Professor Ken Homa Georgetown University. Portfolio Matrix. Proprietary Material. K.E. Homa

Professor Ken Homa Georgetown University Portfolio Matrix Proprietary Material © K.E. Homa Opinion The single most important MBA framework … Mat...
Author: May Simpson
15 downloads 1 Views 289KB Size
Professor Ken Homa Georgetown University

Portfolio Matrix

Proprietary Material © K.E. Homa

Opinion The single most important MBA framework …

Matrix oriented on the two most important questions: • How attractive is the industry ? • How strong is the company’s competitive position ?

Portfolio Matrix MARKET ATTRACTIVENESS

Low

High

- Size - Growth - Margins

Profit Pool ?

Market Attractiveness Many factors can be considered (see any strategy textbook)

Easy to lose forest in the trees Key question: size of profit pool

Portfolio Matrix MARKET ATTRACTIVENESS

Low

High

COMPETITIVE POSITION

Competitive Position

- Market Presence Established? First Mover?

- Positioning - Differentiation - Relative Cost

Profit Pool ?

Key question: Potentially Winnable Share of Pool

Share?

Each of the 4 quadrants has an associated generic strategy…

Portfolio Matrix

COMPETITIVE POSITION

MARKET ATTRACTIVENESS

Low

High

Harvest

Grow / Protect

Share? Divest

Develop or Withdraw

Profit Pool ?

Matrix sorting has applicability to multiple applications…

Portfolio Matrix

COMPETITIVE POSITION

MARKET ATTRACTIVENESS

Low

High

Harvest

Grow / Protect

Applications Opportunity screening Investment strategy

Divest

Develop or Withdraw

Portfolio balancing

Portfolio Matrix Links to PLC …

Portfolio Matrix

Market Attractiveness

Start with the basic Portfolio Matrix …

Competitive Position Low

High

Develop or Withdraw

Grow / Protect

Profit Pool ? Divest

Harvest

Share?

Flip the axes…

Portfolio Matrix

Competitive Position

Market Attractiveness Low

High

Harvest

Grow / Protect

Share? Divest

Develop or Withdraw

Profit Pool ?

Flip the columns …

Portfolio Matrix

Competitive Position

Market Attractiveness High

Low

Grow / Protect

Harvest

Share? Develop or Withdraw

Divest

Profit Pool ?

Overlay the PLC…

Portfolio Matrix

Competitive Position

Market Attractiveness High

Low

Growth

Maturity

Grow / Protect

Harvest

PLC Share?

Develop or Withdraw

Divest

Intro

Decline

Profit Pool ?

Balanced portfolio: • Profits growth • Internally financed

Can then link to more specific PLC management direction…

Product Life Cycle Maturity Growth

Decline

Introduction

• Typical pattern, conceptually based • Cash flow critical, portfolio linked • Manageable: strategically, tactically

PLC Management Maturity

Longer The “Long Tail” PLC Regeneration

Growth Higher Market Development Versioning

Introduction

More Likely

Decline

Faster Diffusion of Innovation Technology Adoption

Roger’s 5 Factors Crossing the Chasm

Worth betting ?

More profitably …

Differentiated PLC Management PLC Phase

Investment Policy

Strategic Role

Management Focus

Introduction

Phased / Selective

Establish a strategic Market position 1st Mover ? beachhead

Growth

Aggressive

Provide a base of future cash flows

Sales/Share Installed base

Maturity

Contained

Generate cash for current needs

Profitable Share

(e.g. cost reduction and line extensions)

Decline

Highly Restrictive

(including NPD)

Maximize short-term Profits/Cash profits; contain any Last standing ? wind-down losses

Linking PLC & Value Disciplines Main Street

The Chasm

Early Market

The Tornado The Bowling Alley Product Leadership Customer Intimacy

Customer Intimacy Operations Excellence

Appendices A - Portfolio Matrix Variants B – Link to HomaFiles Point & Click Map

Appendix A

Portfolio Matrix Variants

BCG Portfolio Matrix Questions

High

Stars

?

R e l a ti v e G r o w t h

Low Dogs

Low

Relative Market Share

Cash Cows

High

GE Portfolio Matrix Business Strength Strong

Medium

Weak

High

Protect Position

Invest to Build

Build Selectively

Medium

Build Selectively

Selectivity/ Manage for Earnings

Limited Expansion or Harvest

Manage for Earnings

Divest

Low

Protect and Refocus

Strategies

Portfolio Matrix Opportunity Screening

COMPETITIVE POSITION

MARKET ATTRACTIVENESS

Low

High

Why ?

Go

No Go How to ?

Portfolio Matrix – Poker Analogy

Strength of Hand

Size of Kitty Low

High

Raise

Call Share?

Fold

Draw

Profit Pool ?

Appendix B

Link to Homa Files Point & Click Map

click to link to Homa Files Point & Click Map

Suggest Documents