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PRESENTATION ON:
PORTFOLIO PLANNING
TOOLS
PRESENTED BY-
Nishi Agrawal
Shreya Saxena
Sagar Syal
Shivli Gupta
Rupali
Ritika ...
What is portfolio
planning?
Portfolio planning is a structured and intelligent
way of spreading your risk through differen...
Portfolio planning tools
Meaning:
PPT is a stochastic modeling tool that has
been designed to help the advisors choose
sui...
BOSTON CONSULTING GROUP
(BCG) MATRIX
 BOSTON CONSULTING GROUP (BCG) MATRIX
is developed by BRUCE HENDERSON of the
BOSTON ...
Relative Market Share and
Market Growth
To understand the Boston Matrix
you need to understand how
market share and market...
MARKET SHARE
• Market share is the percentage of the total
market that is being serviced by your
company, measured either ...
MARKET GROWTH
RATE
 Market growth is used as a measure of a
market’s attractiveness.
 MGR = Individual sales - individua...
THE BCG GROWTH-SHARE
MATRIX
 It is a portfolio planning model which is
based on the observation that a company’s
business...
STARS
(High growth, High market share)
 Stars are leaders in business.
 They also require heavy
investment, to maintain ...
CASH COWS
(Low growth , High market share)
 They are foundation of the company
and often the stars of yesterday.
 They g...
Dogs
(Low growth, Low market share)
 Dogs are the cash traps.
 Dogs do not have potential to bring in
much cash.
 Numbe...
QUESTION MARKS
(High growth , Low market
share)
 Most businesses start of as question
marks.
 They will absorb great amo...
WHY BCG MATRIX ?
To assess :
 Profiles of products/businesses
 The cash demands of products
 The development cycles of
...
BENEFITS
 BCG MATRIX is simple and easy to
understand.
 It helps you to quickly and simply screen
the opportunities open...
LIMITATIONS
 BCG MATRIX uses only two
dimensions, Relative market share
and market growth rate.
 Problems of getting dat...
STRATEGIC PLANNING
 Today, the most important concern of
most of the organizations is for
guaranteed in complex environme...
SPACE Analysis – Strategic Position
and Action Evaluation Matrix
 It is a super technique for evaluating the sense
and wi...
SPACE ANALYSIS
 SPACE Analysis is a systematic appraisal of four
key issues that balance the external and internal
factor...
SPACE Analysis Factors For
Competitive Advantage
1. Market Share
2. Quality
3. Customer Loyalty
4. Cost Levels
5. Product ...
SPACE Analysis Factors For
Industry Attractiveness
1. Growth Potential
2. Life Cycle Stage
3. Entry Barriers
4. Customer P...
SPACE Analysis Factors For
Environmental Stability
1. Political Uncertainty
2. Interest Rates
3. Technology
4. Cyclical
5....
Interpreting the SPACE
Analysis Matrix Diagram
The Strategic Position and Action Evaluation Matrix is a
useful guide which...
THANK YOU !
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  1. 1. PRESENTATION ON: PORTFOLIO PLANNING TOOLS PRESENTED BY- Nishi Agrawal Shreya Saxena Sagar Syal Shivli Gupta Rupali Ritika chabra
  2. 2. What is portfolio planning? Portfolio planning is a structured and intelligent way of spreading your risk through different investment options and to enjoy the diversification benefits marked with a higher rate of interests. There is no fixed rule on how to plan your portfolio but there are several platforms available on which you can explore the art of perfect portfolio building. It is equally important to check the portfolio performance in every quarter.. To be successful in the portfolio planning, you need to be aware of historical precedents, the average return on savings, the rate of return on
  3. 3. Portfolio planning tools Meaning: PPT is a stochastic modeling tool that has been designed to help the advisors choose suitable strategic asset allocations for their clients by allowing them to compare the relative risk and return characteristics of different strategic asset allocations.
  4. 4. BOSTON CONSULTING GROUP (BCG) MATRIX  BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s.  BCG is one of the most FAMOUS AND SIMPLE portfolio planning matrix ,used by large companies having multi-products.  According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.
  5. 5. Relative Market Share and Market Growth To understand the Boston Matrix you need to understand how market share and market growth interrelate.
  6. 6. MARKET SHARE • Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. • RELATIVE MARKET SHARE • RMS = Business unit sales this year Leading rival sales this year • The higher your market share, the higher proportion of the market you control.
  7. 7. MARKET GROWTH RATE  Market growth is used as a measure of a market’s attractiveness.  MGR = Individual sales - individual sales this year last year Individual sales last year  Markets experiencing high growth are ones where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money.
  8. 8. THE BCG GROWTH-SHARE MATRIX  It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:  Stars  Question marks  Cash cows  Dogs  It is based on the combination of market growth and market share relative to the next best competitor.
