Product Portfolio

Product Portfolio
Analysis
Department of Management, MIMIT Malout

Product Portfolio Analysis
Product portfolio analysis looks at the range of products and

brands (product portfolio) that a firm has under its control. This type
of analysis can help a firm identify where every single one of its
products is positioned in the market.
The BCG Matrix is used as most common Product portfolio

analysis in many companies to analyse their product mix.
TATA group runs a business Empire. How many different type

of products does they have under its control?
2.15 Product
Product Life Cycles and the BCG Matrix
 Product Life Cycle –  Product Portfolio –

shows the stages that the range
products go through of products a company
from development to has in development or
withdrawal from the available for consumers
market at any one time
Managing product portfolio

is important for cash flow

BCG Matrix

The BCG Matrix
 The BCG Matrix:

 A means of analysing the product portfolio and informing
decision making about possible marketing strategies
 Developed by the Boston Consulting Group – a business
strategy and marketing consultancy in 1968
 Links growth rate, market share and cash flow
What do
these terms mean?

BCG Matrix – key terms..

Drawing the BCG Matrix

The BCG Matrix - STARS
 Stars – products in markets experiencing high

growth rates with a high or increasing share of the
market
- Potential for high revenue growth

The BCG Matrix – Cash Cows
 Cash Cows:
 High market share
 Low growth markets –
maturity stage of PLC
 Low cost support
 High cash revenue –

positive cash flows
Department of Management, MIMIT

Malout
The BCG Matrix - Dogs
 Dogs:
 Products in a low
growth market
 Have low or declining
market share (decline
stage of PLC)
 Associated with negative
cash flow
 May require large sums
of money to support
Is your product starting to
embarrass your company?

Malout
BCG Matrix - ? Problem child
 Question mark ???

 Or Problem Child:
- Products having a low
market share in a high
growth market
- Need money spent to
develop them
- May produce negative
cash flow Problem children – worth spending
good money on?
- Potential for the future?

Malout
The BCG Matrix
Market Growth
HighProblem Children Stars
Dogs Cash Cows
Market Share
Low Department of Management, MIMIT High
Malout
What stage of the BCG Matrix are
these at?
Put these onto a grid

BCG Matrix Grid
Market Growth
Problem Children Stars

High
Dogs Cash Cows
Video
Low Department of Management, MIMIT High

Malout
Market Share
The BCG Matrix
 Implications:
 Dogs:
 Arethey worth persevering with?
 How much are they costing?
 Could they be revived in some way?
 How much would it cost to continue to support such

products?
 How much would it cost to remove from the market?

The BCG Matrix
 Implications:
 Problem Children:
 What are the chances of these products securing a hold in the
market?
 How much will it cost to promote them to a stronger position?
 Is it worth it?

The BCG Matrix
 Implications:
 Stars:
 Huge potential – how?
 May have been expensive to develop – why?
 Is it worth spending money to promote?
 What issues are there with product life cycle?

The BCG Matrix
 Implications:
 Cash Cows:
 Why are they cheap to promote?
 Generate large amounts of cash – are these used for
further R&D?
 Do you think there are any costs of developing and
promoting these products?
 Is there a need to monitor their performance – the
long term?
 What stage of the PLC are these at?

The Product Life Cycle and the BCG Matrix
Importance of
maintaining a balance
of products in the
portfolio at different
stages of the PLC –
BCG Matrix helps with
the analysis

The Product Life Cycle and the BCG Matrix
Sales (3)
(2) Cash
Cash from
from ‘C’
‘B’
(1)
The ‘A’ is at
product maturity
used
stage to
used to support
support
– cash cow.
portfolio
growth – four
of funds
‘D’ and
(1) (2) (3) ‘C’ through
Generates growth
for
products
possibly
the in
toto
development the
finance
of
stage and
portfolio
extension
launch ‘D’.strategy
‘D’ ‘A’ now
for ‘B’? a dog?
possibly
B
A C
Time

Portfolio Analysis
GE TOOL FOR ANALYZING

OPPORTUNITIES & ABILITY TO
COMPETE

GE Portfolio Analysis
 Classification of SBUs/products into nine cell

matrix based on
 Market Attractiveness
 Multiple Indicators
 Business Strength
 Multiple Indicators

Steps In Developing GE Matrix
1. Select Factors & Indicators.

2. Assign each indicator a weight (total = 1) based on
its importance.
3. Rate the industry on industry indicators and
company on business indicators on scale of
1(weak) – 5 (strong).
4. Multiply weight times rating and total for
summary measures.

Sample Industry/Market Indicators
 Market Factors
 Size
 Growth Rate
 Cyclicality
 Seasonality
 Competition
 Type of competitors
 Degree of Concentration
 Financial & Economic

 Contribution Margins
 Barriers to Entry or Exit

Industry/Market Indicators
 Technological
 Patents & copyrights
 Will it become obsolete
 Sociopolitical
 Social attitudes & trends
 Laws & government regulations

Business Strength Indicators
 Market
 Company’s Market Share
 Company’s Sales or Share Growth Rate
 Competition
 Strength of product, promotion, price, distribution, financial
resources, management relative to competition
 Financial & Economic
 Company’s Margins
 Economies of scale

Business Strength Indicators
 Technological
 Company’s ability to cope with change
 Technological skills
 Patent Protection
 Sociopolitical
 Company’s responsiveness & flexibility

Growth in GE Matrix
As the name suggests, the business units that fall in this
category are products which will be giving higher
returns in the near future.
So the investments required here are more in R & D,
promotions, advertisements etc.
Selectivity in GE Matrix
It is quite similar to the question mark product of
the BCG matrix, wherein the state of the product is still
in ambiguity. However as uncertainty prevails and as
business units are always going to be risky, the final
decision is made by the management which is in line
with their vision.
Harvest in GE Matrix
This category is similar to the dog products of the BCG
matrix. Herein, the products are not going to reap the
desired profits and are likely to fail.
Investing in such products will be an in elevation risk
for any organization.
GE Portfolio Example
Market Factor Weight Rating (1- 5) Value
Size .33 5 1.65

Growth .33 3 .99
Profit Margins .34 2 .68
3.32
Business
Market Share .33 1 .33
Product Quality .33 5 1.65
Distribution Net .34 2 .68

2.66
Product Planning & Control
PRODUCTION PLANNING can be referred to as a technique of forecasting

every step in the long process of production, taking them at right time and
in the right degree and trying to complete operations at the maximum
efficiency. “The planning of industrial operations involves Three
considerations, namely, what work shall be done, how the work shall be
done and lastly, when the work shall be done.” (by – Kimball)
PRODUCTION CONTROL is the process that keeps a watchful eye on the

production flow, size of resources along with any deviation from the
planned action. It also includes arrangement for the prompt remedy or
adjustment in case of any deviation so that the production may run
according to the original or revised schedule. “Production control refers to
ensuring that all which occurs is in accordance with the rules established
and instructions issued.” (By – Henry Fayol)

PPC : CHARACTERISTICS
• Inputs like materials, men and machines are
efficiently used
• Factors of production are integrated to use them
economically
• Division of work is undertaken carefully so that
every available element is properly utilized
• Work is regulated from the first stage of procuring
raw materials to the stage of finished goods
• Questions like what, when and how to be
manufactured are decided

PPC : Objectives

Thank You

Product Portfolio

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Product Portfolio

Department of Management, MIMIT Malout