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%