BCG Matrix

BCG (Boston Consulting Group)

Business Portfolio Matrix

A two-dimensional grid that compares the strategic positions of each of the organisation’s businesses.

BCG- Matrix:

A business portfolio matrix that uses market growth rate and relative market share as the indicators of the firm’s strategic position. (Lewis, et al, 2007)

Figure: BCG matrix. [Adapted from: Lewis, et al, 2007, p.168]

Limitations of BCG matrix:

-          The use of highs and lows to form four categories is too simplistic.

-          The link between market share and profitability is questionable. Low-share business can also be profitable.

-          Growth rate is only one aspect of industry attractiveness.

-          Product lines or business units are considered only in relation to one competitor: the market leader. Small competitor with fast-growing market shares are ignored.

-          Market share is only one aspect of overall competitive position. (Wheelen, Hunger, and Rangarajan, 2006)

Bibliography:

Lewis, P., Goodman, S., Fandt, P., and Michlitsch, J. (2007), Management: Challenges for Tomorrow’s Leaders, 5^th ed, USA: Thomson South-Western

Wheelen, T. L., Hunger, J. D. and Rangarajan, K. (2006), Concepts in Strategic Management and Business Policy, 9^th ed, India: Dorling Kindersley (India) Pvt. Ltd.

Strategic Fit Analysis

Strategic Fit Analysis

Strategic fit is the analysis of the internal resources and external opportunities of a business along with its capabilities. Effective comparison can help the organisation to find out their scopes and lack and take necessary measures to fulfill organisational goal. (Okumus, Altinay and Chathoth, 2010)

Ken Andrews, professor of Harvard Business School, was one of the first strategy theorists to formally describe the concept of Strategic fit between a company’s internal environment (its resources and capabilitites) and its external environment. He claimed that a SWOT analysis could identify the best way for a company to use its strengths to exploit opportunities, to defend its strengths, and limit its weaknesses against external threats (Bensoussan and Fleisher, 2013). SWOT analysis (situation analysis) is widely used to systematically analyse the strengths, weaknesses, opportunities and threats of an individual business. Hence it becomes easy to compare them with the business environment (micro and macro). It would ultimately help the business to make proper changes with the changing environment.

[****NB****

                Micro- Porter’s 5 forces analysis

                Macro- STEEPLE or PEST analysis      ]

Bibliography:

Bensoussan, B. E. and Fleisher, C. S. (2013), Analysis Without Paralysis: 12 Tools to Make Better Strategic Decisions, 2^nd ed, New Jersey: Pearson Education

Okumus, F., Altinay, L. and Chathoth, P. (2010), Strategic Management in the International Hospitality and Tourism Industry, UK: Butterworth-Hrinemann

Power-Interest Matrix of Stakeholders

Stakeholder Management

Stakeholder:

Stakeholders are the different groups of people who are affected by, or can have an effect upon, the company’s strategies. (Bowhill, 2008)

Stakeholders and their objectives:

Stakeholder group	Objective
Share holders	Shareholders will be concerned with the increase in wealth, i.e. future cash inflows, in the form of annual dividends and in the movement in the share price. They will also be concerned with the risk that dividends and share price will not grow at the expected rate.
Managers	Salaries, bonuses, status, security, challenge, responsibility
Employees	Probably similar issues to the managers. However, potentially employees have a different view of the impact of policies than the managers.
Customers	Quality of the product or service, the price
Suppliers	Prompt payment, consistent orders, price paid.
Leaders	Interest payments, loan repayment, security.
Government	Tax payment, provision of employment, compliance with law.
Pressure group	Compliance with interests of the pressure group
Local community	Employment opportunities, pollution of the environment.

[Source: Bowhill, 2008] 

Considering the interests and power of stakeholders:

If an organisation wished to achieve certain objectives, then it is important to take particular account of those stakeholders who have an interest in particular issues being affected by a firm’s objectives and strategies and also those with a level of power that they can exert.

In 1991, Mendelow suggested that stakeholder influence can be mapped using a power/interest matrix.

