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Portfolio Analysis

Portfolio Analysis. GE Tool for Analyzing Opportunities & Ability to Compete. GE Portfolio Analysis. Classification of SBUs/products into nine cell matrix based on Market Attractiveness Multiple Indicators Business Strength Multiple Indicators. Steps In Developing GE Matrix.

JasminFlorian
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Portfolio Analysis

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  1. Portfolio Analysis GE Tool for Analyzing Opportunities & Ability to Compete

  2. GE Portfolio Analysis • Classification of SBUs/products into nine cell matrix based on • Market Attractiveness • Multiple Indicators • Business Strength • Multiple Indicators

  3. Steps In Developing GE Matrix • Select Factors & Indicators. • Assign each indicator a weight (total = 1) based on its importance. • Rate the industry on industry indicators and company on business indicators on scale of 1(weak) – 5 (strong). • Multiply weight times rating and total for summary measures.

  4. GE Portfolio AnalysisSample Industry/Market Indicators • Market Factors • Size • Growth Rate • Cyclicality • Seasonality • Competition • Type of competitors • Degree of Concentration • Financial & Economic • Contribution Margins • Barriers to Entry or Exit

  5. GE Portfolio AnalysisIndustry/Market Indicators • Technological • Patents & copyrights • Will it become obsolete • Sociopolitical • Social attitudes & trends • Laws & government regulations

  6. GE Portfolio AnalysisBusiness Strength Indicators • Market • Company’s Market Share • Company’s Sales or Share Growth Rate • Competition • Strength of product, promotion, price, distribution, financial resources, management relative to competition • Financial & Economic • Company’s Margins • Economies of scale

  7. GE Portfolio AnalysisBusiness Strength Indicators • Technological • Company’s ability to cope with change • Technological skills • Patent Protection • Sociopolitical • Company’s responsiveness & flexibility

  8. Market Factor Weight Rating (1- 5) Value Size .33 5 1.65 Growth .33 3 .99 Profit Margins .34 2 .68 3.32 Business Market Share .33 1 .33 Product Quality .33 5 1.65 Distribution Net .34 2 .68 2.66 GE Portfolio Example

  9. Market Business High Medium Low High Medium Low GE Portfolio Analysis

  10. Competitive Position Market Attractiveness Strong Medium Weak High • Maintain Leadership • Invest to Grow • Concentrate on Maintaining Strength • Challenge Leader • Invest to Build Selectively • Reinforce Strengths • Overcome Weakness, Find Niche or Quit • Build Selectively Medium • Challenge Leader/Build Selectively • In most attractive markets • Or counter competition • Emphasize profitability by raising productivity • Manage for Earnings • Protect existing programs • Concentrate on profitable, less risky segments • Harvest (Gradual Withdrawal) or Limited Expansion • Look ways to expand without high risk • Or Minimize investment Low • Generate Cash • Manage for current earnings • Concentrate on attractive Segments • Defend Strengths • Harvest • Minimize Investment • Protect positions in most profitable segments • Divest • Sell at time that will maximize cash value • Cut fixed costs and avoid investment

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