Portfolio Analysis GE Tool for Analyzing Opportunities & Ability to Compete.

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Presentation transcript:

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.

GE Portfolio Analysis 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

GE Portfolio Analysis Industry/Market Indicators Technological Patents & copyrights Will it become obsolete Sociopolitical Social attitudes & trends Laws & government regulations

GE Portfolio Analysis 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

GE Portfolio Analysis Business Strength Indicators Technological Company’s ability to cope with change Technological skills Patent Protection Sociopolitical Company’s responsiveness & flexibility

GE Portfolio Example Distribution Net Product Quality.331 Market Share Business Profit Margins Growth Size ValueRating (1- 5)WeightMarket Factor

GE Portfolio Analysis Market Low Medium High LowMediumHigh Business

Divest Sell at time that will maximize cash value Cut fixed costs and avoid investment Harvest Minimize Investment Protect positions in most profitable segments Generate Cash Manage for current earnings Concentrate on attractive Segments Defend Strengths Low Harvest (Gradual Withdrawal) or Limited Expansion Look ways to expand without high risk Or Minimize investment Manage for Earnings Protect existing programs Concentrate on profitable, less risky segments Challenge Leader/Build Selectively In most attractive markets Or counter competition Emphasize profitability by raising productivity Medium Overcome Weakness, Find Niche or Quit Build Selectively Challenge Leader Invest to Build Selectively Reinforce Strengths Maintain Leadership Invest to Grow Concentrate on Maintaining Strength High WeakMediumStrong Market Attractiveness PositionCompetitive