Speed Demons

Speed Demons

Contribution

If a Virgin Group Ltd. intends to develop a new product or service, there are two main alternatives: (a) going it alone or (b) entering an alliance. (Rindfleisch and Moorman, 2001) For all of the different components of a large, complex system such as an aircraft or auto, Virgin Group Ltd. may utilize both of these alternatives, as well as nondevelopmental alternatives including open market purchases, licensing, and acquisition of another firm that has already developed a component. One way to analyze the two basic alternatives is to examine their costs and benefits of developing the exact same offering. This type of analysis assumes that a company is attractive enough to have willing partners and that there is at least one attractive partner among them. An attractive firm typically has resources that other companies want, such as innovative technologies or operations and marketing capabilities.

Virgin Group Ltd. founder Sir Richard Branson decided to introduce new product for domestic markets. And he kept two issues to keep in mind. First, while the cost-benefit analysis presented here concentrates on just the alliance alternative, going it alone may involve some of the same kinds of costs and benefits, which also must be considered in making a choice. Second, when a Virgin Group Ltd. already has an existing set of alliances, any decision on whether or not to enter a new development alliance is not completely independent of these past choices (Gulati, 1998). The sub sections “Leveraging Alliance Experience” and “Networks of Alliances” explain some of these connections.

Critique

The author in this article could not justify the reasons behind new product development. If Virgin Group Ltd. works alone, it will have the new offering's entire future revenue stream, but the tangible cost stream might reflect a need to acquire development resources. In an alliance, ...