FORMULATION OF STRATEGY: ANALYSING THE PRODUCT PORTFOLIO

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Presentation transcript:

FORMULATION OF STRATEGY: ANALYSING THE PRODUCT PORTFOLIO THE BCG MATRIX THE SHELL MATRIX THE GENERAL ELECTRIC MATRIX

SOME DEFINITIONS Business Portfolio: The collection of businesses and products that make up the company. Portfolio analysis: A tool by which management identifies and evaluates the various businesses that make up the company Strategic business unit (SBU): A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. A SBU can be a company division, a product line within a division, or sometimes a single product or brand.

BCG MATRIX : BCG CLASSIFICATION OF PRODUCTS High 20 Dogs Question marks Stars 10 Market growth Cash cows Low 1x 10x 0.1x Market share

PORTFOLIO ANALYSIS Stars Cash cows Question marks Dogs Low-growth High-share businesses or products Established and successful units that generate cash that the company uses to pay its bills and support other business units that need investment Question marks Low-share business units in high-growth markets Dogs High –growth High market share (High-share businesses) Products often require heavy investment to finance their rapid growth

THE GENERAL ELECTRIC MATRIX BY MCKINSEY Typical (external) factors that affect Market Attractiveness: - Market size - Market growth rate - Market profitability - Pricing trends - Competitive intensity / rivalry - Overall risk of returns in the industry- Entry barriers - Opportunity to differentiate products and services- Demand variability - Segmentation - Distribution structure- Technology development Typical (internal) factors that affect Competitive Strength of a Strategic Business Unit: - Strength of assets and competencies - Relative brand strength (marketing) - Market share- Market share growth - Customer loyalty - Relative cost position (cost structure compared with competitors)- Relative profit margins (compared to competitors) - Distribution strength and production capacity - Record of technological or other innovation- Quality - Access to financial and other investment resources- Management strength

THE PRODUCT PORTFOLIO THE BCG MATRIX