PORTFOLIO ANALYSIS

Companies with multiple product lines or business units must

decide how these various products to boost overall corporate
performance
 How much of our time and money should we spend
 on our best products and business
 On developing new costly products, most of which will never be
successful
 In portfolio analysis, top management views its product
lines and business units as a series of investments from which
it expects a profitable return.
 Two most popular techniques are
 BCG Matrix
 GE Business Screen
BGC SHARE GROWTH MATRIX
 is the simplest way to portray a corporation’s portfolio of
investments.( want to check k konsa SBU ya product line
better perform kr rhi hai)
 Each of the corporation’s product lines or business units is
plotted on the matrix according to
 the growth rate of the industry in which it competes and
 its relative market share.

 A unit’s relative competitive position is defined as its market

share in the industry divided by that of the largest other
competitor. By this calculation, a relative market share
above 1.0 belongs to the market leader.
 The business growth rate is the percentage of market
growth,
QUESTION MARKS
 (sometimes called “problem children” or “wildcats”) (wo
business huta hai jahan industry grow kr rhi hai, but you are
not established in that industry. Ap me potential hai to grow
but mkt share is not enough, es trah k business ko growth k lie
zyada paisa chaiye huta hai.
 are new products with the potential for success,

 they need a lot of cash for development.

 If such a product is to gain enough market share to become a

market leader (translate into stars)
 A star, money must be taken from more mature products and
spent on the question mark. ,mehnat nai kryn gy tu dogs me
chalay jaein gy- the future is not clear about that type of
busiensses
 This is a “fish or cut bait” decision in which management must
decide if the business is worth the investment needed.
STARS
 Stars are market leaders that are typically at the
peak of their product life cycle and (wo business ju
PLC ki peak pe hon or they are creating good cash.
Industry growth rate high mkt share be high or yh
mkt k leader huty hain. Good eslie hain k y apko
enough cash dyta hai hai or yh apka bright SBU hai)
 are able to generate enough cash to maintain their high
share of the market and
 usually contribute to the company’s profits

 HP’s printer business has been called HP’s “crown

jewel”
Growth strategy ap use krty hain + mkt share ko maintain
rkhty hain.
CASH COW
 Cash cows typically bring in far more money than is needed
to maintain their market share.
 ( jahan pr you are established as a mkt leader but industry
growth rate has come down)
 In this declining stage of their life cycle, these products are
“milked” for cash that will be invested in new question
marks.
 Expenses such as advertising and R&D are reduced.

 Question marks unable to obtain dominant market share (and

thus become stars) by the time the industry growth rate
inevitably slows become dogs.
 Maturity- profit maximizing stage.
DOGS
 Dogs have low market share and do not have the potential
(because they are in an unattractive industry to bring in
much cash.
 According to the BCG Growth-Share Matrix,

dogs should be either sold off or managed carefully for the

small amount of cash they can generate
Example
IBM sold PC business to LENOVO China
 retrench k through ap k pas ju b buchy ga (either its cash
form or resources) ap us s stars or question marks me
establish huny ki try kryn gy.
PORTFOLIO ANALYSIS
 Advantages
 It
is quantifiable and easy to use.
 Cash cow, dog, question mark, and star are easy to remember terms

 Limitations
 The use of highs and lows to form four categories is too simplistic.
 The link between market share and profitability is questionable.
Low-share businesses can also be profitable.
 Growth rate is only one aspect of industry attractiveness.
 Product lines or business units are considered only in relation to one
competitor: the market leader. Small competitors with fast-growing
market shares are ignored.
 Market share is only one aspect of overall competitive position.
STRATEGY
FORMULATION

Functional strategies
FUNCTIONAL STRATEGY
 is the approach a functional area takes to achieve corporate
and business unit objectives (industry k functions ko set krti hai, reason k
hm esy use q krty hain us functional area ki efficiency effectiveness ko kis
trah s bhrana hai)

 strategies by maximizing resource productivity. (financial strategy would try

to get the maximum benefit out of your financial resoucres and trying to get
the good health for the org.

