Food Chain and Food Web (Ecosystem) EVS, B. Pharmacy 1st Year, Sem-II
Ch11 life cycle and portfolio strategies
1. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
PART 3
STRATEGIES FOR THE
ENTREPRENEURIAL
ORGANIZATION
CHAPTER 11
Life Cycle and Portfolio
Strategies
2. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
0 Time
Sales value
Introduction
Low sales
Low growth
Low profits or
losses as costs
are high
Few
competitors
Growth
Increasing sales
Rapid growth
High profits as
costs come
down
Competitors
emerging &
competition
intensifying
Maturity
Static but high sales
Static but high profits
Focus on cost reduction
Fight for market share
Established competitors
Decline
Declining sales
Declining profits
or losses
Competitors
exiting
The Product Life Cycle
3. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Introduction Phase:
Elements of Marketing Strategy
• Basic product
• Price low for repeat purchase where trial is
important or price high where novelty or
uniqueness is valued, particularly if repeat
purchase is infrequent
• Promote aggressively
• Explain product benefits
• Build awareness, encourage early adoption
• Selective distribution
4. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
0 Time
Sales value
Introduction
Low sales
Low growth
Low profits or
losses as costs
are high
Few
competitors
Growth
Increasing sales
Rapid growth
High profits as
costs come
down
Competitors
emerging &
competition
intensifying
Maturity
Static but high sales
Static but high profits
Focus on cost reduction
Fight for market share
Established competitors
Decline
Declining sales
Declining profits
or losses
Competitors
exiting
The Product Life Cycle
5. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Introduction Phase:
Elements of Marketing Strategy
• Basic product
• Price low for repeat purchase where trial is
important or price high where novelty or
uniqueness is valued, particularly if repeat
purchase is infrequent
• Promote aggressively
• Explain product benefits
• Build awareness, encourage early adoption
• Selective distribution
6. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
The Product Life Cycle
0 Time
Sales value
Introduction
Low sales
Low growth
Low profits or
losses as costs
are high
Few
competitors
Growth
Increasing sales
Rapid growth
High profits as
costs come
down
Competitors
emerging &
competition
intensifying
Maturity
Static but high sales
Static but high profits
Focus on cost reduction
Fight for market share
Established competitors
Decline
Declining sales
Declining profits
or losses
Competitors
exiting
7. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Growth Phase:
Elements of Marketing Strategy
• Develop product extensions & service levels
• Price competitively to combat competition &
penetrate market
• Promote aggressively
• Build brand
• Intensive push on distribution
• Limited trade discounts
8. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
0 Time
Sales value
Introduction
Low sales
Low growth
Low profits or
losses as costs
are high
Few
competitors
Growth
Increasing sales
Rapid growth
High profits as
costs come
down
Competitors
emerging &
competition
intensifying
Maturity
Static but high sales
Static but high profits
Focus on cost reduction
Fight for market share
Established competitors
Decline
Declining sales
Declining profits
or losses
Competitors
exiting
The Product Life Cycle
9. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Maturity Phase:
Elements of Marketing Strategy
• Wide range of products but expansion slows
• Modify & differentiate product
• Develop next generation of product
• Price defensively – meeting or beating
competition – to ensure maximum return
• Emphasise brand
• Promote selectively, based on special offers
or promotions and trade discounts
• Intensive push on distribution
10. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
0 Time
Sales value
Introduction
Low sales
Low growth
Low profits or
losses as costs
are high
Few
competitors
Growth
Increasing sales
Rapid growth
High profits as
costs come
down
Competitors
emerging &
competition
intensifying
Maturity
Static but high sales
Static but high profits
Focus on cost reduction
Fight for market share
Established competitors
Decline
Declining sales
Declining profits
or losses
Competitors
exiting
The Product Life Cycle
11. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Life Cycle and Competitive Position
Hold niche
Grow with ind.
Harvest profit
Grow fast
Grow fast
Attain cost
leadership
Defend position
Attain cost
ledshp. Review
Defend posn.
Renew Grow
with industry
Find niche
Grow with
industry
Turn-around
Consolidate
Withdraw
Divest
Withdraw
Grow fast
Catch up
Differentiate
Differentiate
Focus Grow
with industry
Harvest
Catch-up
Hold niche
Focus
Grow with
industry
Differentiate
Focus
Grow fast
Differentiate
Grow fast
Reduce costs
Differentiate
Grow with ind.
Harvest profit
Find niche
Grow with ind.
Harvest profit
Turn around
Find niche
Consolidate
Divest
Consolidate
Cut costs
Start-up Growth Maturity Decline
Dominant
Strong
OK
Weak
Very weak
CompetitivePosition
12. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
The Boston MatrixMarket
Attractiveness
Low
Star Problem Child
DogCash Cow
High
Low
Market Strength
High
Decline
Maturity
Failure
Growth
Introduction
Product/
Servicelaunch
13. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
The Boston Matrix Strategy ImplicationsStar
CashDog
CashCow
INVEST FOR GROWTH
• Penetrate market
• Accept moderate short-term
profits
• Sell and promote aggressively
• Expand geographically
• Extend product range
• Differentiate product/ service
DEVELOP OPPORTUNITIES
• Be critical of prospects
• Invest heavily in selective
products/services
• Specialise in strengths
• Shore up weaknesses
GENERATE CASH
• Monitor carefully and judge
when to discontinue
• Live with low growth
• Improve productivity
• Reduce costs
• Look for ‘easy’ growth
segments
MANAGE FOR EARNINGS
• Maintain market position with
successful products/services
• Differentiate products/ services to
keep share of key segments
• Prune less successful products/
services
• Stabilise prices, except where a
temporarily aggressive stance is
required to deter competitors
ProblemChild
14. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
The Boston Matrix
Star Problem Child
Cash Cow Dog
Niche
Commodity
Commodity
15. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Product Life Cycle Management
Star Problem Child
Cash Cow Dog
Product extensionsProduct expansions
Product
modifications
16. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
The Boston Matrix - Cash Flow
Star
DogCash Cow
Revenue
Expenditure
Cash flow
Revenue
Expenditure
Cash flow
Revenue
Expenditure
Cash flow
Revenue
Expenditure
Cash flow
+ + +
- - -
_________
neutral
+
- - -
_________
- -
+ + + +
- -
_________
+ +
+
-
_________
neutral
Problem Child
17. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
ABC Analysis
Contribution
Low High
Class B
Class C
Class A
Sales
High
Low
Low value to the business
High value to
the business
18. Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns
Industry Life Cycles and Mergers &
Acquisitions
Increasing merger, acquisition and alliance activity
Phase 1
Low
concentration
Phase 2
30-45%
concentration
Phase 3
70%
concentration
Phase 4
90%
concentration
Size
Time
