The document discusses the importance of product portfolio management in corporate strategy, emphasizing the need to align products with market demands to enhance business performance. It introduces the BCG matrix as a tool for classifying products based on market share and growth rate, guiding investment decisions for optimal resource allocation. Additionally, it compares the BCG matrix with the GE matrix, highlighting their advantages and disadvantages in evaluating product portfolios.

1. PORTFOLIO
STRATEGY Gunpreet Kaur
Gaganbir Singh, Jagdeep Singh

2. Management’s decision about products and its product portfolio
strategy to be offered are among the most important of those
affecting the future of a company. You will want a great product
portfolio management system, especially when you add more and
more products.
• Products are critical to business strategy, but they cannot
guarantee business success. Management must match
products with market needs and then develop corporate and
marketing strategies to meet the needs that are targeted.
• Competitive pressures and the changing needs and wants of
buyers help to explain why companies focus on planning their
product portfolio strategy. Another reason for developing good
product management procedures is to reduce the failure rate
of new products.
PRODUCT PORTFOLIO STRATEGIES:

3. • Companies with multiple product lines or
business units must ask themselves how these
various products and SBU’s should be managed
to boost overall corporate performance:
How much of time and money should we spend
on our best products and business units to ensure
that they continue to be successful?
How much of time and money should we spend
developing new costly products, most of which
will never be successful ?

4. HOW DO WE
CLASSIFY
THE
PRODUCTS
IN A
PRODUCTS
PORTFOLIO?
Product Portfolio is done on the basis of
the BCG matrix. The BCG matrix classifies
products on the basis of the market share
of the product as well as the growth rate
which a product may have. On the basis
of this classification, a product manager
can decide what level of investments a
particular product might need and what
would be the returns from such a
product. As the other goal of products
portfolio management is cash flow
management, the BCG matrix propagates
balancing the cash flow between all
products equally. In harsh words – no
extra revenue should be given to products
which cant give the revenue back to the
organization.

5. BCG MATRIX:
BCG Matric, Growth Share Matrix, Boston box & product
portfolio matrix are the different names for the same framework
that was developed by Bruce Henderson od the Boston
Consulting Group in 1970. It is very old strategic framework that
makes it controversial for today’s applicability even then it is one
of the most used frameworks for product portfolio management
.This matrix is used to analyse strategic business units or product
lines from the same corporation by putting them on a 2X2 matrix
based on two factors in order to determine where to allocate
extra resources? Where to cash out? And where to divest? The
main purpose of a BCG matrix is to take investment decisions on
a corporate level which is a part of corporate strategy.

6. As we all know the there are
different levels of strategies
which is illustrated in strategy
pyramid. Generally people are
familiar with business level
strategy i.e. how do we
compete or gain sustainable
competitive advantage.
Rather corporate strategy is
about which businesses they
should be in at the first place.
It is about selecting the
optimal set of businesses and
determining how they should
be integrated into a corporate
whole.

7. There are two factors that are used to plot the business units in
the matrix:
1) Company Competitiveness
2) Market Attractiveness
In order to measure these factors Henderson used what he
believes are the underlying drivers of these two factors i.e.
Relative Market Share and Market Growth Rate.
A high market growth rate means the demand is growing rapidly
means there is an open door for company’s growth as well
however operating in a growing market also requires major
investments in assets to increase capacity and in marketing to
increase market share. Therefore it is attractive to be active in a
high growth market, it also results in the consumption of the
large amount of cash.

9. How To Make A BCG Matrix?
• Step 1: Choose The Product
• Step 2: Define The Market
• Step 3: Calculate The Relative Market Share
• Step 4: Find Out The Market Growth Rate
• Step 5: Draw The Circles On A Matrix

10. APPLE CASE STUDY:
Stars
• High Growth, High Market Share
• Star units are leaders in the category. Products
located in this quadrant are attractive as they are
located in a robust category and these products
are highly competitive in the category .Example:
I phone because there is large potential market
for it and they have their own large share in it.
• Strategic choices: Vertical integration, horizontal
integration, market penetration, market
development, product development

11. Question Marks
• High Growth, Low Market Share
• Like the name suggests, the future potential of these
products is doubtful. Since the growth rate is high here,
with the right strategies and investments, they can
become Cash cows and ultimately Stars. But they have
low market share so wrong investments can
downgrade them to Dogs even after lots of investment.
Example :Macbook because even if there is a huge
need in the market but market share has not built yet.
They need to focus upon the investment and
divestment decisions and analyse their product,
positioning, strategy and pricing.
• Strategic choices: Market penetration, market
development, product development, divestiture.

12. Cash Cows
• Low Growth, High Market Share
• These products or services generate interesting
profits and cash but need to be replaced because
the future growth will be lower. If they are
profitable, they can finance other activities in
progress (including stars and question
marks).Example: I Pad because they have less
competition, there is less need in the market but
they have a huge market share. Harvesting is to
be done in this quadrant. Cash cows is mainly the
category of products that belong to saturated or
matured market.
• Strategic choices: Product development,
diversification

14. Dogs
• Low Growth, Low Market Share
• Dogs hold low market share compared to competitors.
Neither do they generate cash nor do they require
huge cash. In general, they are not worth investing
in because they generate low or negative cash returns
and may require large sums of money to support. Due
to low market share, these products face cost
disadvantages . Example: I Pod because there is no
need in the market as well there is no market share
which means divestment is needed or harvest in case
this product is creating a demand for star or question
mark product.Like Samsung watch.
• Strategic choices: Retrenchment, divestiture,
liquidation

15. BCG MATRIX & PRODUCT LIFE CYCLE:

16. ADVANTAGES OF BCG MATRIX:
• BCG Matrix is simple and very easy to understand.
• BCG matrix can be used to determine and to identify how
corporate cash resources can best be used in order to
maximize company's profitability and future growth.
• BCG matrix is used to evaluate balance in the firm's current
portfolio of Dogs, Question Mark, Cash Cows and stars.
• It also provides base management to prepare and decide
for future actions.
• BCG matrix helps the managers to become more aware on
how the services, products or business unit perform.
• It also helps to prioritize the limited resources in order to
achieve the maximum or best returns.

