product-based divisions, there may also be geographic divisions. The Virgin Active health clubs, for instance, are segmented according to the six different countries where the service is offered.

Introduction

Virgin, formally known as Virgin Group Ltd., is a British multinational that was founded by the enigmatic billionaire entrepreneur Richard Branson in 1970. The company was named for Branson and colleague Nik Powell, who described themselves as virgins in business after opening a mail-order record shop.

Today, Virgin is a vast company with varied interests in air travel, space travel, hotels, financial services, music, fitness, and telecommunications. These diverse interests under the leadership of Branson have resulted in a somewhat unique organizational structure.

To learn a bit more about the internal framework of Virgin, please read on!

Keiretsu business structure

To date, Virgin Group Ltd. is comprised of more than 300 branded companies operating in 30 countries around the world. It’s important to note that each of these companies operates independently with their own assets, employees, products, and services.

Nevertheless, each company in the group has a financial interest in every other company, which means all 300 members work to further and advance Virgin Group’s interests. 

This arrangement is known as keiretsu, a Japanese business structure that became predominant in the aftermath of World War II. In essence, the term can be used to describe any set of companies with interlocking shareholdings or other business relationships. In many modern Japanese contexts, one is these companies is a bank or insurance company that provides financial services to each member of the group. 

For Virgin, the keiretsu approach has several benefits:

  • Takeover resistance – since every company has shares in the other, this shields an individual company from a hostile takeover. If a takeover seems likely, stronger companies raise their respective shareholdings in the weaker, target company.
  • Finance – member companies can provide finance to others, which reduces the need to borrow externally. As we noted earlier, one of these companies is usually a bank which, in Virgin’s case, is Virgin Money. This bank funds other company operations and can also serve as a guarantor if a group member does need to borrow elsewhere.
  • Information access – every member of the keiretsu has access to fast, updated, and readily available information. Consumer data from visitors to Virgin.com, for example, is shared with all Virgin Group companies to gain or maintain a competitive edge. While strategy and operating procedures are set out by a central headquarters, these companies nevertheless have the freedom and flexibility to make most decisions without consulting Branson beforehand.

Product-based divisions

Virgin Group structures its over 300 companies according to the products and services they offer. This may seem an obvious point to make, but it should be noted that product-based divisions are also a characteristic of the keiretsu approach.

Some of these companies include:

  • Virgin Records – music.
  • Virgin Atlantic – aviation services.
  • Virgin Orbit – a launch service for small satellites.
  • Virgin Hotels, and
  • Virgin Pulse – a digital health and engagement company.

Geographic divisions

Within each Virgin company, there may exist geographic divisions that help it account for the various characteristics of regional markets.

Consider the chain of Virgin Active health clubs, for example, which has the following geographic divisions:

  • Virgin Active Australia.
  • Virgin Active Italy.
  • Virgin Active Singapore.
  • Virgin Active South Africa.
  • Virgin Active Thailand, and
  • Virgin Active UK.

Organizational Structure Case Studies

Airbnb Organizational Structure

airbnb-organizational-structure
Airbnb follows a holacracy model, or a sort of flat organizational structure, where teams are organized for projects, to move quickly and iterate fast, thus keeping a lean and flexible approach. Airbnb also moved to a hybrid model where employees can work from anywhere and meet on a quarterly basis to plan ahead, and connect to each other.

eBay Organizational Structure

ebay-organizational-structure
eBay was until recently a multi-divisional (M-form) organization with semi-autonomous units grouped according to the services they provided. Today, eBay has a single division called Marketplace, which includes eBay and its international iterations.

IBM Organizational Structure

ibm-organizational-structure
IBM has an organizational structure characterized by product-based divisions, enabling its strategy to develop innovative and competitive products in multiple markets. IBM is also characterized by function-based segments that support product development and innovation for each product-based division, which include Global Markets, Integrated Supply Chain, Research, Development, and Intellectual Property.

Sony Organizational Structure

sony-organizational-structure
Sony has a matrix organizational structure primarily based on function-based groups and product/business divisions. The structure also incorporates geographical divisions. In 2021, Sony announced the overhauling of its organizational structure, changing its name from Sony Corporation to Sony Group Corporation to better identify itself as the headquarters of the Sony group of companies skewing the company toward product divisions.

Facebook Organizational Structure

facebook-organizational-structure
Facebook is characterized by a multi-faceted matrix organizational structure. The company utilizes a flat organizational structure in combination with corporate function-based teams and product-based or geographic divisions. The flat organization structure is organized around the leadership of Mark Zuckerberg, and the key executives around him. On the other hand, the function-based teams based on the main corporate functions (like HR, product management, investor relations, and so on).

Google Organizational Structure

google-organizational-structure
Google (Alphabet) has a cross-functional (team-based) organizational structure known as a matrix structure with some degree of flatness. Over the years, as the company scaled and it became a tech giant, its organizational structure is morphing more into a centralized organization.

Tesla Organizational Structure

tesla-organizational-structure
Tesla is characterized by a functional organizational structure with aspects of a hierarchical structure. Tesla does employ functional centers that cover all business activities, including finance, sales, marketing, technology, engineering, design, and the offices of the CEO and chairperson. Tesla’s headquarters in Austin, Texas, decide the strategic direction of the company, with international operations given little autonomy.

McDonald’s Organizational Structure

mcdonald-organizational-structure
McDonald’s has a divisional organizational structure where each division – based on geographical location – is assigned operational responsibilities and strategic objectives. The main geographical divisions are the US, internationally operated markets, and international developmental licensed markets. And on the other hand, the hierarchical leadership structure is organized around regional and functional divisions.

Walmart Organizational Structure

walmart-organizational-structure
Walmart has a hybrid hierarchical-functional organizational structure, otherwise referred to as a matrix structure that combines multiple approaches. On the one hand, Walmart follows a hierarchical structure, where the current CEO Doug McMillon is the only employee without a direct superior, and directives are sent from top-level management. On the other hand, the function-based structure of Walmart is used to categorize employees according to their particular skills and experience.

Microsoft Organizational Structure

microsoft-organizational-structure
Microsoft has a product-type divisional organizational structure based on functions and engineering groups. As the company scaled over time it also became more hierarchical, however still keeping its hybrid approach between functions, engineering groups, and management.

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