Virgin Management Methods

Richard Branson and the Virgin Group

Richard Branson's first successful business venture, at the age of 16, was in publishing a magazine called Student.   He followed this by setting up a mail-order record business in 1970.   Undercutting high street record stores, it sold direct to the consumer and took advantage of the UK government’s abolition of Resale Price Maintenance (RPM).   RPM had previously applied to most consumer products and left the pricing of retail products in the hands of manufacturers rather than retailers.   This had tended to keep prices high and to restrict competition.   When his direct mail business was threatened by a postal strike, Branson responded by opening a retail record store in Oxford Street, London. The success of this led Branson to extend into a chain of stores, Virgin Retail.

At a later stage, the retailing operation was repackaged, in a joint venture, to become Virgin Megastores (recently sold)[1].   Virgin Megastores were, for a number of years, notable features of many major cities in the UK and throughout the world.   Selling a range of home entertainment products, naturally including music, along with videos, compact discs and books, they offered a showcase for the Virgin brand.

Branson’s ‘Virgin’ record label was launched in 1973.   The phenomenal success of Tubular Bells by Mike Oldfield, one of Virgin’s first sign-ups, paved the way for the expansion of the label and provided funds for Branson to branch out into other fields.   Some twenty or so years later, in the context of slowing growth in the record market and financial pressures at Virgin Airways, the Virgin record business was sold to EMI.

Branson’s move into the airline industry in the 1980s with Virgin Atlantic came about as a result of an approach to Branson from an entrepreneur seeking additional finance for a cut-price airline that he had set up.   The concept of a cut price ‘no frills’ airline had been pioneered in the UK by Freddie (later Sir Freddie)...