17. DISADVANTAGES OF BCG MATRIX:
• BCG matrix is costly to conduct.
• BCG matrix needs highly experienced person or a
consultant to determine industry's attractiveness and
business unit strength.
• BCG matrix does not take into account the synergies
which might exist between two or more business units.
• High market share is not the only success factor.
• The model of BCG matrix do not take into
consideration small competitors that have fast growing
market share.
• BCG matrix uses only two dimensions : Market share
and Growth rate.

18. GE MATRIX:
• It focuses on 2 variables:
– Industrial Attractiveness.
• How attractive is the economic sector in which a certain
Product, Service or Business Unit is located.
– Competitive Strength.
• How strong is the company in that particular sector.
• These 2 variables are both quantified into three
categories:
– High.
– Medium.
– Low.

19. • The result is a 3 x 3 Matrix with 9
scenarios but 3 main approaches:
– The Invest / Grow scenario.
– The Selectivity / Earnings scenario.
– The Harvest / Divest scenario.

21. HOW TO ACCESS THE INDUSTRY
ATRACTIVENESS:
• Its Growth.
• If it is growing at higher or lower rates than the
general economy.
• Number of competitors.
• The more saturated a market is, the worse.
• Entry barriers.
• The higher, the better, as long as you have access to
it.
• Its average Profitability.
• How profitable it is.
• Are there substitute products that jeopardize this
profitability?

22. HOW TO ACCESS THE COMPETITIVE
STRENGTH:
• Market share.
• What is your Market share.
• Your average profitability.
• You can compare it with the market average.
• The size of your Product Mix.
• How deep you have penetrated the market.
• The strength of your Brand.
• How an average customer perceives your
Brand.

23. WHAT ABOUT MEDIUM SCENARIOS ?

24. Ford electric car- Invest/Grow
scenario:
• 2 main reason that explained why Ford was not
investing in electric cars
• First reason:
• Ford is very Strong in the “classic Automobile” sector, but
not in the electric one.
• Manufacturing and designing an electric car is very
different from the traditional one:
• The Engine.
• The Powertrain.
• etc.
• The components are absolutely different.
• And Ford was not Strong there.

25. • Second reason:
• The market was not really booming.
• Demand was increasing, but people seemed
to prefer traditional cars.
• The electric car Sector didn’t seem really
attractive at all.
WHAT DID FORD DO?

26. DVD VIDEO- SELECTIVITY/EARNINGS
SCENARIO:
• The DVD-Video format is the perfect example of an
“Earnings” scenario.
• It’s been years since “Blue-Ray” was released.
• Now, we have HD, 4K, 8K…
• But, has the Blue-Ray substituted the DVD-Video
format?
• Not at all.
• Today, people use mainly streaming platforms for
watching movies (Netflix, HBO,DFisney +, etc).
• However, although there are many new alternatives
on the market, people still prefer DVDs to Blue-
Rays, or other new formats.

27. • What should DVD-Video companies
do?
• The Market is declining.
• There are new and better products that will
replace your product sooner or later.
• As mentioned before, this scenario is the
perfect example of a “Maintaining
Earnings” scenario

28. MICROSOFT ZUNEMP3 PLAYER-
DIVEST/ HARVEST SCENARIO
• There was a time when every technology
company had its own mp3 player.
• But only when Apple became the “reference” with
its iPod, was it when Microsoft launched its own
mp3 player: the Zune.
• It was 2006.
• And what happened 1 year later? Apple
introduced its iPhone.
• Mp3 players were doomed.
• The new and emerging smartphone Market, made
mp3 players absolutely unnecessary.
• People could simply use their phones.

29. • What did Microsoft do?
• They discontinued the Zune (its mp3
player) in 2008.
• That was an intelligent decision since:
• They were not Strong in the mp3-player
market.
• Moreover, had not succeeded with its product.
• The mp3-player Market was no longer
Attractive.

30. • Remember that it is very easy to
highlight a Success, but retiring on
time is always much more important.
• And the GE-McKinsey matrix can help you
with this.

32. ADVANTAGES OF GE MATRIX:
• It used 9 cells instead of 4 cells of BCG
• It considers many variables and does not lead to
simplistic conclusions
• High/medium/low and strong/average/low
classification enables a finer distinction among
business portfolio
• It uses multiple factors to assess industry
attractiveness and business strength, which allow
users to select criteria appropriate to their
situation

33. DISADVANTAGES OF GE MATRIX:
• It can get quite complicated and cumbersome with
the increase in businesses
• Though industry attractiveness and business strength
appear to be objective, they are in reality subjective
judgements that may vary from one person to
another
• It cannot effectively depict the position of new
business units in developing industry

34. THANK YOU