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Portfolio Models & Abc Cheese Factory

1650 words - 7 pages

Jovie Alvarez

ID No. 3109617

Diploma of Marketing (BSB51207)

 

BSBMKG514A – Implement and Monitor Marketing Activities BSBMKG515A – Conduct a Marketing Audit

Case Study 1:
 

Chapter 3 – Portfolio Models (review questions 1-3, page 64) The ABC Cheese Factory – Case Questions (page 65)

BSBMKG514A – Implement and Monitor Marketing Activities BSBMKG515A – Conduct a Marketing Audit


Jovie Alvarez

ID No. 3109617

Chapter 3 – Portfolio Models (review questions 1-3, page 64)
1. What is a portfolio model and how is it used? Is a visual tool for diverse companies to review:
– – –

all businesses together; where growth is expected (resources ...view middle of the document...

If not generating cash for the company, should be sold off.

Question marks (problem child):
– – –

Units that are not market leaders Are units growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. Has potential to gain market share and become a star, and eventually a cash cow when the market growth slows.

– – –

Market leaders Units with a high market share in a fast-growing industry When growth slows, stars become cash cows if they have been able to maintain their category leadership.


What is the formula for calculating relative market share (RMS)? RMS = 1. 2. 3. 4. 5.
– – – – –

Market share of SBU ‘X’ Market share of the largest competitor

Define your market before you calculate. Search for the total number of items sold in your market. Divide the number of units that your company (or the company that you are interested in) sold by the number of total units in the space. Calculate the percentage of market share. Determine if the market share is growing or shrinking. ‘X” is the SBU whose position is calculated If ‘X’ is not market leader than largest competitor is market leader If ‘X’ is market leader than largest competitor is second Any SBU’s whose RMS places in ‘Stars’ or ‘Cash Cows’ are market leaders. Any SBU’s whose RMS places in ‘Question Marks’ or ‘Dogs’ are not market leaders

BSBMKG514A – Implement and Monitor Marketing Activities BSBMKG515A – Conduct a Marketing Audit


Jovie Alvarez

ID No. 3109617


Explain what the circles indicate
– –

The circles indicates the position of the SBU on the matrix The circle size indicates the proportional contribution to total company sales of each SBU.


What are the main limitations of the BCG model?
– – – – – – – –

Too simplistic, potentially disastrous if strategies are based purely on location of a SBU in the model. Not easy to obtain market growth and market share figures (Nielsen Data, brand scan). Not all businesses will find high growth markets attractive (e.g. high barrier to entry). Resources required to compete successfully are beyond the capacity or even interest of many businesses. The attractiveness of a market or industry is usually determined by many more factors than just the market growth rate. Success for a business is determined by more than ability to become market leader. Return on Investment (ROI) may be more important than cash flow when making investment decisions. Profits may rise as a result of brand loyalty.


Using the data provided in Table 3.7, draw and plot a BCG product portfolio model. Suggest strategies for each SBU.
HIGH 20%

(position in the product category life cyle)
MED. 10% 9%


C 3.75m


B .7m

4% D 4.25m



A 2.5m

LOW 0%



1.1 1.0




(SBU’s market share compared...

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