This document summarizes a presentation on portfolio planning tools. It discusses what portfolio planning is, which involves intelligently spreading risk across investment options to enjoy diversification benefits. It then discusses two portfolio planning tools: 1) Portfolio Planning Tools (PPT), which is a stochastic modeling tool that helps advisors choose suitable asset allocations by comparing risk and return characteristics. 2) The Boston Consulting Group (BCG) Matrix, which is a portfolio planning model that classifies businesses into four categories (Stars, Question Marks, Cash Cows, and Dogs) based on their market growth and relative market share. The document explains how to use and interpret the BCG Matrix. It concludes by discussing SPACE analysis

1. PRESENTATION ON:
PORTFOLIO PLANNING
TOOLS
PRESENTED BY-
Nishi Agrawal
Shreya Saxena
Sagar Syal
Shivli Gupta
Rupali
Ritika chabra

2. What is portfolio
planning?
Portfolio planning is a structured and intelligent
way of spreading your risk through different
investment options and to enjoy the
diversification benefits marked with a higher rate
of interests. There is no fixed rule on how to plan
your portfolio but there are several platforms
available on which you can explore the art of
perfect portfolio building. It is equally important to
check the portfolio performance in every quarter..
To be successful in the portfolio planning, you
need to be aware of historical precedents, the
average return on savings, the rate of return on

3. Portfolio planning tools
Meaning:
PPT is a stochastic modeling tool that has
been designed to help the advisors choose
suitable strategic asset allocations for their
clients by allowing them to compare the
relative risk and return characteristics of
different strategic asset allocations.

4. BOSTON CONSULTING GROUP
(BCG) MATRIX
 BOSTON CONSULTING GROUP (BCG) MATRIX
is developed by BRUCE HENDERSON of the
BOSTON CONSULTING GROUP IN THE EARLY
1970’s.
 BCG is one of the most FAMOUS AND
SIMPLE portfolio planning matrix ,used by
large companies having multi-products.
 According to this technique, businesses or
products are classified as low or high performers
depending upon their market growth rate and
relative market share.

5. Relative Market Share and
Market Growth
To understand the Boston Matrix
you need to understand how
market share and market growth
interrelate.

6. MARKET SHARE
• Market share is the percentage of the total
market that is being serviced by your
company, measured either in revenue terms
or unit volume terms.
• RELATIVE MARKET SHARE
• RMS = Business unit sales this year
Leading rival sales this year
• The higher your market share, the higher
proportion of the market you control.

7. MARKET GROWTH
RATE
 Market growth is used as a measure of a
market’s attractiveness.
 MGR = Individual sales - individual sales
this year last year
Individual sales last year
 Markets experiencing high growth are
ones where the total market share
available is expanding, and there’s plenty
of opportunity for everyone to make
money.

8. THE BCG GROWTH-SHARE
MATRIX
 It is a portfolio planning model which is
based on the observation that a company’s
business units can be classified in to four
categories:
 Stars
 Question marks
 Cash cows
 Dogs
 It is based on the combination of market
growth and market share relative to the next
best competitor.

9. STARS
(High growth, High market share)
 Stars are leaders in business.
 They also require heavy
investment, to maintain its large
market share.
 It leads to large amount of cash
consumption and cash generation.
 Attempts should be made to hold the
market share otherwise the star will
become a CASH COW.

10. CASH COWS
(Low growth , High market share)
 They are foundation of the company
and often the stars of yesterday.
 They generate more cash than
required.
 They extract the profits by investing as
little cash as possible
 They are located in an industry that is
mature, not growing or declining.

11. Dogs
(Low growth, Low market share)
 Dogs are the cash traps.
 Dogs do not have potential to bring in
much cash.
 Number of dogs in the company should be
minimized.
 Business is situated at a declining stage.

12. QUESTION MARKS
(High growth , Low market
share)
 Most businesses start of as question
marks.
 They will absorb great amounts of cash if
the market share remains
unchanged, (low).
 Why question marks?
 Question marks have potential to become
star and eventually cash cow but can also
become a dog.
 Investments should be high for question
marks.

