What’s Portfolio Analysis?It’s basically a product portfolio in which we rank our product or we can say that where our products are stands in the market.
We’ve three Matrices under this tab.1.BCG Matrix (Boston Contingency Group)2.GE Matrix (General Electric)3.Product/Market Growth MatrixBCG MatrixIt is what how we maintain or analyze our product. Here’s the matrix. BCG Matrix ExplanationIf the industry is growing and your share is low, you’requestion mark (?). What are you doing? You need toimprove. Like Snakes industry is growing but there’resome snakes with no name. You must’ve seen it.
1 If the industry is growing and your share is also highthen it’d be Star`1s. Like Beauty Soap i`ndustry. LUX is a product of Unilever. Unilever’s all Beauty Soaps are allstars. Do you know? When you start your business, your productis in “?” position. It’sup to you where youwant to go, Stars Or dogs
BCG Matrix ExplanationIf the industry growth is high and but your share is high then your product’s Cash Cow.Like industry of Tetra Pack packaging. Only“Packages Ltd” and “Tetra Pack” has the plant of Packet Milk and Juices packaging.
If the industry growth is low and your share isalso low then your product is dog. Better toexit from the market. You’ll be amazed to seethe example.Nestlé’s Polo is the example GE Matrix This matrix is given by General Electric which isworld biggest electronics British company.
It’s what you’ve to do with BCG Matrix.
GE Matrix ExplanationInvest:It is used to strengthened and build thesekinds of SBUs (Strategic Business Units). Bold andwell financial marketing efforts are needed here. It’s basically use when you start a new business as thename suggests.
Protect:It’s used to protect your current SBUs. LikePEPSI is protecting its product. Because Coke is thecompetitor of PEPSI and they’re allocating resources.You can say it a defensive approach. It also generatescash needed by other SBUs or products GE Matrix Explanation
Harvest:They lack an attraction market at a strong position. These SBUs shouldn’t receive substantialnew resources instead expenditure should cut tominimize any remaining profit. You know that*CDL’s Dairy Queen milk is operating in Loss? Divest:In this position, an SBU shouldn’t receiveany resources. Probably, the best approach is toeliminate from the organization’s portfolio by sellingit or shutting it down. Point To Ponder:What aboutPOLO? I think it fits here… But why Nestle is notshutting it down? *Chaudary Dairies Limited (Formally Haleeb Foods Ltd)Product/Market Growth MatrixIt is about the market. What you’re gonna do or what you’ve to do. So get a look at the matrix below… ExistingProductNew ProductExistingMarket MarketPenetrationProductDevelopmentNew MarketMarketDevelopmentDiversificationProduct/Market Growth MatrixMarket Penetration:When someone snatches the marketshare of other. Do you know that there’s big fight betweenHaleeb and Milkpak? Both are always willing to penetrate inthe market.
It’s like I’m supplier of BoardMarkers. I’m supplying to different educational institutes. If i begin to supply my product to different business organization,it would be market development. What do you think about thedevelopment of Mobile Phones market in Pakistan? Mobileswere being used by only businessmen but now… you musthave your mobile phone I think Product/Market Growth Matrix
Product Development:If you’re gonna introduce anew product in the market, it’d be productdevelopment. Have you seen Nestlé’s Pure Water?You must know that Milkpak is also the product of Nestlé . Diversification:When we have totally new productin a new market. Conglomerates can also put under this heading. Do you know Mitsubishi is the biggestconglomerate of the world? There’re other likeBerkshire Hathaway (USA), Aditya Birla Group(India), Reliance Industries (India), Habib Group(Pakistan), Bibojee Services (Pakistan Ok… That was it.
I’m sure you understand the topic. I tried my best of the best to make you know about thethings effectively. Thanks for you time… and and and BESTOF LUCKKKK…FOR EDUCATIONAL PURPOSE ONLY !!!
The GE matrix is an alternative technique used in brand marketing and product management to help a company decide what product(s) to add to its product portfolio, and which market opportunities are worthy of continued investment. Also known as the ‘Directional Policy Matrix,’ the GE multi-factor model was first developed by Mckinsey for General Electric in the 1970s.
Conceptually, the GE Matrix is similar to the Boston Box as it is plotted on a two-dimensional grid. In most versions of the matrix: * the Y-Axis comprises industry attractiveness measures, such as Market Profitability, Fit with Core Skills etc. and * the X-Axis comprises business strength measures, such as Price, Service Levels etc. Each product, brand, service, or potential product is mapped as a piechart onto this industry attractiveness/business strength space.
