SM_UNIT II_Corporate Portfolio Analysis.pptx

Corporate Portfolio Analysis- SWOT Analysis, BCG Matrix, GE Nine Cell
Matrix, Hofer’s Matrix, Importance and Problems of Strategic Implementation,
Importance, and Techniques of Strategic Evaluation and Control

1. Corporate Portfolio Analysis UNIT II  STRATEGIC MANAGEMENT 1 Dr Vijay Vishwakarma

2. INDEX Corporate Portfolio Analysis-  SWOT Analysis,  BCG Matrix,  GE Nine Cell Matrix,  Hofer’s Matrix,  Importance and Problems of Strategic Implementation, Importance, and Techniques of Strategic Evaluation and Control 2 Dr Vijay Vishwakarma

3. Corporate Portfolio Analysis is simply a portfolio analysis that is used for competitive analysis and strategic planning in various small to large companies including multi-product and multi-business firms. It can be defined as a set of techniques that helps strategists in taking strategic decisions regarding individual products or businesses in a firm’s portfolio. In this, each segment of company or organisation’s product line is evaluated. This includes: sales production cost market share potential market share. https://indiaclass.com/corporate-portfolio-analysis/ 3 Dr Vijay Vishwakarma

4. TECHNIQUES SWOT Analysis,  BCG Matrix,  GE Nine Cell Matrix,  Hofer’s Matrix,  4 Dr Vijay Vishwakarma

5. SWOT Analysis 5 Dr Vijay Vishwakarma

6. 6 Dr Vijay Vishwakarma

7. SWOT Analysis  is the most renowned tool for audit and analysis of the overall strategic position of the business and its environment. Its key purpose is to identify the strategies that will create a firm specific business model that will best align an organization’s resources and capabilities to the requirements of the environment in which the firm operates. 7 Dr Vijay Vishwakarma

8. Strengths -  Strengths are the qualities that enable us to accomplish the organization’s mission. These are the basis on which continued success can be made and continued/sustained. Strengths can be either tangible or intangible. These are what you are well-versed in or what you have expertise in, the traits and qualities your employees possess (individually and as a team) and the distinct features that give your organization its consistency. Strengths are the beneficial aspects of the organization or the capabilities of an organization, which includes human competencies, process capabilities, financial resources, products and services, customer goodwill and brand loyalty. Examples of organizational strengths are huge financial resources, broad product line, no debt, committed employees, etc. 8 Dr Vijay Vishwakarma

9. Weaknesses -  Weaknesses are the qualities that prevent us from accomplishing our mission and achieving our full potential. These weaknesses deteriorate influences on the organizational success and growth. Weaknesses are the factors which do not meet the standards we feel they should meet. Weaknesses in an organization may be depreciating machinery, insufficient research and development facilities, narrow product range, poor decision-making, etc. Weaknesses are controllable. They must be minimized and eliminated. For instance - to overcome obsolete machinery, new machinery can be purchased. Other examples of organizational weaknesses are huge debts, high employee turnover, complex decision making process, narrow product range, large wastage of raw materials, etc. 9 Dr Vijay Vishwakarma

10. Opportunities -  Opportunities are presented by the environment within which our organization operates. These arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable. Organizations can gain competitive advantage by making use of opportunities. Organization should be careful and recognize the opportunities and grasp them whenever they arise. Selecting the targets that will best serve the clients while getting desired results is a difficult task. Opportunities may arise from market, competition, industry/government and technology. Increasing demand for telecommunications accompanied by deregulation is a great opportunity for new firms to enter telecom sector and compete with existing firms for revenue. 10 Dr Vijay Vishwakarma

11. Threats -  Threats arise when conditions in external environment jeopardize the reliability and profitability of the organization’s business. They compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can be at stake. Examples of threats are - unrest among employees; ever changing technology; increasing competition leading to excess capacity, price wars and reducing industry profits; etc. 11 Dr Vijay Vishwakarma

12. https://www.managementstudyguide.com/swot-analysis.htm 12 Dr Vijay Vishwakarma

13. BCG Matrix 13 Dr Vijay Vishwakarma

14. 14 Dr Vijay Vishwakarma

15. 15 Dr Vijay Vishwakarma

16. The horizontal axis of the BCG Matrix represents the amount of market share of a product and its strength in the market. By using relative market share, it helps measure a company’s competitiveness. The vertical axis of the BCG Matrix represents the growth rate of a product and its potential to grow in a particular market. In addition, there are four quadrants in the BCG Matrix: Question marks : Products with high market growth but a low market share. Stars : Products with high market growth and a high market share. Dogs : Products with low market growth and a low market share. Cash cows : Products with low market growth but a high market share. 16 Dr Vijay Vishwakarma

