1. Portfolio Analysis
Strategic Implementation

2. Prepared By
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Manu Melwin Joy
Assistant Professor
Ilahia School of Management Studies
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com

3. Portfolio Analysis
• Executives in charge of
firms involved in many
different businesses
must figure out how to
manage such portfolios.

4. Portfolio Analysis
• General Electric (GE), for
example, competes in a very
wide variety of industries,
including financial services,
insurance, television, theme
parks, electricity generation,
lightbulbs, robotics, medical
equipment, railroad
locomotives, and aircraft jet
engines. When leading a
company such as GE,
executives must decide
which units to grow, which
ones to shrink, and which
ones to abandon.

5. The Boston Consulting Group
(BCG) Matrix

6. (BCG) Matrix
• The Boston Consulting
Group (BCG) matrix is the
best-known approach to
portfolio planning. Using
the matrix requires a
firm’s businesses to be
categorized as high or low
along two dimensions: its
share of the market and
the growth rate of its
industry.

7. Question Marks
• Divisions in Quadrant I have a
low relative market share
position, yet they compete in
a high-growth industry.
Generally these firms’ cash
needs are high and their cash
generation is low. These
businesses are called
Question Marks because the
organization must decide
whether to strengthen them
by pursuing an intensive
strategy.

8. Stars
• Quadrant II businesses (Stars)
represent the organization’s best
long-run opportunities for growth
and profitability. Divisions with a
high relative market share and a
high industry growth rate should
receive substantial investment to
maintain or strengthen their
dominant positions. Forward,
backward, and horizontal
integration; market penetration;
market development; and product
development are appropriate
strategies for these divisions to
consider.

9. Cash Cows
• Divisions positioned in
Quadrant III have a high
relative market share
position but compete in a
low-growth industry. Called
Cash Cows because they
generate cash in excess of
their needs, they are often
milked. Many of today’s Cash
Cows were yesterday’s Stars.
Cash Cow divisions should be
managed to maintain their
strong position for as long as
possible.

10. Dogs
• Quadrant IV divisions of the
organization have a low
relative market share
position and compete in a
slow- or no-market-growth
industry; they are Dogs in the
firm’s portfolio. Because of
their weak internal and
external position, these
businesses are often
liquidated, divested, or
trimmed down through
retrenchment.

11. GEC Model

12. GEC Model
• In consulting
engagements with
General Electric in the
1970's, McKinsey &
Company developed a
nine-cell portfolio matrix
as a tool for screening
GE's large portfolio of
strategic business units
(SBU).

13. GEC Model
• The GE matrix attempts to
improve upon the BCG matrix
in the following two ways:
– The GE matrix generalizes the
axes as "Industry
Attractiveness" and "Business
Unit Strength" whereas the
BCG matrix uses the market
growth rate as a proxy for
industry attractiveness and
relative market shares as a
proxy for the strength of the
business unit.
– The GE matrix has nine cells vs.
four cells in the BCG matrix.

14. GEC Model

16. Strategic Implications
• Grow strong business
units in attractive
industries, average
business units in
attractive industries, and
strong business units in
average industries.

17. Strategic Implications
• Hold average businesses
in average industries,
strong businesses in weak
industries, and weak
business in attractive
industries.

18. Strategic Implications
• Harvest weak business
units in unattractive
industries, average
business units in
unattractive industries,
and weak business units
in average industries.