Corporate Portfolio Analysis

When companies are having more then one business unit, they need to know the performance of their each business unit. To manage and maintain each business unit, managers make portfolio of businesses using corporate portfolio matrix.

The first and most commonly used and known portfolio matrix is BCG matrix- developed by Boston consulting. In this idea businesses could be evaluated using 2x2 matrix where we can identify that which business is offering high opportunities and which one is going in loss. This way you can best analyze your businesses and make decision in which business to invest, where to cut the costs, which needs more attention etc.

In the diagram above, the horizontal axis represents market share, which has two values either low or high; and the vertical axis indicates anticipated market growth, which also has two values either high or low.

There are four categories in which businesses are placed in order to evaluate each of them:

Cash Cows: This category business is having high market share but there growth rate is quite low. So due to high market share these are highly profit generating for you organization but there future prospects are no certain and are limited.
Managers should milk cash cows as much as they can and stop making new investments in these businesses.

Stars: these businesses have both high growth and high market share. So along with generating high amounts of profits for your organization, these also hold a dominant share of market. There growth rate is very fast and have future certainty.
Managers should invest heavily in stars to get more benefit out of these businesses. This way growth will keep on increasing and high market share will be maintained giving huge amounts of cash to organization. Eventually stars will turn into cash cows, when they will reach the stage of maturity and growth will slow down.

Question marks: these businesses have high growth but there market share is not strong. These are attractive opportunities but due to small market share they are not profit generating.
Managers should make new investments in question marks as they have growth potential. So they should invest to get the market share and enjoy high profits by holding strong market share as well. And when they will achieve the market share along with high growth, these will turn into stars and ultimately cash cows. Some of these may be sold out if managers are not willing or having heavy investments.

Dogs:Business in this category are both with low growth and low market share. These neither produce nor consume much of organizational resources.
Since these businesses are giving nothing to organization, so these should be either sold off or liquidated.


Lahore Design Studio said...

Hey this was really interesting and good to read for me. Do keep it up with such good posts and I look forward to see more of your work.

Rimon said...

This particular post is really very interesting. It has a really great piece of Data,
I enjoyed very well with this particular blog it has very useful information
I like to much the style of this Article
that's really nice and informative article. Thank You.
Your Garden Expart

Sophie Grace said...

that is a very awesome recipe. I will definitely try this at home Nonton Drama Korea

Dhruv said...

I love this content keep sharing !!!
Fashion Fabrics provide a wide range of quality fabric. Lace fabric, Prints, laces, net embroidery, khadi, denim and more.
Buy Indian Fabric By The Yard, Indian Fabric Store Online
Fabric Store, fabric, laces fabric, faric lace, print fabric, printed fabric , laces in india, lace fabric in india, fabric store in india, online fabric in india, fashion fabrics online fabric, laces, Printed, Solids, Textured, Handloom, Cotton, Rayon, Crepe, Woolen, Velvet, Gold Block, Embroidery, rayon fabric, georgette fabric, polyester fabric, cotton fabric, fabric online, linen fabric, fabric design, silk fabric, lycra fabric, jacquard fabric, velvet fabric, ikat fabric, nylon fabric, knit fabric, knit fabric, chiffon fabric, woven fabric, upholstery fabric, online fabric store, textile shop near me, fabric stores, wool fabric, fabric material

Teknoloji Haberleri said...

Teknoloji ve İnternet dünyasından en son gelişmeleri güncel olarak takip edin.

Teknoloji Haberleri
En Son Teknoloji Haberleri
En Güncel Teknoloji Haberleri
Güncel Teknoloji Haberleri
Teknoloji ve İnternet Haberleri

Post a Comment