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CHAPTER 4

CHAPTER 4. Evaluation of Product/Service Portfolio. Multidimensional ‘Screening’ Approach.

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CHAPTER 4

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  1. CHAPTER 4 Evaluation of Product/Service Portfolio

  2. Multidimensional ‘Screening’ Approach Advocates a systematic review of the product line in which every product is subject to performance evaluation on a number of key performance dimensions/criteria (e.g. sales volume, profitability, market share).

  3. Index Approach Routine evaluation of product performance on a number of key dimensions/criteria, which is summarized into a single overall performance index.

  4. Product Portfolio Classification/Matrix Approach Joint consideration of a number of key product performance dimensions which leads to the development of a product portfolio classification/matrix scheme.

  5. Non-financial models of product portfolio • Product classification by Peter Drucker • Product classification by Fluitman • Market Growth-Market Share Matrix by Boston Consulting Group • Product profitability grid by Philip Kotler • Product evaluation matrix by Wind & Claycamp • Market attractiveness – Competitive position portfolio model by General Electric/McKinsey • Shell International Directional Policy Matrix • Product/Market Matching Matrix by B. Enis • Business Profile Matrix by A.D. Little • Barksdale & Harris Model

  6. The BCG Matrix Source: Boston Consulting Group (1973); Hedley (1977)

  7. The Product Profitability Grid Source: Kotler (1974)

  8. Invest / grow Selectivity / earnings Harvest / divest The GE/McKinsey Matrix Invest / grow Invest / grow BUSINESS STRENGTH BUSINESS STRENGTH Selectivity / earnings Selectivity / earnings Medium Medium Strong Strong Weak Weak 5.00 5.00 Harvest / divest Harvest / divest High High 3.67 3.67 MARKET ATTRACTIVENESS MARKET ATTRACTIVENESS Medium Medium 2.33 2.33 Low Low 1.00 1.00 1.00 1.00 5.00 5.00 3.67 3.67 2.33 2.33 Source: Allen (1979)

  9. Shell International Directional Policy Matrix Source: Seidl (1979)

  10. Product/Market Matching Matrix Source: Enis (1980)

  11. A.D. Little Business Portfolio Matrix Source: Wind (1982)

  12. Product Life Cycle Portfolio Matrix Source: Barksdale and Harris (1982)

  13. Combined PLC/product portfolio concepts Source: Barksdale and Harris (1982)

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