STRATEGIC THINKING AND PLANNING FOR BUSINESS STRATEGIC POSITIONING

Learning objectives Investigate the BCG matrix Discuss the importance of competitive advantage Why do we need to know what our competition is doing?

Portfolio analysis Organisations don’t just operate one product in one market. They can have many differing products in differing industries All the products will have the same aim of maximising profit for the organisation One way of analysing a the portfolio of a business is the BCG matrix

BCG matrix

Dogs These are products with a low share of a low growth market. They do not generate cash for the company, they tend to absorb it.

Cash cow These are products with a high share of a slow growth market. Cash Cows generate more than is invested in them. These are great products for a company.

Problem child These are products with a low share of a high growth market. They consume resources and generate little in return. They absorb a lot of money as you attempt to increase market share mainly in advertising

Stars These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income and therefore these products should be kept and developed.

Exercise 1 As 2 groups identify a organisation which has a large variety of products and apply a portfolio analysis to the organisation What is the ideal portfolio? Do you have any criticisms of the matrix?

Needs of customers How has this changed in the last ten years? How has this impacted on businesses? What will happen in the future?

Competition In our business we need to know/assume/guess! What the competition are planning, and incorporate what they are doing into our plans This is to combat other firms getting an early advantage in the market

Examples of knowing your competition

Competitive advantage