Business Tips & Tricks Business portfolio analysis
The business portfolio is the collection of businesses and products that make up the company. The best business portfolio is one that fits the company's strengths and helps exploit the most attractive opportunities.
The company must:
(1) Analyse its current business portfolio and decide which businesses should receive more or less investment, and
(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.
The business portfolio is the collection of businesses and products that make up the company. The best business portfolio is one that fits the company's strengths and helps exploit the most attractive opportunities.
The company must:
(1) Analyse its current business portfolio and decide which businesses should receive more or less investment, and
(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.
Most Popular Business Portfolio Tools
The most popular business portfolio tools are the BCG Matrix , GE 9 cell ,The GE Multifactor Portfolio Matrix , McKinsey 7s framework
BOSTON CONSULTING GROUP MATRIX
Understanding the Model
Market Share and Market Growth
To understand the Boston Matrix you need to understand how market share and market growth interrelate.
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. The higher your market share, the higher proportion of the market you control.
Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, which should provide the opportunity for businesses to make more money, even if their market share remains stable.
Stars: High Market Share / High Market Growth Here you're well-established, and growth is exciting! These are fantastic opportunities, and you should work hard to realize them. Cash Cows: High Market Share / Low Market Growth Here, you're well-established, so it's easy to get attention and exploit new opportunities. However it's only worth expending a certain amount of effort, because the market isn't growing and your opportunities are limited.
Question Marks (Problem Child): Low Market Share / High Market Growth These are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there. Dogs: Low Market Share / Low Market Growth In these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. Also, you won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit.
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