17. The BCG Matrix: Question Marks Products in the question marks quadrant are in a market that is growing quickly but where the product(s) have a low market share.  Question marks are the most managerially intensive products and require extensive investment and resources to increase their market share.  Investments in question marks are typically funded by cash flows from the cash cow quadrant. In the best-case scenario, a firm would ideally want to turn question marks into stars (as indicated by A). If question marks fail in becoming a market leader, they end up becoming dogs when market growth declines. 17 Dr Vijay Vishwakarma

18. The BCG Matrix: Dogs 18 Dr Vijay Vishwakarma

19. The BCG Matrix: Stars 19 Dr Vijay Vishwakarma

20. The BCG Matrix: Cash Cows Products in the cash cows quadrant are in a market that is growing slowly and where the product(s) have a high market share.  Products in the cash cows quadrant are thought of as products that are leaders in the marketplace.  The products already have a significant amount of investments in them and do not require significant further investments to maintain their position. Cash flows generated by cash cows are high and are generally used to finance stars and question marks. Products in the cash cows quadrant are “milked” and firms invest as little cash as possible while reaping the profits generated from the products. https://corporatefinanceinstitute.com/resources/management/boston-consulting-group-bcg-matrix/ 20 Dr Vijay Vishwakarma

21. GE Nine Cell Matrix 21 Dr Vijay Vishwakarma

22. The GE matrix was developed by Mckinsey and Company consultancy group in the 1970s.  The nine cell grid measures business unit strength against industry attractiveness and this is the key difference. Whereas BCG is limited to products, business units can be products, whole product lines, a service or even a brand. You can plot these chosen units on the grid and this will help you to determine which strategy to apply. 22 Dr Vijay Vishwakarma

23. The GE/McKinsey Matrix is a nine-cell (3 by 3) matrix  used to perform business portfolio analysis  as a step in the strategic planning process. The GE/McKinsey Matrix identifies  the optimum business portfolio as one that fits perfectly to the company’s strengths and helps to explore the most attractive industry sectors or markets. The objective of the analysis is to position each SBU on the chart depending on the  SBU’s Strength and the Attractiveness of the Industry Sector or Market  on which it is Each axis is divided into Low, Medium and High, giving the nine-cell matrix as depicted below. 23 Dr Vijay Vishwakarma

24. Different  factors can be used to define Industry Attractiveness.  Like:-Market Size, Market Growth Rate,  Demand variability, Industry Profitability, Competitive Rivalry, Global Opportunities, Entry and exit barriers,  Capital requirement, Macro environmental Factors (PEST) Different  factors can also be used to define SBU Strength.  Like:- Market Share, Distribution Channel Access, Financial Resources, R&D Capability, Brand equity, Production Capacity, Knowledge of customer and market, Caliber of management. Relative cost position 24 Dr Vijay Vishwakarma

25. 25 Dr Vijay Vishwakarma

26. GROW, HOLD, HARVEST Grow –  Business units that fall under grow attract high investment. Firms may go for product differentiation or Cost leadership. Huge cash is generated in this phase. Market leaders exist in this phase. Hold –  Business units that fall under hold phase attract moderate investment. Market segmentation, Market penetration, imitation strategies are adopted in this phase. Followers exist in this phase. Harvest –  Business units that fall under this phase are unattractive. Low priority is given in these business units. Strategies like divestment, Diversification, mergers are adopted in this phase. https://noteswa.in/ge-9-cell-matrix/comment-page-91/ 26 Dr Vijay Vishwakarma

27. 27 Dr Vijay Vishwakarma

28. The objective of this matrix is to assess the industry attractiveness and competitive strength of strategic business units. Factors affecting the industry attractiveness are market growth rate, market size, demand variability, market profitability etc and all these factors are external to the organization. Internal factors such as assets, competencies, brand strength, profit margins and quality etc make a competitive strength or business strength of organization. 28 Dr Vijay Vishwakarma

29. Patanjali’s Dantkanti , Honey and Ghee operate in the green segment giving the organization opportunities to go ahead and grow & build the product. The green zone pushes an organization for expansion strategies. Patanjali’s Candy, Fruit juice, and medicines takes place in yellow category signifying that brand should hold the product for some time and makes necessary developments. The yellow area suggests making strategies aimed at maintaining stability. Patanjali’s Home care category like agarbatti , dish wash bar etc comes under red area due to the presence of other strong competitors. The red segment signifies that company should start harvesting the brand. Brand harvesting means maximizing your profit by reducing your expenditure on brand due to its decline phase in product life cycle. Source:  http://bit.ly/2vct8e6  /  http://bit.ly/2wALvYj 29 Dr Vijay Vishwakarma

