PORTFOLIO RESTRUCTURING/BUSINESS PORTFOLIO ANALYSIS: Large diversified organizations basically use combination strategy. For example: an organization may simultaneously seek growth through the acquisition of new businesses, employ a stability strategy for some of it existing businesses and divest of any other business which runs in loss. It is very complicated to identify a consistent strategy for large diversified organizations, because a number of different business-level strategies need to be coordinated to achieve overall organizational objectives. Business portfolio models are tools for analyzing: the relative position of each of an organization’s businesses in its industry & the relationships among all the businesses of the organization. The well-known approaches to develop business portfolio include: BCG Matrix, GE 9 Cell, 7s Framework & Balance Score Card. BCG Matrix is also known as BCG Growth-Share Matrix. It states that the organization should have a balanced portfolio of businesses such that some generate more cash than they use and can support other businesses that need cash to develop & become profitable. The role of each business is determined on the basis of two factors: the growth rate & market share The vertical axis indicates the market growth rate which is the annual growth percentage of the market (current or forecasted) in which the business operates. The horizontal axis indicates the market share dominance or relative market share. It is computed by dividing the firm’s market share (in units) by the market share of the largest competitor. The matrix is the combination of rows & columns. The growth-share matrix has four cells. A star is the market leader in a high growth market (HMS & HMG). They are question mark business that become successful. The organization has to spend a great deal of money keeping up with the market’s growth rate & fighting off competitor’s attack. Stars are often cash using category rather than cash generating. They are profitable units and provide high ROI as compared to others. Hold strategy is maintained for this success and benefit from market growth by means of a Star. Question mark is also known as problem child as it operates in high growth market, but low relative market share (LMS & HGR). The term question mark or problem child is well chosen, because the organization has to think hard about whether to keep investing funds to become a star or it comes down to dog category. Most business start off as question marks, in that they enter in a high growth market in which there is already a leader. A question mark generally requires the infusion of a lot of funds to keep adding plant, equipment, personnel to keep up with fast growing market & it wants to overtake the leader. Build strategy is appropriate for question mark as it increases share inorder to become a star by creating a new brand and a new target audience. Question mark is also known as problem child as it operates in high growth.

1. BUSINESS PORTFOLIO ANALYSIS
BY: Dr. Debajani Palai
BCG Matrix
GE 9 Cell Model
Mc Kinsey’s 7s Framework
Balance Score Card

2. PORTFOLIO RESTRUCTURING/BUSINESS
PORTFOLIO ANALYSIS
• Large diversified organizations basically use combination strategy. For
example: an organization may simultaneously seek growth through the
acquisition of new businesses, employ a stability strategy for some of it
existing businesses and divest of any other business which runs in loss.
• It is very complicated to identify a consistent strategy for large diversified
organizations, because a number of different business-level strategies need
to be coordinated to achieve overall organizational objectives.
• Business portfolio models are tools for analyzing: the relative position of
each of an organization’s businesses in its industry & the relationships
among all the businesses of the organization.
• The well-known approaches to develop business portfolio include: BCG
Matrix, GE 9 Cell, 7s Framework & Balance Score Card.

3. Boston Consulting Group (BCG) MATRIX
• BCG Matrix is also known as BCG Growth-Share Matrix.
• It states that the organization should have a balanced portfolio of
businesses such that some generate more cash than they use and can
support other businesses that need cash to develop & become
profitable.
• The role of each business is determined on the basis of two factors:
the growth rate & market share

4. FIGURE OF BCG MATTRIX

5. CONT…
• The vertical axis indicates the market growth rate which is the annual
growth percentage of the market (current or forecasted) in which the
business operates.
• The horizontal axis indicates the market share dominance or relative
market share. It is computed by dividing the firm’s market share (in
units) by the market share of the largest competitor.
• The matrix is the combination of rows & columns. The growth-share
matrix has four cells, which reflect the four

6. STARS & HOLD STRATEGY
• A star is the market leader in a high growth market (HMS & HMG).
They are question mark business that become successful.
• The organization has to spend a great deal of money keeping up with
the market’s growth rate & fighting off competitor’s attack.
• Stars are often cash using category rather than cash generating. They
are profitable units and provide high ROI as compared to others.
• Hold strategy is maintained for this success and benefit from market
growth by means of a Star.

7. QUESTION MARK & BUILD STRATEGY
• Question mark is also known as problem child as it operates in high growth
market, but low relative market share (LMS & HGR).
• The term question mark or problem child is well chosen, because the
organization has to think hard about whether to keep investing funds to
become a star or it comes down to dog category.
• Most business start off as question marks, in that they enter in a high
growth market in which there is already a leader.
• A question mark generally requires the infusion of a lot of funds to keep
adding plant, equipment, personnel to keep up with fast growing market &
it wants to overtake the leader.
• Build strategy is appropriate for question mark as it increases share inorder
to become a star by creating a new brand and a new target audience.

8. CASH COWS & HARVEST STRATEGY
• Cash cows have high market share with low market growth (HMS & LMG).
• A cash cow is so called because it produces a lot of cash for the
organization. As the organization does not have to finance a great deal of
expansion due to the low growth rate it is profitable for the business.
• The business enjoys economies of scale with high profit margin and is
regarded as the market leader to support other struggling businesses.
• Harvest strategy involves milking as much short-term cash from a business
as possible, even allowing market share to decline if necessary.
• Weak cash cows that do not appear to have a promising future are
candidates for harvesting, as are question marks and dogs.

