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Strategy Outline part 2

Strategy Outline part 2 - Business Portfolio Analysis...

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THE PROBLEM Many, diverse SBUs/product-markets/brands How do you allocate limited resources across them? Business Portfolio Analysis  Consider businesses, SBUs, brands as a           portfolio  of investments Categorize each by (market) attractiveness and             relative competitive advantage Evaluate overall position and allocate resources Business Portfolio Analysis
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BCG (BOSTON CONSULTING GROUP) MATRIX GROWTH-SHARE MATRIX Method: Map units (SBUs, brands, products) together according to: Market _____________ Market growth Relative __________________ Market share relative to strongest competitor
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BCG Growth-Share Matrix for P&G Market Growth Relative Market Share 10 % RELATIVE MARKET SHARE = FIRM’S MARKET SHARE / MARKET SHARE OF LARGEST COMPETITOR CREST = 35 % Leader = COLGATE = 36% Relative Share =35/ 36 = . 98 TOOTHPASTE MARKET GROWTH = -.9% 10x 1 x .1x A
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BCG Growth-Share Matrix Market Growth Relative Market Share 10 % PROCTER & GAMBLE A = toothpaste B = detergent C = color cosmetics D = dog food ISSUES? A B C D Market Share Leader Lower market share Low Growth Markets High Growth Markets 10x 1 x .1x
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TWO ASSUMPTIONS OF BCG MATRIX THEORY Ø High growth markets are more __________, but more __________ and require more investment (cash) than low growth markets Ø High relative share implies lower ______ and more profit.
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