PORTFOLIO ANALYSIS - By Prof. Purvish Shah BE ( Mech), PGDBM (Gold Medalist)
Product Life Cycle: It is a life span through which a product needs to move.
Low brand loyalty sales is target Building awareness Promotion Selective new channels More intensive Selective Distribution Low price reduction Based on demand High/Low Price Reduced differentiation important More product/More features Few products Product Decline Maturity Growth Introduction
Portfolio Matrix : Popularly known as BCG matrix
Developed based on product life cycle theory
by Boston Consulting Group.
What are the priorities for a company in given product portfolios
Helpful in long term value creations for a company
Low Low High High Market Growth Rate Relative Market Share Cash Usage Cash Generation Dogs Cash Cow ? ? ? STAR
Low market share
Low Growth rate
Cash trap for companies
Consumes major cash
Either become Dog or Star ( high risk)
High cash consumption
If taken care becomes Cash cow
Generate more cash than consume
Help other business grow
BCG matrix for ITC ltd.
ITC is formally known as Indian Tobacco company.
Company is in to diverse business portfolio like Hotels, Greetings, Cigarettes, Agarbatti, Specialty papers, Agricultural business, Cloths, Sports wear, FMCG products and Infotech business .
Low Low High High Market Growth Rate Relative Market Share Cash Usage Cash Generation Dogs Infotech Cash Cow Cigarettes, FMCG ? ? ? Agarbatti, Cloths STAR Hotels, papers, Agri business
BCG matrix for MARUTI SUZUKI Models available: Swift, Zen estillo, Swift Desire, sx4, grand vitara, A STAR, ALTO, 800, Wagon R, Versa, Baleno, Omni
Low Low High High Market Growth Rate Relative Market Share Cash Usage Cash Generation Dogs BALENO, VERSA, OMNI Cash Cow 800, ALTO, WAGON R ? ? ? SX4, GRAND VITARA, A STAR STAR SWIFT, ZEN ESTILO, DESIRE
Only two factors taken in to consideration.
Data accuracy becomes very important
Business of low over all market share may also be profitable ( specialty/niche segments)
It ignores effect of synergy between different business.