2.2 Implications of BCG Matrix Analysis on strategy development
Portfolio analysis has three uses.
First, a business can assess the balance of its portfolio…
Second, the portfolio provides a framework for strategic market planning…
Third, each SBU should have a clear objective appropriate to its portfolio position…

2.3 Limitations of BCG Matrix Analysis
The major weaknesses are as follows:
Market growth is an inadequate description of overall industry attractiveness.
Market share is an inadequate proxy for relative competitive strength.
The analysis is highly sensitive to how the market is defined. Definitions of the market can be fairly arbitrary and different definitions will radically change an SBU’s matrix position.
The model assumes that business units are independent.


2.4 The parenting matrix-the Ashridge portfolio display
In deciding on the appropriateness of the role of the parent and the mix of SBUs best suited to the parent, the parenting matrix can be useful. The Ashridge Portfolio Display is a way of displaying this degree of “fit” of a portfolio of business. Two dimensions of fits are assessed:
Fit between the critical success factors of the SBUs and the skills, resources and characteristics of the parenting organization.
FIT between the parenting opportunities of SBUs and the skills, resources and characteristics of the parenting organization.

Heartland businesses are ones that the parent can add value to without danger of doing harm.
Since Virgin Atlantic founding, the airline has relied on service, value-for-money, and innovation, dished up with panache and flair, to differentiate itself in the market. Virgin Atlantic announced further expansion plans on the back of continuing growth and increased profitability. It is now the company closets to Branson’s heart. In addition, with the development of IT, the e-commerce has a promising future. Vigin should continue its expansion in e-commerce with a wide range of connections from Megastores online to train booking facilities. Likewise, the development of Virgin Direct Ltd that is a financial can create synergies with other company business largely. Thus, they should be at the core of future strategy.

Ballast SBUs are ones the parent understands well but can do little for. They would probably be just as successful as independent companies. If they are part of a future strategy, they need to be managed with a light touch.
The retail sector is a mature industry where the environment does not change radically. Company has an abundant management experience in retail industry. Therefore Virgin needs not to put their eye to Virgin Retail in the future.

Value trap SBUs are dangerous. They appear attractive because there are opportunities for the parent to add value. But they are deceptively result in more harm than good. There is a risk in Virgin Rail. If the passenger numbers does not rise, Branson’s project to undertake major investment in modern trains and convert the staff to a customer-service culture would not pay off, This business will get into hot water and will has a considerable damage to the brand. Virgin should take into account if Virgin Rail should be included in the future strategy. If they can be moved into the heartland, Some adjustments to the skills, resources or characteristics of the parent will probably be necessary.

Alien SBUs are clear misfits. They offer little opportunities to add value and they rub awkwardly with the normal behaviour of the parent. Exit is the best straty. Some business such as Virgin Vouchers and Virgin Helicopter, London Broncos, which has a very little share in the total income of the company, and the industry perspective, is unattractive. Virgin’s management should divest them.

3. Diversification
3.1 Three schools of strategic management thoughts
Strategic planning: A formal planning system for the development and implementation of the strategies related to the mission and objectives of the organization. It is no substitute for strategic thinking. Strategic planning will plot the prescriptive route forward.
Positioning school: focuses on one particular core business and position in the market. According to the positioning school in strategic management led by Porter, which argues that the best strategy or the best way to achieve sustainable company development is to focus on one strategy which is the core business. If an organization does more than that, it will be confused and stuck in the middle.
Learning school: resource-based theories stress the resources of the organization and core competences in strategy development. The theory stressed that an organization should not focus on the market and look outside. Focus on one-core businesses is not a good strategy. Core business keeps changing quickly and is moving. If an organization has core competencies that can support any other business, it should diversify. The only way to survive is to develop core competencies inside the organization that can survive in different situation. And therefore, an organization should diversify.

3.2 Diversification defined
Diversification is based on the resource-based view strategy. Diversification is a product-market strategy. Diversification involves directions of development, which take the organization away from its present markets and its present products at the same time. Diversification is usually considered under two broad headings: related diversification and unrelated diversification.