Reasons for unrelated Diversification Exploiting underutilized resources Escape from present business Spread risk Even out cyclical effects Need to use excess cash Personal values of powerful boss Dr. Jerry L. huxell
Dr. Jerry L. Huxell Reasons for Unrelated Diversification • Exploiting underutilized resources • Escape from present business • Spread risk • Even out cyclical effects • Need to use excess cash • Personal values of powerful boss
Portfolio analysis Top management views its product lines and business units as a series of investments from which it expects a profitable return ° Popular approaches BCG Growth-Share matrix GE Business screen Dr. Jerry L. huxell
Dr. Jerry L. Huxell Portfolio Analysis • Top management views its product lines and business units as a series of investments from which it expects a profitable return • Popular approaches – BCG Growth-Share Matrix – GE Business Screen
BCg Matrix Stars Question Marks 20 18 16 14 12 10 Cash Cows Dogs 86420 Relative Competitive Position (Market Share) Dr. Jerry L. Huxell
Dr. Jerry L. Huxell BCG Matrix
General electric's Business screen Winners Winners Question High B Marks Winners Average Businesses Medium Losers Losers Profit Producers Losers Source: Adapted from Strategic Management in GE, Corporate Planning and Development, General Electric Strong Avera leak Corporation. Used by permission of Business Strength/Competitive Position General Electric Company. Dr. Jerry L. Huxell
Dr. Jerry L. Huxell General Electric’s Business Screen A Winners Winners B C Question Marks D F Average Businesses E Winners Losers G Losers H Losers Profit Producers Strong Average Weak Low Medium High Business Strength/Competitive Position Source: Adapted from Strategic Management in GE, Corporate Planning and Development, General Electric Corporation. Used by permission of General Electric Company