1. Portfolio Analysis
Mktg 485
May 19, 2004

2. Diversification
Meaning?
Why Diversify?
Why not Diversify?

3. Coca Cola

4. Business Performance
Share Position
Share Growth
Profitability

5. Portfolio Analysis and Strategic Market Plan
Business Performance – what will we end up with?
Market Attractiveness – what do we need to succeed?
Competitive Advantage – what resources do we have?

6. Competitive Advantage
Portfolio Analysis
Very Attractive
Market
Attractiveness
Very Unattractive
Very Weak
Very Strong
Competitive Advantage

7. Microsoft’s Financials
Segment
Revenue
Profits
Growth
Home & Entertainment
$505 million
- $177 million
82%
Business Solutions
$107 million
- $68 million
Internet(MSN)
$531 million
- $97 million
CE/Mobility
$17 million
- $33 million
Information Worker
$2.39 billion
+ $1.88 billion
26%
Client
$2.89 billion
+ $2.48 billion
34%
Server
$1.52 billion
+ $519 million
13%

8. Fall 2004 Changes

9. Market Attractiveness - 1
Market Forces
Attractive
Not Attractive
Market Size
Growth Rate
Buying Power
Customer Loyalty

10. Market Attractiveness - 2
Competitive Intensity
Attractive
Not Attractive
Number of Competitors
Price Rivalry
Ease of Entry
Substitutes

11. Market Attractiveness - 3
Market Access
Attractive
Not Attractive
Customer Familiarity
Channel Access
Sales Requirements
Company Fit

12. Competitive Advantage - 1
Differentiation
Attractive
Not Attractive
Product Quality
Service Quality
Brand Image
Relative Price

13. Competitive Advantage - 2
Cost Advantage
Attractive
Not Attractive
Unit Cost
Transaction Cost
Marketing Expense
Overhead Expense

14. Competitive Advantage - 3
Marketing Advantage
Attractive
Not Attractive
Market Share
Brand Awareness
Distribution
Sales Coverage

15. Strategies Protect Invest to hold a competitive position Grow
Invest to grow a competitive advantage
Focus
Selectively narrow market focus to profitable segments

16. Strategies
Harvest
Adjust prices and marketing expenses to gradually exit a market
Entry
Invest to enter an attractive market
Divest
Quick divestment from a market when there are no short-term profits to be made

17. Competitive Advantage
Portfolio Analysis
Very Attractive
Offensive (Grow)
Offensive (Grow) or Defensive (Protect)
Defensive (Protect)
Offensive (Grow) or Defensive (Protect/Harvest)
Offensive (Grow) or Defensive (Protect/Focus)
Defensive (Divest or Harvest)
Market
Attractiveness
Very Unattractive
Very Weak
Very Strong
Competitive Advantage

18. Question 7 Product-Market Share Sales (mills) Market Attract.
Competitive Adv. A
10%
$20 20 40 B
33%
$50 75 80 C 5%
$10 85 15

19. Competitive Advantage
Portfolio Analysis
Very Attractive
Market
Attractiveness
Very Unattractive
Very Weak
Very Strong
Competitive Advantage

20. Question 8 Prod-Mkt Strategy Share Object Market Demand Market Growth
Reduced Focus 5%
$200 m B
Protect Share
33%
$150 m 7% C
Grow Share
10%
$200
20%