 It is concerned with developing and nurturing a distinctive competence to

provide a company or business unit with a competitive advantage.

 each SBU/ division has its own functional strategy

 May vary from region to region e.g Mr. Donut pg 238

 Funct. Strgy, apki business or corporate strategies k sth aligned hon.
EXAMPLE
1.Corporate 1. Growth
Strategy Concentric

2. Business 2. Competitive
Strategy Differentiation

3. Functional
3. High quality through quality assurance
Strategies
HR- trained, skilled workforce
Marketing- pull through advertising
Push through
promotional allowances
MARKETING STRATEGY
 Deals with pricing, selling and distributing a product(product ki marketing
se concern huta hai bs)
 Market Development (existing or new mkt)
 Capturelarge share of existing market through market saturation and penetration OR
 develop new uses/ markets for current products P&G, Unilever

 Product Development
 developnew products for existing markets or (ballpoints to colour pens)
 develop new products for new markets. (foriegns)

 Pricing
 Skimming/Penetration (high price-maxi. Profit/low price-to get maxi.mkt share)
 Distribution (channel konsa use kiya jaey, tv pe ad chala dia, yh b mkting
ka kam hai customers k brain ko target krna)
 Brand extensions (gul ahmad(mensware),eid ware, casual wear, party dress,
groom dress
 Pull/Push (advertisement/through promotional, dealers,distributors)
FINANCIAL STRATEGY
 Identifies best course of action to maximize financial value of the firm (yani
k ap yh dekhty k apki firm ko benefit kis strategy me hai apko call option
put option lene me faida hai, stock issue krny me faida hai. Tamam
financial aspects ko dekhna huta hai ju maximum value dyn firm ko)
 Achieve desired debt-equity ratio

(ap k kerzy or ap k pas kitna assasa majood hai eska ratio, ap n karza zyada
le lia growth k lie tu apka debt bhr jata hai)
 Achieve flexibility

(saray ka sara stockissue kr dia tu ap n dividend pay krna huta, interest

apko pay krna hi prta hai)
 Build defense against takeovers, acquisitions (

 Dividends management (kitna retain krna hai earning ko kitna divide

krna hai,
 Selling company patents: (company k patents ko kese protect krna hai)-
sale kr k hm revenue generate krty hain.
R & D STRATEGY (AGGRESSIVE MKT)
 deals with product and process innovation and improvement. (mkt me ap ayn tu new mkt k sth
aye reinvent the wheel means k existing me thora sa improvement la k b innovation lai ja skti
hai)
 deals with the appropriate mix of different types of R&D (basic, product, or process) and
 how new technology should be accessed—through internal development, external acquisition, or
strategic alliances ( kis mkt ki kiya needs hain hain or kis had tk customize kr skty hain)
 Technological leader/ follower (1st mover or late mover)
Operations Strategy
 determines how and where a product or service is to be manufactured, (ap yh dekho k ap n
plant wahan lgana hai jahan s 18 wheelers n guzarna hai or ponchana hai apko, q k yh
availability pe ht farak prta hai agr available na hu product tu log brand chor deyte hain,
operations wale yh sb tackle kr rhy huty)
 the level of vertical integration in the production process,(forward or backword integration- in
ko relate kr k apko dekhty hain k kesy operations ko manage kiya hain, agr koi ingrident na aye
tu problems create hujyn gi) textile-nishat
 the deployment of physical resources, and relationships with suppliers. (ap k suppliers k sth ap k
relations kese hain- 15 days ka time huta hai credit pe chezein dy k recover krny ka)
 deal with the optimum level of technology the firm should use in its operations processes (use
technology in operations R&D to improve process- yh na hu k ap asi technology adopt krlyn
heavy investment lga k jiska koiitna use na hu org me r na wo beneficial hu ap ne technology
leader bny k lie dopt ki hu pr yh glt decision hu apka)