Portfolio Analysis Strategic Management

1. PORTFOLIO ANALYSIS
HIMANI SABHARWAL
AISHWARYA YADAV

2. Question
Marks
BCG GROWTH-SHARE MATRIX
Stars
Cash
Cows
Dogs
Market Share
MarketGrowth
High
Low High

3. MARKET SHARE AND MARKET GROWTH
• Market Share: Percentage of
revenue or sales volume of the
organization to that of the market.
• How well the product generates
cash?
• Market Growth : Percentage growth
compared to the next year
• How much cash is needed in the
future?
Inter-
Relationship
between the
two.
Market
Share
Market
Growth

4. Question
Marks
OF STARS, QUESTION MARKS, COWS AND DOGS
Stars
Cash
Cows
Dogs
Market Share
MarketGrowth
High
Low High
Stars
High
Market
Share
Fast
Growth
Rate
Dogs
Low Market
Share
Low
Growth
Rate
Question
Marks
Low Market
Share
Fast
Growth
Rate
Cash Cows
High
Market
Share
Low
Growth
Rate

5. PRODUCT LIFE CYCLE IN THE BOSTON BOX
Question
Marks
Stars
Cash Cows
Dogs
Cash Cows Dogs
Dogs
Stars
Cash Cows Dogs
Dogs

6. SHOULD DOGS CONTINUE?
Niche product within range
Synergy with other Products
Social Issues
Positive impact on image
Yes, four way reasons for the same, if applicable!

7. A balanced product portfolio ensures:
CASH COWS providing
investment funds for
STARS that ensure future success
QUESTION MARKS that use these
funds to develop into stars
Hold Build
Harvest Divest
Hence, determine the most appropriate
strategy!

8. GE NINE CELL MATRIX
• Perform business portfolio analysis
• Identifies the optimum business
portfolio as one that fits perfectly
to the company’s strengths and
helps to explore the most attractive
industry sectors or markets
• Position each SBU’s strength and
the attractiveness of the industry
sector or market on which it is
focused

9. HOW TO DO IT?
• Different factors can be used to define Industry Attractiveness. Ex:
Market Size, market growth, demand variability, global operations,
entry and exit barriers, etc.
• Different factors can be used to determine SBU strength too. Ex:
Market share, distribution channel access, production capacity,
knowledge of customer and market, etc.
• The factors and their relative ratings are selected. The rating values
for each factor are entered for each SBU and industry.

10. IMPLICATIONS
• GROW: Business Units that fall under grow attract high investment.
Firms may go for product differentiation or cost leadership. Huge
cash is generated in this phase. Market leaders exist in this phase.
• HOLD: Business units that fall in this category attract moderate
investment. Market segmentation, market penetration and
imitation strategies are adopted. Followers exist in this phase.
• HARVEST: Business units in this category are unattractive. Low
priority is given in these business units. Strategies like mergers,
divestment and diversification are adopted.

11. STRENGTHS
• Allows intermediate ratings between high low and between strong
and weak.
• It helps in channeling the corporate resources to business and
achieving competitive advantage and superior performance.
• Helps in better decision making and better understanding of
business scope.

12. CRITICISMS
• Assessment in terms of two factors unfair
• It tends to obscure businesses that are going to become winners
because their industries are at exit stage

13. STRONG AVERAGE WEAK
HIGH iPad
iPhone
MEDIUM iTunes
iPad
Laptop
LOW iMac,
Peripherals,
Software
Industry
attractiveness Business Unit Strength
THE CASEOF APPLE

14. PRODUCT-MARKET
EVOLUTION MATRIX

15. BUSINESS PORTFOLIO ANALYSIS
• The analysis methods of the business portfolio analysis are used in
order to identify and examine the various strategic alternatives that
must be approached at corporate level.

16. POTENTIAL BENEFITS
• Selective earmarking of financial resources by means of
identification of strategic issues and by means of adoption of a
standardized and objective negotiation process.
• It helps to reduce risks, increases concentration and involvement.

17. COMPETITIVE POSITION
Strong Average Weak
Develop
A
Growth
B
C
Super Growth D
Maturity F
E
Decline G

18. INTERPRETATION
• Strategic business unit A Seems to be a potential star. It holds a
large market share, it is in the stage of life cycle development and
has a strong competitive position on the market. As such, unit ‘A’
represents a potential candidate in the competition for corporate
resource competition.
• Investments in B must take into account that although it has a
strong market position, it’s market share is quite small. Strategy
that may contribute to the increase in market share must be
developed.

19. INTERPRETATION
• Unit C has a small market share and it holds a competitively weak
position and it entered a small market whose development is
underway.
• Unit D is characterized by a strong competitive position on the
market and it holds a large market share. In this case, it is
recommended that investments be made with a view to
maintaining the current position on the market.

20. INTERPRETATION
• Unit E together with unit F is included in Cash Cow category. And
they should be capitalised on because of great cash flows that they
generate.
• Unit G is included in the dogs category and the management is
advised with a view to generate short term cash flows as much as
possible. In the long term, however, liquidation on the market
should be selected.

21. ADVANTAGES
• It provides an image regarding the manner of distribution of the
businesses undertaken by the company during specific stages of life
cycle.
• The company may predict how the present portfolio will develop in
the future.
• It manages to divert the campany’s attaention to corporate and
focus on potential strategies specific to the strategic business unit.

22. DISADVANTAGES
• Weight assignment to different Key Success Factors difficult
• Managers tend to underestimate their weaknesses and
overestimate their strengths.