13. WHY BCG MATRIX ?
To assess :
 Profiles of products/businesses
 The cash demands of products
 The development cycles of
products
 Resource allocation and
divestment decisions

14. BENEFITS
 BCG MATRIX is simple and easy to
understand.
 It helps you to quickly and simply screen
the opportunities open to you, and helps
you think about how you can make the
most of them.
 It is used to identify how corporate cash
resources can best be used to maximize a
company’s future growth and profitability.

15. LIMITATIONS
 BCG MATRIX uses only two
dimensions, Relative market share
and market growth rate.
 Problems of getting data on market
share and market growth.
 High market share does not mean
profits all the time.
 Business with low market share can
be profitable too.

16. STRATEGIC PLANNING
 Today, the most important concern of
most of the organizations is for
guaranteed in complex environmental
changes. Strategic planning provides
some tools for the organizations to
follow the formulation of the strategy in
various aspects of the organization
and manage their strategic
performance

17. SPACE Analysis – Strategic Position
and Action Evaluation Matrix
 It is a super technique for evaluating the sense
and wisdom in a particular strategic plan. It was
developed by strategy academics Alan
Rowe, Richard Mason, Karl Dickel , Richard
Mann and Robert Mockler. The Strategic Position
Evaluation (SPACE) analysis framework is a very
useful but not well known tool to develop and
review a company’s strategy.
It can be used at :
 the beginning of the exercise to predict the
overall key themes
 As a check at the end of the process.
 It can also be used to evaluate individual
strategic options generated by using a tool like
the Growth Matrix

18. SPACE ANALYSIS
 SPACE Analysis is a systematic appraisal of four
key issues that balance the external and internal
factors that should determine the general theme
of the strategy:
External :
 Industry Attractiveness
 Environmental Stability
Internal :
 Competitive Advantage
 Financial Strength
By combining ratings on each dimension on one
SPACE matrix diagram, the framework guides
the strategic agenda.

19. SPACE Analysis Factors For
Competitive Advantage
1. Market Share
2. Quality
3. Customer Loyalty
4. Cost Levels
5. Product Range
Advantage In The SPACE Matrix:
 · Market share (small to large)
 · Product quality (inferior to superior)
 · Product life cycle (late to early)
 · Product replacement cycle (variable to fixed)
 · Customer loyalty (low to high)
 · Competition’s capacity utilisation (low to high)
 · Technological know-how (low to high)
 · Vertical integration (low to high)
 · Speed of new product introductions (slow to fast)

20. SPACE Analysis Factors For
Industry Attractiveness
1. Growth Potential
2. Life Cycle Stage
3. Entry Barriers
4. Customer Power
5. Substitutes
Industry attractiveness is scored 6 great and 1 poor in the SPACE
analysis matrix :
 Growth potential (low to high)
 Profit potential (low to high)
 Financial stability (low to high)
 Technological know-how (simple to comple
 ·Resource utilisation (inefficient to efficient)
 Capital intensity (low to high)
 ·Ease of entry into the market (easy to difficult)
 ·Productivity; capacity utilisation (low to high)
 bargaining power (low to high)

21. SPACE Analysis Factors For
Environmental Stability
1. Political Uncertainty
2. Interest Rates
3. Technology
4. Cyclical
5. Environmental Issues
Stability In The SPACE Matrix:
· Technological changes (High to Low)
· Rate of inflation(High to Low)
· Demand variability (much to little)
· Barriers to entry into market (much to little)
· Competitive pressure/rivalry
· Price range of competing products (narrow to
wide)

22. Interpreting the SPACE
Analysis Matrix Diagram
The Strategic Position and Action Evaluation Matrix is a
useful guide which helps you to decide which strategy is
most appropriate in which situation.
The SPACE Matrix assesses the business across four
dimensions
· Industry Attractiveness
· Environmental Stability
· Competitive Advantage
· Financial Strength
To come to a recommended strategic thrust which can be:
· Aggressive Strategy
· Competitive Strategy
· Conservative Strategy
· Defensive Strategy

23. THANK YOU !