1. Portfolio models
FM : Anis Gunawan,MM

2. 2.Portfolio model Topic Exam Suggested reading
1.The strategic planning process
Intro to the Integrating case study
Chapter 1-2
Case 1 :The ABC Cheese Factory
2.Portfolio model
Page
Chapter 3
Case 2 :Abbotsleigh Citrus
3.The growth strategies
Page
Chapter 4
Case 3 :Degrees South
4.Five forces model
Page
Chapter 5
Case 4 : A retail meat market
Question No 1
5.Competitive generic strategies
Page
Chapter 6
Case 5 : A retail meat market
Question no 2
6.Competitive market position and related strategies
Chapter 8
Case 6 : A retail meat market
Question No 3
7.Strategic alliance and network
Chapter 9
Exam -

3. Portfolio models Portfolio models are a visual tool used to:
Compare all SBUs within a company on specific criteria.
Give an indication of the most logical strategic direction to take each SBU, and to what extent, i.e., the level of resources to commit.
They provide some of the supporting evidence needed to validate strategic decisions.

4. Strategic business unit (SBU)
A part of a larger business that operates as a small,
separate business. Each SBU:
operates in a different industry or market, each of which has different market conditions and potential;
has its own set of customers;
has its own set of competitors;
has a range of product/service offerings;
at different stages of the product/market life cycle; and
each with different resource needs based on potential and growth direction.

5. Product-Line Strength
Product Strategy
Product-Mix Width
Jet
Product-Line Strength

6. Product-Line Strength
Product Strategy
Product-Mix Width
Product-Line Strength
Production closed in 1991
787
Production closed in 1984

7. Airbus Industrie
Multinational Consortium of two-stated-owned enterprises:
France Aerospatiale (37,9 %) and Spain’s CASA (4,2%)
Deutsche Airbus (37,9%) and British Aerospace (20%)

8. Airbus Industrie
Airbus
A 380, Airbus’ latest product

9. The GE/McKinsey model GE
Developed by McKinsey for General Electric in the 1970s to overcome some of the limits of the BCG Model.
Uses several factors combined and compared to calculate business strength and market attractiveness.
Is calculated using management assessment.
Contains nine sectors with different strategy implications suggested for each sector.

10. The GE/McKinsey Model for Airbus
Harvest or
divest
Manage selectively or for earnings
Invest / Grow
Business strength
High Medium Low 5
High 4
Medium 3
Low 1 B A
C..\Video\AirbusvsBoeing.flv D
380
Airbus380
Airbus 340
Market attractiveness
Airbus
Airbus 319

11. The GE/McKinsey Model for Boeing
Harvest or
divest
Manage selectively or for earnings
Invest / Grow
Business strength
High Medium Low 5
High 4
Medium 3
Low 1 B A C D
B787 B
Market attractiveness B
B727

12. Parts of the GE Model
Market/industry attractiveness indicates how easy it is for the business to achieve its objectives given the opportunities within the particular market or industry.
Business strength is a comparative factor indicating how successful the business is likely to be compared to its direct competitors.
Circles represent the comparative size of the overall market.
Shaded sectors indicate the market share of the particular business or SBU.
Sectors indicate a range of strategy directions suggested for SBUs located in each sector.
Arrows indicate the future position of the SBU over the next 3 to 5 years if current strategies remain in place.

13. Calculating market attractiveness and business strength
Decide what factors are most relevant.
Decide how many factors need to be included to create a balance between completeness and functionality.
Decide the relative weighting to be attributed to each factor.
Allocate a score for the company’s SBUs representing performance against each factor.

14. Market Attractiveness Analysis, 2009
Rating
( 1 – 5 )
Description
Weight
Value
Overall market size
Annual market growth rate
Historical profit margin
Competitive intensity
Technological requirements
Inflationary vulnerable
Energy requirement
Environment impact
Social/political/legal
0.20
0.15
0.05
Must be
acceptable
4.00
5.00
2.00
3.00
0.80
1.00
0.60
0.30
0.15
0.10
3.70
1.00

15. Business Strength Analysis, 2000
Rating
( 1 – 5 )
Description
Weight
Value
Market share
Share growth
Product quality
Brand reputation
Distribution network
Promotional effectiveness
Productive capacity
Productive eficiency
Unit costs
Material supplies
R & D performance
Managerial personnel
0.10
0.15
0.05
4.00
2.00
5.00
3.00
0.40
0.30
0.50
0.20
0.15
0.10
0.45
0.25
1.00
3.40

16. Market attractiveness
GE port folio strategy
Strong
Medium
Weak
5.00
3. Build
selectively
1.Protect
position
2.Invest to
build
High
3.67
Market attractiveness
5. Selectively
manage
for earning
6. Limited
Expansion
Or divest
4. Build
selectively
Medium
2.33
7. Protect
& refocus
8. Manage
For earning
9.Divest
Low
1.00
2.33
5.00
3.67
1.00
Business strength

17. G.E. Port Folio Strategy 3.Build selectively 1. Protect position
2. Invest to build
Invest to growth at maximum
digestible rate.
Concentrate effort on maintaining
strength
Challenge for leadership
Build selectively on strengths
Reinforce vulnerable areas
Specialize around limited strengths
Seek way to overcome weaknesses
Withdraw if indications of sustainable
growth are lacking
4. Build selectively
5. Selectively/
Manage for earnings
6. Limited expansion
Or Harvest
Invest heavily in most attractive
segments
Build up ability to counter
competition
Emphasize profitable by raising
productivity
Protect existing program
Concentrate investments in
segments where
profitable is good and risk
are relatively low
Look for way to expand without
high risk, otherwise, minimize
investment and
rationalize operations
7.Protect and
refocus
8. Manage for
Earning
9. Divest
Protect position in most
profitable segments.
Upgrade product line
Minimize investment
Sell at time that will maximize
cash value
Cut fixed costs avoid investment
meanwhile
Manage for current earnings
Concentrate on attractive
segments.
Defend strengths

18. Market Attractiveness
Cars
G.E. Port Folio Strategy
Weak
Strong
Medium
5.00
2014
High
3.67
Market Attractiveness
Build
Selectively
Medium
2011
2.33
Low
1.00
5.00
3.67
2.33
1.00
Business Strength