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    Gyanesh Strategic Management II - Session 2

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    Sandeep Chowdhury
    The document discusses strategic portfolio analysis methods like the BCG matrix and GE matrix. It explains that the BCG matrix evaluates business units based on their market growth and market share to determine whether to invest, hold, harvest or divest. The GE matrix assesses market and industry attractiveness as well as a business' strength based on factors like market share and quality. However, these matrix approaches have limitations like difficulty defining business units and overemphasis on growth that can lead companies to abandon healthy mature businesses.

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    Gyanesh Strategic Management II - Session 2

    Uploaded by

    Sandeep Chowdhury
    44 views5 pages
    The document discusses strategic portfolio analysis methods like the BCG matrix and GE matrix. It explains that the BCG matrix evaluates business units based on their market growth and market share to determine whether to invest, hold, harvest or divest. The GE matrix assesses market and industry attractiveness as well as a business' strength based on factors like market share and quality. However, these matrix approaches have limitations like difficulty defining business units and overemphasis on growth that can lead companies to abandon healthy mature businesses.

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    Gyanesh Strategic Management II – Session 2

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    The document discusses strategic portfolio analysis methods like the BCG matrix and GE matrix. It explains that the BCG matrix evaluates business units based on their market growth and market share to determine whether to invest, hold, harvest or divest. The GE matrix assesses market and industry attractiveness as well as a business' strength based on factors like market share and quality. However, these matrix approaches have limitations like difficulty defining business units and overemphasis on growth that can lead companies to abandon healthy mature businesses.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    44 views5 pages

    Gyanesh Strategic Management II - Session 2

    Uploaded by

    Sandeep Chowdhury
    The document discusses strategic portfolio analysis methods like the BCG matrix and GE matrix. It explains that the BCG matrix evaluates business units based on their market growth and market share to determine whether to invest, hold, harvest or divest. The GE matrix assesses market and industry attractiveness as well as a business' strength based on factors like market share and quality. However, these matrix approaches have limitations like difficulty defining business units and overemphasis on growth that can lead companies to abandon healthy mature businesses.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 5

    Strategic Management II Session 2

    BCG and GE Matrix(Designing Business Portfolio)

    GYANESH PHULAMBRIKAR 2013PGP150, SECTION A

    Introduction to Business Portfolios


    Collection of businesses and products that make up a company Guided by companys mission and vision Best fits companys strengths and weaknesses Firms must a) Analyse Current business portfolio 1) Identify SBUs( Separate mission and objectives, independent)

    2) Assess attractiveness and support required( Judgemental, product & business based
    b) Develop growth strategies to add new products & businesses to portfolio

    Most portfolio analysis methods evaluate SBUs on

    a) attractiveness of markets or industry


    b) strength of SBUs position in market or industry

    BCG Approach
    To build share => invest more in business unit To hold => invest just enough To harvest => Milk short term cash flows

    regardless of long term profits


    To Divest => Sell out or phase out & use resources elsewhere

    SBU Life cycle


    ?

    Success

    Market growth

    Cash Cows

    Die Off

    Dogs

    Reason why company adds products continuously

    GE Approach
    Market/Industry Attractiveness a) Market Size b) Market Growth rate c) industry profit margin d) amount of competition e) seasonality and cyclicality of demand f) industry cost structure Business position/strength

    a) companys relative market share b) price competitiveness c) product quality d) customer and market knowledge e) sales effectiveness f) geographic advantages
    1) 2)

    Pie slices within the circles represent each SBUs market share Management plot projected positions of SBUs with and without changes and compares them to identify major strategic issues and opportunities.

    Problems with Matrix Approaches


    Difficult to define SBUs and measure market share and growth Time consuming and costly to implement Focuses on current business and little advice for future planning Mgmt have to rely on its judgement to set business objectives, resource allocation and new business ventures Too much emphasis on market share growth or growth through entry into attractive new markets leads to entry into unrelated high growth market with little ability to manage Leads to often quick abandonment, sell or milk to death of healthy mature businesses Firms now focusing and getting back to basics of serving one or few industries they know better with planning efforts moving out of headquarters into the hands of cross functional teams of line managers and staff managers who are close to markets

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