  9. 9. STARS (High growth, High market share)  Stars are leaders in business.  They also require heavy investment, to maintain its large market share.  It leads to large amount of cash consumption and cash generation.  Attempts should be made to hold the market share otherwise the star will become a CASH COW.
  10. 10. CASH COWS (Low growth , High market share)  They are foundation of the company and often the stars of yesterday.  They generate more cash than required.  They extract the profits by investing as little cash as possible  They are located in an industry that is mature, not growing or declining.
  11. 11. Dogs (Low growth, Low market share)  Dogs are the cash traps.  Dogs do not have potential to bring in much cash.  Number of dogs in the company should be minimized.  Business is situated at a declining stage.
  12. 12. QUESTION MARKS (High growth , Low market share)  Most businesses start of as question marks.  They will absorb great amounts of cash if the market share remains unchanged, (low).  Why question marks?  Question marks have potential to become star and eventually cash cow but can also become a dog.  Investments should be high for question marks.
  13. 13. WHY BCG MATRIX ? To assess :  Profiles of products/businesses  The cash demands of products  The development cycles of products  Resource allocation and divestment decisions
  14. 14. BENEFITS  BCG MATRIX is simple and easy to understand.  It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them.  It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability.
  15. 15. LIMITATIONS  BCG MATRIX uses only two dimensions, Relative market share and market growth rate.  Problems of getting data on market share and market growth.  High market share does not mean profits all the time.  Business with low market share can be profitable too.
  16. 16. STRATEGIC PLANNING  Today, the most important concern of most of the organizations is for guaranteed in complex environmental changes. Strategic planning provides some tools for the organizations to follow the formulation of the strategy in various aspects of the organization and manage their strategic performance
  17. 17. SPACE Analysis – Strategic Position and Action Evaluation Matrix  It is a super technique for evaluating the sense and wisdom in a particular strategic plan. It was developed by strategy academics Alan Rowe, Richard Mason, Karl Dickel , Richard Mann and Robert Mockler. The Strategic Position Evaluation (SPACE) analysis framework is a very useful but not well known tool to develop and review a company’s strategy. It can be used at :  the beginning of the exercise to predict the overall key themes  As a check at the end of the process.  It can also be used to evaluate individual strategic options generated by using a tool like the Growth Matrix
  18. 18. SPACE ANALYSIS  SPACE Analysis is a systematic appraisal of four key issues that balance the external and internal factors that should determine the general theme of the strategy: External :  Industry Attractiveness  Environmental Stability Internal :  Competitive Advantage  Financial Strength By combining ratings on each dimension on one SPACE matrix diagram, the framework guides the strategic agenda.
  19. 19. SPACE Analysis Factors For Competitive Advantage 1. Market Share 2. Quality 3. Customer Loyalty 4. Cost Levels 5. Product Range Advantage In The SPACE Matrix:  · Market share (small to large)  · Product quality (inferior to superior)  · Product life cycle (late to early)  · Product replacement cycle (variable to fixed)  · Customer loyalty (low to high)  · Competition’s capacity utilisation (low to high)  · Technological know-how (low to high)  · Vertical integration (low to high)  · Speed of new product introductions (slow to fast)
  20. 20. SPACE Analysis Factors For Industry Attractiveness 1. Growth Potential 2. Life Cycle Stage 3. Entry Barriers 4. Customer Power 5. Substitutes Industry attractiveness is scored 6 great and 1 poor in the SPACE analysis matrix :  Growth potential (low to high)  Profit potential (low to high)  Financial stability (low to high)  Technological know-how (simple to comple  ·Resource utilisation (inefficient to efficient)  Capital intensity (low to high)  ·Ease of entry into the market (easy to difficult)  ·Productivity; capacity utilisation (low to high)  bargaining power (low to high)
  21. 21. SPACE Analysis Factors For Environmental Stability 1. Political Uncertainty 2. Interest Rates 3. Technology 4. Cyclical 5. Environmental Issues Stability In The SPACE Matrix: · Technological changes (High to Low) · Rate of inflation(High to Low) · Demand variability (much to little) · Barriers to entry into market (much to little) · Competitive pressure/rivalry · Price range of competing products (narrow to wide)
  22. 22. Interpreting the SPACE Analysis Matrix Diagram The Strategic Position and Action Evaluation Matrix is a useful guide which helps you to decide which strategy is most appropriate in which situation. The SPACE Matrix assesses the business across four dimensions · Industry Attractiveness · Environmental Stability · Competitive Advantage · Financial Strength To come to a recommended strategic thrust which can be: · Aggressive Strategy · Competitive Strategy · Conservative Strategy · Defensive Strategy
  23. 23. THANK YOU !
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