ITPEC IP October 2018 Question 84
Which of the following is appropriate as the evaluation axes in PPM that are used in optimizing the allocation of management resources across multiple businesses in a company?
Explanation
Market growth rate and market share — the two axes of PPM (Product Portfolio Management).
PPM places each business or product on a chart of relative market share (the company's competitive strength) against market growth rate (the market's potential). The quadrant shows where management resources should go:
- •Star: high growth, high share — invest to keep the lead
- •Cash cow: low growth, high share — needs little investment and funds the others
- •Question mark (problem child): high growth, low share — invest selectively to build share
- •Dog: low growth, low share — a candidate for withdrawal
Answer (b)
Why not others:
- •(a) — technology and products are the axes of a technology portfolio or roadmap, used in technology strategy, not in allocating resources across businesses
- •(c) — products and markets (existing or new) are the axes of Ansoff's growth matrix, which chooses a growth strategy
- •(d) — strengths, weaknesses, opportunities and threats are the four items of SWOT analysis
Key rule: A chart of market growth rate against relative market share is PPM; cash cows fund the stars and question marks, and dogs are candidates for withdrawal.
Business Strategy Management · AI-written, may contain errors
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