		Level of Interest
		Low	High
Level of Power	Low	A (Minimal effort)	B (Keep informed)
	High	C (Keep satisfied)	D (Key player)

Figure: Power-Interest Matrix of Stakeholders [Adopted from: Bowhill, 2008] 

Key Player (D): If an organisation has an objective and strategy that is of interest to a particular set of stakeholders who also have the power to prevent or impede its successful implementation, then the organisation needs to recognize these stakeholders as key player. The organisation will need to consider how to deal with these key players in order that its objectives can be achieved.

Minimal effort (A): If stakeholders have little power and/or influence then it is possible that the oranisation will need to make minimal effort to take account of their objectives

Keep satisfied (C): Where stakeholders have high power, though little interest in specific objectives, then it is necessary to keep these stakeholders satisfied.

Keep informed (B): Where the stakeholders have low power, but high interest, it is necessary to keep them informed.

Bibliography:

Bowhill, B. (2008), Business Planning and Control: Integrating Accounting, Strategy, and People, England: John Wiley & Sons Ltd.

Marketing Environment (micro, macro)

Marketing Environment

The factors or forces influencing marketing decision making are collectively called as marketing environment. Marketing environment can be broadly divided into two categories:
i. Micro- Environment and ii. Macro-Environment. (Jain, 2010)

i. Micro Marketing Environment:

Micro environment refers to the company’s immediate environment. Micro environmental factors are closely related to a specific company/firm and are included as part of the firm’s total marketing system. These factors are-

Company’s internal environment- Top management, Finance department, Purchase department, Production department, Accounting department, Research and Development department.; Suppliers; Marketing intermediaries- Resellers, Physical distribution firms, Marketing service agencies, Financial Intermediaries; Customers- Population point of view (Final consumers, Prospective consumers) and the marketing environment point of view (Ultimate consumers, Industrial consumers, Resellers, Government Agencies, Foreign consumers); Competitors; and Public- Financial publics, Media publics, Government publics, Citizen action publics, Internal public, Local public, General public.

ii. Macro Marketing Environment:

It consists of Demographic- age-group, income group, division according to sex, marital status, occupation and profession etc.; Economic- interest rate, money supply, price level, consumer credit, etc.; Socio-cultural- change in lifestyle and social values, caste structure, mobility of labor, customs and conventions, cultural heritage, life style, social values, beliefs, view towards scientific methods, etc.; Political and Legal; Technological and Physical forces- air pollution, noise pollution, water pollution, etc. which influence marketing policies and operations. These are all uncontrollable as far as business is concerned.

Advantage of Marketing Environment:

-       Marketers are able to know stated, unstated, secret and real needs or the customers

-       Trendy products can be brought out in the market

-       Competitor moves can be anticipated and countered

-       Marketing mix strategy can be properly formulated

-       Marketer is able to know the organisational strengths, capabilities and related opportunities. (Jain, 2010)

Bibliography:

Jain, A. (2010), Principles of Marketing, New Delhi: V.K. (India) Enterprises

Typology of Organisational Stakeholders

Typology of Organisational Stakeholders:

The typology of organizational stakeholders in the figure shows two dimensions: potential for threat and potential for cooperation. Note that stakeholders can move among the quadrants, changing positions as situations and stakes change. Generally, officers of a firm in confroversial situation, or situations that offer significant opportunities for an organisation, try to influence and move stakeholders toward type-1. (Weiss,2014)

		Stakeholder’s Potential for  Threat to Ogranisation
		High	Low
Stakeholder’s Potential for Cooperation with Ogranisation	High	Type-4 MIXED BLESSING Strategy: COLLABORATE	Type-1 SUPPORTIVE Strategy: INVOLVE
	Low	Type-3 NON-SUPPORTIVE Strategy: DEFEND	Type-2 MARGINAL Strategy: MONITOR

Figure: Diagnostic Typology of Organisational Stakeholders [Source: Adopted from: Weiss,2014]

Type-1: Supportive Stakeholder, with low potential for threat and high potential for cooperation. Here the strategy of the focal company is to involve the supportive stakeholder. Think of both internal and external stakeholders who might be supportive and who should be involved in the focal organisation’s strategy.