The diameter of each piechart is proportional to the Volume or Revenue accruing to each opportunity, and the solid slice of each pie represents the share of the market enjoyed by the planning company. The planning company should invest in opportunities that appear to the top left of the matrix. The rationale is that the planning company should invest in segments that are both attractive and in which it has established some measure of competitive advantage.
Opportunities appearing in the bottom right of the matrix are both unattractive to the planning company and in which it is competitively weak. At best, these are candidates for cash management; at worst candidates for divestment. Opportunities appearing ‘in between’ these extremes pose more of a problem, and the planning company has to make a strategic decision whether to ‘redouble its efforts’ in the hopes of achieving market leadership, manage them for cash, or cut its losses and divest. ————————————————-
See also* MarketingThe General Business Screen was originally developed to help marketing managers overcome the problems that are commonly associated with the Boston Matrix (BCG), such as the problems with the lack of credible business information, the fact that BCG deals primarily with commodities not brands or Strategic Business Units (SBU’s), and that cashflow is often a more reliable indicator of position as opposed to market growth/share.
The GE Business Screen introduces a three by three matrix, which now includes a medium category. It utilizes industry attractiveness as a more inclusive measure than BCG’s market growth and substitutes competitive position for the original’s market share. So in come Strategic Business Units (SBU’s).
A large corporation may have many SBU’s, which essentially operate under the same strategic umbrella, but are distinctive and individual. A loose example would refer to Microsoft, with SBU’s for operating systems, business software, consumer software and mobile and Internet technologies. Growth/share are replaced by competitive position and market attractiveness. The point is that successful SBU’s will go and do well in attractive markets because they add value that customers will pay for. So weak companies do badly for the opposite reasons. To help break down decision-making further, you then consider a number of sub-criteria: For market attractiveness:
————————————————-* Size of market.————————————————-* Market rate of growth.————————————————-* The nature of competition and its diversity. ————————————————-* Profit margin.————————————————-* Impact of technology, the law, and energy efficiency. ————————————————-* Environmental impact.. . . and for competitive position:————————————————-* Market share.————————————————-* Management profile.————————————————-* R & D.————————————————-* Quality of products and services.————————————————-* Branding and promotions success.————————————————-* Place (or distribution).————————————————-* Efficiency.————————————————-* Cost reduction.At this stage the marketing manager adapts the list above to the needs of his strategy. The GE matrix has 5 steps: ————————————————-* One – Identify your products, brands, experiences, solutions, or SBU’s. ————————————————-* Two – Answer the question, What makes this market so attractive? ————————————————-* Three – Decide on the factors that position the business on the GE matrix. ————————————————-* Four – Determine the best ways to measure attractiveness and business position. ————————————————-* Five – Finally rank each SBU as either low, medium or high for business strength, and low, medium and high in relation ————————————————-to market attractiveness.Now follow the usual words of caution that go with all boxes, models and matrices. Yes the GE matrix is superior to the Boston Matrix since it uses several dimensions, as opposed to BCG’s two. However, problems or limitations include: ————————————————-
* There is no research to prove that there is a relationship between market attractiveness and business position. ————————————————-* The interrelationships between SBU’s, products, brands, experiences or solutions is not taken into account. ————————————————-* This approach does require extensive data gathering.————————————————-* Scoring is personal and subjective.————————————————-* There is no hard and fast rule on how to weight elements. ————————————————-* The GE matrix offers a broad strategy and does not indicate how best to implement it. The GE-McKinsey matrix or model, like other generic strategy models may not be applicable universally and has some inherent limitations. * An assumption behind the GE-McKinsey matrix is that it can operate when the economies of scale are achievable in production and distribution. Unless the same holds true, the concept of leveraging the competencies of the firm and the SBU falls flat
* Also some of the factors of competitive strength and market competitiveness may be extremely important for a particular instance, while another instance may even require even other factors. The top management of the organization should decide upon these factors very carefully as there is no generic set of factors with which all SBUs may be evaluated. * The relative weights given to each of the factors of competitive strength and market competitiveness is often arbitrary.
While some methodology such as the Analytic Hierarchy Process may be used to compute the relative importance of such factors, such is mostly not done. Thus the overall position of the SBU on the matrix could come under criticism. * The core competencies of the firm or the corporation are not represented in this analysis. The core competencies may be leveraged across SBUs and can be a deciding factor while judging the competitive strength of the SBUs s