Tuesday, June 21, 2011

Models to Analyze your Product Portfolio

If  you are required to manage a range of products you must be in a position to evaluate your products' performance.  There are two models that are considered appropriate for such analyses and are based on two different templates and relevant guidelines:
  1. Boston Matrix
  2. Directional Policy Matrix
This post will discuss the Boston Matrix
The Matrix seeks to guide you in a number of decisions:
  • How to allocate resources
  • How to manage each product
  • What to expect, in financial terms, for each product
The following diagram exhibits the dimensions of Boston Matrix:



 Below I provide a brief description of the various dimensions and basic guidelines of what a company should do.  A summary is also given in the diagram below:

Dogs


These are products with a low share of a low growth market. They do not generate cash for the company, they tend to absorb it. You must consider getting rid of these products.

Cash Cows


These are products with a high share of a slow growth market. Cash Cows generate more more than is invested in them. So keep them in your portfolio of products for the time being.

Problem Children


These are products with a low share of a high growth market. They consume resources and generate little in return. They absorb most money as you attempt to increase market share.

Stars


These are products that are in high growth markets with a relatively high share of that market. Stars tend to generate high amounts of income. Keep and build your stars.

For each dimension there are different strategies to employ.  I have summarized them for your convenience in the following table:



For any further information please do not hesitate to contact me: info@antonymichail.com

Dr. A. Michail


YOU CAN BUY my product portfolio analysis TEMPLATE (in MICROSOFT EXCEL) HERE for ONLY $10 (the toolkit includes both DPM, BCG)

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