Portfolio Planning

11

Portfolio PlanningPortfolio Planning Used to help managers decide on Used to help managers decide on

investing scarce organizational investing scarce organizational

resources among competing business resources among competing business

opportunities.opportunities.

Useful for multibusiness or multiproduct Useful for multibusiness or multiproduct

situationssituations..

22

33

Boston Consulting GroupBoston Consulting Group

Who is Who is the the Boston Consulting GroupBoston Consulting Group

??

Most well-known for “The Pricing Most well-known for “The Pricing

Paradox” and the BCG MatrixParadox” and the BCG Matrix

44

BCG MatrixBCG Matrix

Allows Allows for Strategy Formulation by for Strategy Formulation by

analyzing business opportunities analyzing business opportunities

according to according to ……

1.1. Industry or market growth rateIndustry or market growth rate

Low versus highLow versus high

2.2. Market shareMarket share

Low versus highLow versus high

55

High

MarketGrowth

High

Low

Market ShareLow

BCG Matrix

66

High

MarketGrowth

High

Low

Market ShareLow

BCG Matrix

Question Mark•Poor position in a great market.•Grow or get out

Star•Market leader in a growing market.•Invest in further growth.

Dog•Poor position in a dieing market.•“Kick the dog to the curb”

Cow•Great position in a market with little growth.•“Milk it”