Portfolio Analysis

1
Portfolio Analysis

• Mktg 485
• May 19, 2004

2
Diversification

• Meaning?
• Why Diversify?
• Why not Diversify?

3
Coca Cola
4
Business Performance

• Share Position
• Share Growth
• Profitability

5
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?

6
Portfolio Analysis
VeryAttractive



Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
7
Microsofts 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
8
Fall 2004 Changes
9
Market Attractiveness - 1
Market Forces Attractive Not Attractive
Market Size
Growth Rate
Buying Power
Customer Loyalty
10
Market Attractiveness - 2
Competitive Intensity Attractive Not Attractive
Number of Competitors
Price Rivalry
Ease of Entry
Substitutes
11
Market Attractiveness - 3
Market Access Attractive Not Attractive
Customer Familiarity
Channel Access
Sales Requirements
Company Fit
12
Competitive Advantage - 1
Differentiation Attractive Not Attractive
Product Quality
Service Quality
Brand Image
Relative Price
13
Competitive Advantage - 2
Cost Advantage Attractive Not Attractive
Unit Cost
Transaction Cost
Marketing Expense
Overhead Expense
14
Competitive Advantage - 3
Marketing Advantage Attractive Not Attractive
Market Share
Brand Awareness
Distribution
Sales Coverage
15
Strategies
Protect Invest to hold a competitive position
Grow Invest to grow a competitive advantage
Focus Selectively narrow market focus to profitable segments
16
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
17
Portfolio Analysis
VeryAttractive
Offensive(Grow) Offensive(Grow) orDefensive(Protect) Defensive(Protect)
Offensive(Grow) orDefensive(Protect/Harvest) Offensive(Grow) orDefensive(Protect/Focus) Offensive(Grow) orDefensive(Protect/Focus)
Defensive(Divest or Harvest) Defensive(Divest or Harvest) Defensive(Divest or Harvest)
Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
18
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
19
Portfolio Analysis
VeryAttractive



Market Attractiveness
VeryUnattractive
Very Weak
Very Strong
Competitive Advantage
20
Question 8
Prod-Mkt Strategy Share Object Market Demand Market Growth
A Reduced Focus 5 200 m 5
B Protect Share 33 150 m 7
C Grow Share 10 200 20