9. DOGS & DIVESTURE STRATEGY
• Dogs consist of low rate of market share and growth (LMS & LMG). It
involves low profit or generates a little cash.
• Such business frequently consume more management time than they are
worth & need to be phased out.
• However, an organization may have good reasons to hold onto a dog, such
as an expected turnaround in the market growth rate or a new chance at
market leadership.
• Divesture strategy is useful for dogs as it involves selling or liquidating a
business because the resources devoted to it can be invested more
profitable in other business.
• This strategy is appropriate for those dogs that are not worth investing in
to improve their positions

10. M.C KINSEY’S GE 9 CELL MATRIX MODEL

11. GE MATRIX: X AXIS: Business Position (BP) & Y
AXIS: Market Attractiveness (MA)
MARKET
ATTRACTIVENESS
HIGH MEDIUM LOW
HIGH Invest (HBP & HMA) Invest (MBP & HMA) Protect (LBP & HMA)
MEDIUM Invest (HBP & MMA) Protect (MBP &MMA) Harvest (LBP & MMA)
LOW Protect (HBP & LMA) Harvest (MBP & LMA) Divest (LBP & LMA)
BUSINESS POSITION…… ……………………………………. …………………………………… …………………………………..

12. CONT…
• Invest or Grow strategy is implemented in High Business Position & High
Market Attractiveness (HBP & HMA), High Business Position & Medium
Market Attractiveness (HBP & MMA) & Medium Business Position & High
Market Attractiveness (MBP & HMA).
• Protect strategy is implemented in High Business Position (HBP) & Low
Market Attractiveness (LMA), Medium Business Position (MBP) & Medium
Market Attractiveness (MMA) & Low Business Position (LBP) & High Market
Attractiveness (HMA).
• Harvest strategy is implemented in Medium Business Position (MBP) & Low
Market Attractiveness (LMA) & Low Business Position (LBP) & Medium
Market Attractiveness (MMA)
• Divesture strategy is implemented in case of Low Business Position (LBP) &
Low Market Attractiveness (LMA)

13. EVALUATING BUSINESS POSITION & MARKET
ATTRACTIVENESS
• Evaluating the ability to compete on the basis of business position
focuses on: size, growth, customer loyalty, channels of distribution,
technological knowhow, patent, marketing style, flexibility of the
organization.
• Evaluating market attractiveness focuses on: competitors, price level,
profitability, Government rules, sensitivity to economic trends.

14. 7S FRAMEWORK

15. CONT…
• The 7-S framework describes how the strategist can holistically &
effectively organize a company with 7-S factors: shared values,
strategy, structure, system, style, staff & skills.
• Shared Values: The interconnecting center of 7-S model is shared
values which states the central beliefs & attitude on which the
organization stands.
• Strategy: It refers to the plans for the allocation of Firm’s scarce
resources over a time period to reach in a identified goal.
• Structure: It is the way the organization’s units relate to each other:
centralized, decentralized, matrix, hybrid, network etc.

16. CONT…
• System: It states about procedures, processes, routines that
characterize how important work is to be done with the help of
financial system, human resources, information system etc.
• Staff: It consists of numbers & types of personnel within the
organization.
• Style: Cultural style of organization & how key managers behave in
achieving the goals of the organization.
• Skill: It refers to core competencies. Distinctive capabilities of
personnel or of the organization as a whole.

17. BALANCE SCORE CARD
• The Balance score card is developed by Dr. Robert Kaplan & David Norton.
• It is a strategic planning & management system that is used extensively in
business & industries along with the Government & NGOs..
• It aligns business activities to the vision & strategy of the organization,
improves internal & external communication & monitors the performance
of the overall organization.
• Early the balance score card is used as a simple performance
measurement, but the modern balance score card transforms an
organization’s strategic plan into action plan by focusing on what should be
the plan & how it will be carried out with appropriate approaches.

18. BALANCED SCORE CARD

19. PERSPECTIVES OF BALANCED SCORE CARD
• Only the financial scores are not adequate to achieve the goals of the
organization. It demands coordination of suppliers, customers,
investors, employees, technology, innovation & over all processes.
• The Balace score card suggests four basic perspectives: learning &
growth perspective, internal business perspective, customer
perspective & financial perspective.

20. LEARNING & GROWTH PERSPECTIVE
• Learning & growth perspective includes employee training & corporate
cultural attitudes related to both individual & corporate self-improvement.
• In a knowledge-worker organization, people & repository knowledge are
the main resources.
• In the current climate of rapid technological change, it is necessary for
knowedge workers to be in a continuous learning mode.
• Metric can put into place too guide managers in focusing training funds
where they can help the most.
• According to Kaplan & Norton learning is more than training which
enhances performance of employees.

21. INTERNAL BUSINESS PROCESS PERSPECTIVE
• The internal business process perspective refers to the overall
business activities.
• Metrics based on this perspective allow the managers to know how
well their business is running & whether its products & services
conform to customer requirement.
• These metrics have to be carefully designed by those who know these
processes most intimately with the unique mission.

22. CUSTOMER PERSPECTIVE
• The customer perspective focuses on identifying the of customers &
satisfy that.
• The recent managers are customer oriented as they feel the tough
competition of substitutes.
• Poor performance in this perspective leads to decline in future.
• In developing customer perspective it is important to analyze kinds of
customer for grouping them & providing them required products &
services.

23. FINANCIAL PERSPECTIVE
• The financial data plays very vital role in risk management & cost-
benefit analysis.
• It should be accurate and provided timely and it should be stored in
corporate database.
• It is hoped that the information on fiancé should be unbiased.