Portfolio analysis

A portfolio analysis helps you to look at all your existing products and services and to rate them according to demand and how much of the market each service holds. Mapping your services in this way can help you to decide where to invest more or less time and money, or whether to drop particular services.

Each product and service is plotted on a 2x2 matrix with an axis for market growth rate and another for your market share. Each product will fit into one of four categories:

  • Dog (minor player in a static market): you may want to consider dropping these products, but only if they are no longer useful to your existing service users or cause
  • Problem child (minor player in a high growth market): you may invest a lot of money and get nowhere, so assess carefully whether it’s worth the effort
  • Gold mine (market leader in a large or fairly static market): the best place for your product to be. You should probably invest significant time and money here, and defend these products vigorously.
  • Star offering(market leader in a new high growth market): to ensure you retain your market lead position, you will probably need to invest heavily to attract the majority of the new customers in this market.

Benefits

This tool helps you to consider the benefits of each of your services in the light of current demand and other players offering similar services.

Limitations

The tool was developed with an assumption that long-term profitability is the main goal and existing customers are secondary. Keep your mission clearly in mind to ensure your users or cause are centre stage when you reach decision-time.

When to use it

This tool is useful when you look inside your organisation to assess your strengths and weaknesses and at decision time.

What are your experiences of using this tool? Share your triumphs and tribulations with our network members or write your own tips by commenting on this page.

More information on this tool is featured in our guide Tools for Tomorrow.

Last updated at 17:54 Mon 12/Apr/10.

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How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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