lecture 4 Business Portfolio Analysis Business portfolio consulting

lecture 4 Business Portfolio Analysis

Business portfolio • consulting firms: BCG, Mc. Kinsey etc. • Business selection for multi-business and cross-industry companies

• BCG Matrix high Industrial growth average rate Star Question mark Cash Cow Dog ％ low 1 Relative market share 0

Basic principles for BCG analysis • Reasonable businesses distribution • Reasonable cash flow among different businesses • The importance of STAR • Avoid the lack of certain business • Proper moving speed among boxes

Critiques to BCG Matrix • The difficulty of defining market, market share and growth rate – Scope of industry – Focusing on past not future • Too simple to label the status high or low • Focusing on phenomenon not potential

Case high Star Question mark Industrial growth 复方阿胶浆 average rate 补血膏 瓶装阿胶 补血颗粒 Cash Cow Dog 阿胶 ％ 复方阿胶颗粒 low 1 Relative market share 0

ROR size scale competing The market share and the rate of return scattered specialization

Business status-industry attractiveness matrix • Factors reflecting industry attractiveness – Market growth rate, industry size and profitability. Such as market growth rate, industry size and profit, competition, technology, social environment and etc. • Factors reflecting business competitive advantage – Market share, profit rate, competitiveness, technology, management

Industrial attractiveness Attractive (100%) Unattractive (-100%) leader struggle question leader custody decline Cash supplier decline hopeless Strong (100%) Weak ( -100%) Business status

Product-lifecycle analysis Competitive status Product-market phases strong entering developing excluding mature decline normal weak