30. Hofer’s Matrix 30 Dr Vijay Vishwakarma

31. The Hofer Matrix is a tool to determine a company's competitive position by identifying internal and external factors. It is often used for business portfolio analysis, which is very similar to BCG and McKinsey GE Matrix. You can use this matrix when an organization wants to know which product(s) to put resources into. It can be used effectively to balance a company's product portfolio. 31 Dr Vijay Vishwakarma

32. Charles Hoffer proposed a 3 x 5 matrix in which businesses are plotted in terms of product/market evolution and competitive position.  Thus Hofer’s product-market evolution model is a 15 cell matrix of a firm’s business.  Hoffer's product market evolution matrix adds additional cells to the display of market evolution and business position and uses a finer grid. The relative size of the industry is shown in circles, and the shadow of the business’s market share is shown in this template. 32 Dr Vijay Vishwakarma

33. Matrix is created based on two criteria: the maturity of the product in the industry sector, divided into 5 phases and the competitive position of companies in that industry sector into 3 phases.  This circles are placed in the appropriate cell, where represent different areas of activity in the company, and the size of the circle is proportional to size of the sector.  Sometimes segments could be added to the circle, which reflect the market share of company in the sector. 33 Dr Vijay Vishwakarma

34. Hofer’s matrix reflects the stage of development of the product or market.  Business units are placed on a grid showing their stage of product-market evolution and their competitive position.  Circles represent the industry and the pie wedges represent the market share of the business unit.  Hoffers evolution matrix are useful to develop strategies that are appropriate at different stages of the product life cycle. 34 Dr Vijay Vishwakarma

35. 35 Dr Vijay Vishwakarma

36. In Hofer’s matrix, the vertical axis represents the stages of product-market evolution and horizontal axis represents the SBU’s competitive position. In this matrix, three stages of competitive position of SBU (viz., strong, average and week) are shown on horizontal axis.  The vertical axis shows the industry’s state in the evolutionary life cycle, starting with initial development and passing through the growth, competitive shake-out, maturity, saturation and decline stages. https://www.businessmanagementideas.com/strategic-management/business-portfolio-analysis-matrix-strategic-management/18787 36 Dr Vijay Vishwakarma

37. Importance and Problems of Strategic Implementation Dr Vijay Vishwakarma 37

38. Strategy implementation is the process of making your strategic planning come to life . This is where you take the goals you’ve laid out and turn them into actions that move the needle in your business. Strategy implementation aims to get your employees, partners, and vendors on board with the new plan and ensure everyone has the necessary skills to make it happen. Dr Vijay Vishwakarma 38

39. It Creates Clarity In The Process It Creates Accountability It Makes Data Actionable It Helps You Make Decisions It Helps You Manage Your Time Better It Allows You To Be Proactive, Not Reactive It Helps You Avoid Missteps And Mistakes That Could Have Been Avoided In The First Place It Helps You Avoid Missteps And Mistakes That Could Have Been Avoided In The First Place Dr Vijay Vishwakarma 39 IMPORTANCE OF STRATEGIC IMPLEMENTATION

40. Problems of Strategic Implementation Lack Of Clarity About The Strategy Lack Of Commitment To The Strategy Lack Of Communication And Engagement With Employees Inability To Deliver On The Strategy’s Goals And Objectives Lack Of Integration With Other Strategies Or Initiatives Failure To Measure Progress Against Key Performance Indicators  Lack of Leadership- Obstacles to Strategy Implementation Lack Of Resources Dr Vijay Vishwakarma 40 https://accountingprofessor.org/strategy-implementation-steps-challenges-and-tips/#:~:text=The%20success%20of%20your%20strategy,five%20factors%20in%20more%20detail .

41. Importance, and Techniques of Strategic Evaluation and Control Dr Vijay Vishwakarma 41

42. Strategic evaluation and control is defined as a process of estimating the effectiveness of a strategy in achieving the organizational objectives and taking corrective actions whenever required. Dr Vijay Vishwakarma 42

43. Strategic evaluation is defined as the process of assessing the efficacy of the strategy in achieving the organizational objectives. In other words, strategic evaluation checks that whether the strategy that was selected and implemented has met the organizational objectives.  It can be regarded as the performance appraisal of organizational strategies. Dr Vijay Vishwakarma 43

44. Importance of Strategic Evaluation Getting Feedback, Appraisal, and Reward Verifying the Strategic Choice Checking the Link between the Decisions and Strategy Ensuring Successful Strategic Management Further Planning of Strategies Dr Vijay Vishwakarma 44 https://noteswa.in/strategic-evaluation-and-control/