ITPEC IP April 2022 Question 84
Which of the following often uses a chart with relative market share for the horizontal axis and market growth rate for the vertical axis, and analyzes the strategic positioning of a company’s products or business?
Explanation
PPM — Product Portfolio Management places products or businesses on a chart of relative market share (horizontal) and market growth rate (vertical).
Relative market share measures the company's competitive strength in a market, and market growth rate measures that market's potential. The four quadrants guide where management resources 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) ABC analysis — ranks items by sales or quantity in descending order and splits them into groups A, B and C for priority control; it has no market axes
- •(c) SWOT analysis — lists internal strengths and weaknesses and external opportunities and threats; it does not plot products by share and growth
- •(d) Value chain analysis — breaks a company's activities into primary and support activities to see where value and cost arise
Key rule: A chart of market growth rate against relative market share is PPM; the quadrant a business falls in tells whether to invest, harvest or withdraw.
Business Strategy Management · AI-written, may contain errors
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