GENERATING ALTERNATIVE STRATEGIES USING PORTFOLIO MODELS

اَلسَّلاَمُ عَلَيْكُمْ وَرَحْمَةُ اللهِ وَبَرَكَا تُهُ

WHAT HAVE I LEARNED TODAY

PORTFOLIO MODELS:

↱ BCG ( Boston Consulting Group Model)

↱General Electric

↱Shell

↱The internal-external matrix

1) BCG 

       = Based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit.

1. Stars (high growth, high market share)

    = use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.

    = Frequently roughly in balance on net cash flow. However, if needed any attempt should also generate large amounts of cash

2. Cash Cows (low growth, high market share)

      = profits and cash generation should be high, and because of the low growth, investments needed

should be low. keep profits high

      = Foundation of a company.

3. Dogs (low growth, low market share)

= avoid and minimize the number of dogs in a company.

=beware of expensive 'turn around plans'

=deliver cash, otherwise liquidate.

4. Question Marks (high growth, low market share)

=have the worst cash characteristic of all, because high demands and low returns due to low market share

= if nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.

= either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver cash.

2) GENERAL ELECTRIC MODEL

3) SHELL DIRECTIONAL POLICY MATRIX


4) THE INTERNAL-EXTERNAL MATRIX