Marketing Strategy and Competitive Positioning pdf ebook

Portfolio planning
Any diversified organisation needs to find methods for assessing the balance of businesses 
in its portfolio and to help guide resource allocation between them. A number of portfolio 
Figure 2.4 
Product 
types in the 
portfolio
Tomorrow’s
breadwinners
Death
Cycles
Life
Cycle
High
High
Low
Low
Business strength
Mark
et attr
activeness
Developments
Sleepers
Ego trips
Today’s
breadwinners
Failures
Yesterday’s
breadwinners

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37
ESTABLISHING THE CORE STRATEGY
planning models are available in the management literature to facilitate this process. The 
earliest and most basic model was the Growth–Share Matrix, developed by the Boston 
Consulting Group. More sophisticated models have been developed by consultants Arthur 
D. Little and McKinsey, as well as by organisations such as Shell and General Electric. All, 
however, share a number of key objectives (Grant, 1995):
1 
Development of business strategies and allocation of resources (both financial and mana-
gerial). By assessing the position of a business in its industry, together with the prospects 
for that industry over the medium to long term, investment priorities can be set for 
individual businesses. Those businesses that are strong in attractive markets are likely 
to be self-sustaining financially. They will, however, require attentive management to 
ensure they continue to achieve their potential. Hold or build strategies will typically be 
indicated. Weak businesses in attractive markets may require further investment to build 
a position for the future. Products in declining sectors may be less deserving of resource 
allocation unless turnaround strategies are likely to reverse market trends. In declining 
markets, products are often managed for cash flow, to enable resources to be reallocated 
to areas of the portfolio with more potential.
2