Business

Positioning
&
Portfolio
Analysis
A circle represent the
percent of revenues it
represent in the overall
corporate portfolio.

Market Growth rate is the

projected rate of sales-
growth for the market
being served by a
particular business.

Relative market share

represent the ratio of a
business’s market-share to
the market-share headed
by the large rival only -
in the industry. i.e.,
market-share of a business
divided by the market-
share of its’ large
competitors. Prof. Arefin 2
Problem Child/Question Marks:
A cash hog business whose
internal cash generation are
inadequate to fully fund its’ own
needs for working & or new
venture-capital investment.
Stars have strong competitive
position in rapidly growing
industry, major revenue
contributors and, may or may
not be cash hogs.
Cash Cows businesses can
generate enough cash for
financing new acquisitions, funding
cash hogs needs and paying
dividends.
Dog businesses are often unable
to generate attractive cash in long-
run, profit margins are chronically
thin, and sometime unable to
secure competitive position.
Limitations of BCG Matrix

o Dividing the matrix into four cell is

very simplistic;
o In the competitive market accurately
measuring market share & growth
rate is very difficult;
o The relationship between market-
share & profitability varies across
industries and market segments;
o The matrix often do not reflect
diversity options available for the
business;
o Attractiveness of business not only
depend on growth rate but also -
change in technology; seasonality;
changes in custom; etc.

Prof. Arefin 4
 o Relative Market Share
GE o Profit Margin Relative to Competitors
o Ability to beat Rivals on Product/Service Quality
Nine Cell o Relative Cost Position
o Technological Capability
Matrix o Caliber of Management etc.

o Market Size
o Growth Rate
o Intensity of
Competition
o Seasonality
o Cyclicality
o Social,
Regulatory,
Technological
Changes
o Emerging
Opportunities
and Threats
o Exit & Entry
Barrier etc.

Prof. Arefin 5
 GE Industry Attractiveness &
Business Strength Matrix
Advantages of GE Matrix
o Uses multiple factors to assess industry attractiveness &
business strength therefore the most sophisticated business
portfolio framework that helps to prioritize the investment of
limited resources to achieve ROI – Return On Investment

Limitations of GE Matrix
o Use of multiple factors make the matrix complicated and
cumbersome hence need a expert consultant, so its quite
costly.
o Though industry attractiveness and business strength appear
to be objective, that may vary from one person to another
o It represent as static quality – i.e., different businesses in
the matrix portrayed as they exist at one point in time rather
- as they evolve over time.

Prof. Arefin 6
 The Life-Cycle Portfolio Matrix
by. Charles W. Hofer

The matrix shows – whether the

firm’s businesses are evenly
distributed across the stage of
the industry life cycle that is,
businesses are plotted in-terms
of stage of industry evaluation
and competitive position or not.

Business A : The Developing winner : being at the development stage

combined with relatively large market share
Business B : somewhat similar to developing winner : Though relatively small
market share however in a average competitive position. Hence developed a
strategy to overcome this low market share through investing more capital.
Business C : The potential loser : to overcome the low market share and
weak competitive position thus it require future investments.
Prof. Arefin 7
 The Life-Cycle Portfolio Matrix

Business D : The Competitor

Shakeout period : Business has
relatively large market share but
strong competitive position
therefore further investment
should be made to improve this
position.
Business E : The Established
winner and F : The cash cows
: Able to generate enough cash
mostly for the other portfolio of
business.
Business G : The Looser or
Dog : It should be managed to
generate cash in the short run
however, the long-run strategy
will more likely to be divestment
or liquidation.

Prof. Arefin 9