Opportunities to take advantage of and threats to address are identified by
analyzing the “external environment” surrounding the corporation.
A SWOT analysis is also used to determine marketing plans and crisis
management policies. It is considered an ideal analysis technique when
formulating a business strategy.
Threats
Strengths
What societal opportunities
bring out the strengths of our
corporation?
Can societal threats be overcome using the strengths of our
corporation?
Weaknesses
What societal opportunities do
the weaknesses of our corporation present?
Can any threats be overcome
using the weaknesses of our
corporation?
Category
Description
Star
Businesses and products that are profitable but require investment.
Businesses and products that have a high rate of return and have
matured, but need funds to maintain their place in the market.
Cash cow
Businesses and products that generate profit with little investment.
Mature businesses and products that have a high rate of return with
minimal investment (funding) due to large market share. Over-investment should be avoided.
Question
mark
Businesses and products that are not profitable, but can be expected to grow in the future with additional investment. The growth rate
is high but significant investment (funding) is needed due to small
market share. For businesses and products that can be expected to
grow in the future, a strategy to turn them into a “star” is required.
Dog
Businesses and products with low potential that should generally be
withdrawn. Businesses and products that have declined, and have
both low outflow of investment and low inflow of funds. Unless income greater than the investment can be expected, it may be necessary to withdraw or scale down the businesses and products.
↑ Market growth
↓ Low
High
Star
Growth expected → Maintain
Question mark, problem child
Intensifying competition → Nurture
Cash cow
Mature field/stable profit → Harvest
Dog
Stagnant/declining → Withdraw
“External environment” refers to government, economy, social conditions, law,
marketability, price changes, customer
trends, rival companies, etc.
Reference
PPM
Abbreviation for “Product Portfolio Management.”
Reference
Product life cycle
A “product life cycle” refers to the four
stages a product goes through from the
time of its release as it appears on the
market until sales end and it disappears
from the market. The four stages are
summarized below.
Introduction stage:
A period during which much investment goes into sales promotion strategies in order to increase sales.
Growth stage:
The sales peak is reached and
rival products increase. A period during which plans to differentiate the product from its rivals are implemented.
Maturity stage:
The sales peak has passed
and growth in de-mand has
slowed down. A period of investment to maintain the product’s place in the market.
Decline stage:
Sales have become stag-nant.
A period during which the product is either withdrawn from the
market or reinvested in according to the needs of the market.
Business strategy
(2)PPM (Product Portfolio Management)
“PPM (Product Portfolio Management)” is a technique for business
analysis that divides the businesses and products the corporation handles
into four categories: “star,” “cash cow,” “question mark,” and “dog.”
They are plotted on a graph with market share and market growth on the
axes. By allocating management resources to each of the four categories,
the most effective and efficient combinations of businesses and products
can be analyzed.
External environment
Chapter 2
Opportunities
Reference
Large ← Market share → Small
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