Portfolio Analysis Mktg 485 May 19, 2004
Diversification Meaning? Why Diversify? Why not Diversify?
Coca Cola
Business Performance Share Position Share Growth Profitability
Portfolio Analysis and Strategic Market Plan Business Performance – what will we end up with? Market Attractiveness – what do we need to succeed? Competitive Advantage – what resources do we have?
Competitive Advantage Portfolio Analysis Very Attractive Market Attractiveness Very Unattractive Very Weak Very Strong Competitive Advantage
Microsoft’s Financials Segment Revenue Profits Growth Home & Entertainment $505 million - $177 million 82% Business Solutions $107 million - $68 million Internet(MSN) $531 million - $97 million CE/Mobility $17 million - $33 million Information Worker $2.39 billion + $1.88 billion 26% Client $2.89 billion + $2.48 billion 34% Server $1.52 billion + $519 million 13%
Fall 2004 Changes
Market Attractiveness - 1 Market Forces Attractive Not Attractive Market Size Growth Rate Buying Power Customer Loyalty
Market Attractiveness - 2 Competitive Intensity Attractive Not Attractive Number of Competitors Price Rivalry Ease of Entry Substitutes
Market Attractiveness - 3 Market Access Attractive Not Attractive Customer Familiarity Channel Access Sales Requirements Company Fit
Competitive Advantage - 1 Differentiation Attractive Not Attractive Product Quality Service Quality Brand Image Relative Price
Competitive Advantage - 2 Cost Advantage Attractive Not Attractive Unit Cost Transaction Cost Marketing Expense Overhead Expense
Competitive Advantage - 3 Marketing Advantage Attractive Not Attractive Market Share Brand Awareness Distribution Sales Coverage
Strategies Protect Invest to hold a competitive position Grow Invest to grow a competitive advantage Focus Selectively narrow market focus to profitable segments
Strategies Harvest Adjust prices and marketing expenses to gradually exit a market Entry Invest to enter an attractive market Divest Quick divestment from a market when there are no short-term profits to be made
Competitive Advantage Portfolio Analysis Very Attractive Offensive (Grow) Offensive (Grow) or Defensive (Protect) Defensive (Protect) Offensive (Grow) or Defensive (Protect/Harvest) Offensive (Grow) or Defensive (Protect/Focus) Defensive (Divest or Harvest) Market Attractiveness Very Unattractive Very Weak Very Strong Competitive Advantage
Question 7 Product-Market Share Sales (mills) Market Attract. Competitive Adv. A 10% $20 20 40 B 33% $50 75 80 C 5% $10 85 15
Competitive Advantage Portfolio Analysis Very Attractive Market Attractiveness Very Unattractive Very Weak Very Strong Competitive Advantage
Question 8 Prod-Mkt Strategy Share Object Market Demand Market Growth Reduced Focus 5% $200 m B Protect Share 33% $150 m 7% C Grow Share 10% $200 20%