ANSOFF MATRIX, BCG MATRIX,

LIFE CYCLE ANALYSISCUEVAS, Rieland

REBADOMIA, ChumesceneTAN, Nerick Jason

TAVEROS, Maxine AnnVENTURA, Cleo ArianaVILLAHERMOSA, Giah

UY, John

ANSOFF’S MATRIXProduct and Growth Matrix

Ansoff’s Matrix• Developed by Igor Ansoff

• Explains different growth strategies for a company via existing products and new products, and in existing markets and new markets

• Used after having the SWOT Analysis

• Suggests for possible strategies: Market Penetration, Market Development, Product Development and Diversification

Different Growth Strategies

Market Penetration

Product Development

Market Development Diversification

Existing Products New Products

Esta

blis

hed

Mar

ket

New

Mar

ket

Market Penetration

Aims•Focus on selling your existing products or services to

existing markets to achieve growth in market share

Risk Low

Profits Low

Approaches

•Maintain or increase the market share of current products

• Secure dominance of growth markets•Restructure a mature market by driving out

competitors•Increase usage by existing customers

Requires•Detailed market•Competitor intelligence

Market Development

Aims•Focus on selling your existing products or services to

new markets

Risk Moderate

Profits Medium

Approaches•New Geographical Markets•New product dimensions or packaging•New distribution channels

Requires•Detailed market and competitor intelligence•Well-researched market, financial and operational data

Product Development

Aims•Focus on developing new products or services to

existing markets

Risk Moderate

Profits Moderate

Approaches•New product is closely associated with current product•Matches current customers’ purchasing habits•Reinvents or refreshing existing products

Requires•Research and Development•Assessment of customer needs•Clear path for brand extension

Diversification

Aims•Focus on selling new products or services to new

markets

Risk High

Profits High

Approaches

•Honest assessment of risks•Access to capital and willingness to invest•Clear expectation of potential gains•Right balance of risks versus rewards

Types•Forward•Full •Backward

Advantages and Disadvantages

- Useful tool in analyzing the strategic position of the firm and set objectives for the way forward

- sub-divides the options into four specific strategies that management could consider for long term growth

- indicates the level of risk associated with each strategy thus encouraging management to focus carefully on the impact of any decision made

- Simplistic

- Its main focus tends to be market potential rather then the resources required by the firm to support its chosen strategy

- usefulness will be very limited to a firm whose objective is survival

- No guarantee of success

- Based on forecasts

BCG Matrix

INTRODUCTION

• BOSTON COUNSULTING GROUP(BCG) MATRIX is developed by Bruce Henderson of the Boston Consulting group in the early 1970s

• Businesses are classified as low or high performers depending on their relative market share and their market growth rate

MARKET SHARE

• It is the percentage of the total market that’s being serviced by your company, measured either in revenue terms or unit volume terms.

• RMS= Business unit sales this year

Leading rival sales this year

The higher your market share, the higher proportion of the market you control

MARKET GROWTH RATE

• Used as a measure of a market’s attractiveness

• MGR= Individual sales this year- Individual sales last year

Individual Sales Last year

Those with high growth rate are those where the total market share available is expanding, and there is plenty of opportunity for everyone to

make money

BCG MATRIX

• A portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:

>Stars

>Question marks

>Cash cows

>Dogs

STARS

• High growth, high market share• Needs large amounts of cash and are

leaders in the business so they could also generate large amounts of cash.

CASH COWS

• Low growth, High market share• Foundation of the company, usually the

stars of yesterday• Generate more cash than required• Extract profits by investing as little cash as

possible• Located in an industry that is mature

Dogs

• Low growth, Low market share• Avoid or minimize the number of dogs in a

company• Do not have potential to bring much cash• Business is situated at a declining stage

Question Marks

• High growth, Low market share• Most businesses start of as this• Absorb great amounts of cash if market

share remains low• Have potential to become stars, cash

cows, or dogs• Investments should be high

WHY BCG MATRIX?

• To assess:• Profiles of products/businesses• The cash demands of products• The development cycles of products• Resource allocation and divestment

decisions

BENEFITS

• Simple and easy to understand• Used to identify corporate cash resources

that can be used to maximize a company’s future growth and profitability

Limitations

• Uses only two dimensions• Problems on getting data on market share

and market growth• High market share doesn’t mean high

profits all the time• Businesses/products with low market

share can be profitable too

CONCLUSION

• Though the BCG matrix has its limitations, it is one of the most famous and simple portfolio-planning matrix, used by large companies having multi-products.

Life Cycle Analysis

What is LCA? Looking at a products complete life

cycle From Raw Materials to Final Disposal of

the product. Examines the environmental impact of a

product by considering the major stages of a products life.

What is LCA? (Contd) Major Stages include:

A. Raw Material AcquisitionB. ProcessingC. ManufacturingD. Product LifeE. Waste Management/ End of Life

Historical Perspective 1960’s: Coca Cola explores alternative

containers besides the glass bottle.

1970’s: Oil embargos in the US create concerns about energy supplies. Resources & Environmental Profile Analysis (REPA)

1974: A new beverage container comparison and compare different plastics.

Historical Perspective (Contd)

1980’s: “Green Movement” in Europe brings focus on emissions and need to recycle.

1990’s: Battle between cloth and disposable diapers

1992: Energy, Water, and Solid waste

Purpose1. Calculate products environmental

impact.2. Identify positive and negative

environmental impact.3. Opportunities for process or product

improvement.4. Compare several processes.5. Quantitatively justify a change in a

process or product.

Goal Definition

and Scoping

Life Cycle Inventory

(LCI)

Life Cycle Impact

Assessment (LCIA)

Final Report

LIFE CYCLE ANALYSIS

Life Cycle Inventory (LCI) process which quantifies all inputs and

outputs of a process or product.

Inputs = Energy and Raw Materials

Outputs = Material Emissions to the Environment, such as water, air, & solid waste.

Sample Life Cycle Stages

InputsLife Cycle of Process or Product

Output

• Trees and Crops

• Water• Gas &

Crude Oil• Chemicals• Energy• Capital

Equipment

• Raw Material Processing

• Manufacturing• Production• Transportation• Product Life• Maintenance

• Airborne Emissions

• Recyclable Waste

• Co-products• Waterborne

Emissions• Landfill Waste• Dumping and

Littering

Life Cycle Impact Assessment (LCIA)

Way to interpret how the processes and products impact human health and environment.

Gives a more meaningful basis for comparison.

Step 1: Create a definition and scope Consider the following topics when

developing definition and scope:a. Goal of LCAb. Audiencec. Production and Process

Informationd. Data Accuracye. Result Interpretation and Displayf. Ground Rules

Step 2: Life Cycle Inventory (LCI) Consider the following when completing

the LCI:

a. Process Flowb. Data Gathering c. Data Inventoryd. Result

Step 3: Life Cycle Impact Assessment (LCIA) Consider the following when completing

an LCIA:a. Impact Categoriesb. Result Categorizationc. Impact Comparisonsd. Important Potential Impactse. Results

Step 4: Interpret the results and make recommendations Consider the following when interpreting

results:a. Final Resultsb. Conclusionsc. Limitationsd. Recommendationse. Report Information