Planning Marketing: Business Portfolios and Growth Strategies

In order to develop and maintain a strategic fit between the organization's capabilites and goal, and its changing marketing opportunities, the organization needs a strategic plan, and to do that, managers must define the company's objective and goals.

The main priority while developing a strategic plan, is the design of a business portfolio - the collection of businesses and products that make up the company - or the analysis of the current portfolio. Why is it so important? Because this process will allow the organization managers to:

  • Identify the key businesses making up the company.
  • Evaluate the attractiveness of it's Strategic Business Units (also know as SBU).
  • Decide how much investment and support each SBU deserves.

BGA Matrix

After the initial SBA identification phase, it's time to assess the attractiveness of the various Strategic Business Units, and i'm going to describe a well know portfolio planning method:

The Boston Group Matrix

The BGA Matrix, or growth share matrix, helps managers evaluate their company's SBA's, like the name implies, in terms of their market growth rate and relative share. It's pretty simple to understand.

Strategic Business Units are classified as:

  • Stars
  • Cash Cows
  • Question Marks
  • Dogs


The image above illustrates the matrix we're talking about. Basically:

  • Stars - High-growth, high-share businesses or products requiring heavy investment to finance their rapid growth. Eventually Stars turn into Cash Cows.
  • Cash Cows - Low-growth, high-share businesses or products. Established SBU's that require less investment in order to maintain their current market share.
  • Question Marks - Low-share, high-growth units, that require a big investment to hold their share.
  • Dogs - Low-growth, low-share units, that may be able to maintain themselves with the cash they generate, but don't promise to be a large source of profit.
After this classification, managers should determine each unit's role in the future of the organization, to make the required decisions.
But there's also disadvantages to this system. First, it's difficult to define each SBU and measure accurately it's market share and growth. Second, this process can be expensive and time consuming. And finally, it's focus on current businesses, neglecting future planning.

More by this Author

  • Management Roles
    33

    What Is Management?  Describing management is no simple task, and most of the times you’ll find statements like:  “Management is what managers do” While that’s true, it...


Comments 1 comment

Tiago Dias profile image

Tiago Dias 3 years ago from Almada, Portugal

This is really interesting, one more nice work my friend ;)

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working