Type-3: The Non-supportive stakeholder, who shows a high potential for threat and a low potential for cooperation, represents an undesirable stance from the perspective of the influencer. The suggested strategy in this situation calls for the focal organisation to defend its interests and reduce dependence on that stakeholder.

Type-4: Mixed Blessing stakeholder, with high potential for both threat and cooperation. This stakeholder calls for collaborative strategy. In this situation, the stakeholder could become a Supportive or Non-supportive type. A collaborative strategy aims to move the stakeholder to the focal company’s interests.

Type-2: The Marginal stakeholder. This stakeholder has a low potential for both threat and cooperation. Such stakeholders may not be interested in the issues of concern. The recommended strategy in this situation is to monitor the stakeholder, to “wait and see” and minimize expenditure of resources, until the stakeholder moves to a Mixed Blessing, Supportive, or Non-supportive position. (Weiss,2014)

Bibliography:

Weiss, J. W. (2014), Business Ethics: A Stakeholder and Issues Management Approach, California: Berrett-Koehler Publishers, Inc.

Stakeholder & Stakeholder Analysis

Stakeholder & Stakeholder analysis

Stakeholder:

Stakeholders can be defined as the individuals or groups with whom the organisation interacts or has interdependencies. Or Any individual or group that has legitimate (legal/rightful/valid) influence on the actions, decisions, policies, practices or goals of an individual or organisation is called stakeholder.

Possible stakeholders might be- Owner, Financial community, Local community, Activist groups, Customers, Consumers advocate groups, Trade unions or similar, Employees, Trace associations, Competitors, Suppliers, Government (local/regional/national), Political groups, Media, Academia.

Stakeholder Analysis

A stakeholder analysis provides information on key stakeholders to help manage relationship with them. The type of information included in a stakeholder analysis includes the following:

-       Names and organisations of key stakeholders

-       Their roles on the project

-       Unique facts about each stakeholder

-       Their influence of the project

-       Suggestions for managing relationships with each stakeholder (Schwalbe, 2009)

It is helpful to start preparing a stakeholder analysis during initiation and adding information to it during the planning process.

Sample Stakeholder Analysis:

July 3, 2009

Project Name: Just-In-Time Training Project

KEY STAKEHOLDERS
	Mike Sundby	Lucy Camarena	Ron Ryan	Mohammed Abdul	Julia Portman
Organisation	VP of HR	Training director	Senior HR stuff member	Senior programmer/analyst	VP of IT
Role on project	Project champion	Project sponsor	Led the Phase-I project	Project team member	Project steering committee member
Unique facts	Outgoing, demanding, focuses on the big picture; MBA with emphasis on ogranisational design	Very professional, easy to work with but can stretch out discussions; Ph.D. in education	Old-timer; jealous that he wasn’t asked to lead Phase-II project	Excellent technical skills, English his second language, weak people skills, not excited about a training project	Thinks the company is way behind in applying IT, especially for training; wary of many suppliers
Level of interest	Very high	Very high	High	Medium	High
Level of influence	Very high; can call the shits	Very high; subject matter expert	Medium; he could sabotage the project	High; needs strong IT support for project to succeed	High; people listen to her at steering committee meetings
Suggestions on managing relationship	Keep informed, ask for advice as needed	Make sure she reviews work before showing to managers	Ask Lucy to talk to him to avoid problems, ask him to be available for advice.	Help him see the project’s importance, encourage his creativity	Compliment her a lot, ask for additional IT support as needed.

[Source: Schwalbe, 2009]

Bibliography:

Polonsky, M. J. (2005), Stakeholder Thinking in Marketing, “European Journal of Marketing”, Vol: 39, Number: 9/10, ISS: 0309-0566

Schwalbe, K. (2009), Introduction to Project Management, 2^nd ed, USA: Cengage Learning