Schedule
• Wednesday (5-26)– Chapter 12 (Offensive Strategies)
– Systemsoft Case
• Wednesday (6-2)– Chapter 13 (Defensive Strategies)– Intel Case– Course review
• Monday (6-7)– Final Exam (8:30)
Portfolio Analysis
Very Weak Very Strong
VeryAttractive
VeryUnattractive
Competitive Advantage
Market Attractiveness
Portfolio AnalysisBuild Selectively(Flanker)
Invest to Build(Challenger)
Protect(Leader)
Limited Expansion or Harvest(low risk expansion)
Selectivity & Manage for Earnings(seek & protect profitable segments)
Build Selectively(Protect against competition & seek profitability)
Divest Manage for Earnings(harvest?)
Protect & Refocus(Manage for current earnings)
Very Weak Very Strong
VeryAttractive
VeryUnattractive
Competitive Advantage
Market Attractiveness
Strategies
Protect Invest to hold a competitive position
Grow Invest to grow a competitive advantage
Focus Selectively narrow market focus to profitable segments
Strategies
Harvest Adjust prices and marketing expenses to gradually exit a market
Entry Invest to enter an attractive market
Divest Quick divestment from a market when there are no short-term profits to be made
Portfolio Management
• Grow versus Harvest/Divest
• General Motors– Chevrolet, Pontiac, Oldsmobile, Cadillac,
Buick, GMC, Saturn, Hummer, Saab, Opel
• Harvest Oldsmobile
• Grow Cadillac
Portfolio Analysis and Strategic Market Plan
• Business Performance – what will we end up with?
• Market Attractiveness – what do we need to succeed?
• Competitive Advantage – what resources do we have?
Snack Foods Market
• $ 32 billion / year• Potato chips , pretzels, corn chips, popcorn,
crackers, snack nuts, tortilla chips, party mix, meat snacks, etc.
• Major brands– Frito-Lay (Pepsi), Pringles (P&G), Nabisco, Keebler
• Trends – Healthier snacks– Sales in mass merchandise stores versus grocery stores– Fat free
Market Attractiveness - 1
MarketForces
Attractive-ness
Market Size
Growth Rate
Buying Power
Customer Loyalty
Market Attractiveness - 2
Competitive Intensity
Attractive-ness
Competitors
Price Rivalry
Ease of Entry
Substitutes
Market Attractiveness - 3
Market Access
Attractive-ness
Customer Familiarity
Channel Access
Sales Requirements
Company Fit
Portfolio Analysis
Offense
(grow)Offense (grow)Defensive (protect)
Defensive(protect)
Offense (grow) Defensive
(protect/harvest)
Offense (grow) Defensive
(protect/focus)
Offense (grow)Defensive
(protect/focus)
Defensive
(divest or harvest)Defensive
(divest or harvest)Defensive
(divest or
harvest)
Market
Attractivenes
s
Competitive Advantage
Portfolio Analysis
Offense(grow)
Offense(grow)
?
Offense(grow)
Offense(grow)
Offense(grow)
Very Weak Very Strong
VeryAttractive
VeryUnattractive
Competitive Advantage
Market Attractiveness
Portfolio Analysis
Defense Defense
Defense Defense Defense
Defense Defense Defense
Very Weak Very Strong
VeryAttractive
VeryUnattractive
Competitive Advantage
Market Attractiveness
Life Cycle Effects
Offensive/Defensive
Defensive
Defensive
Offensive
Offensive
Offensive
EmergingMarket
RapidGrowth
EarlyGrowth
LateGrowth
MaturingMarket
MatureMarket
DecliningMarket
Offensive/Defensive
Market Penetration
Grow Market
Share
Grow Customer Purchases
Enter New Market Segments
Grow Market Demand
New Market Entry
Related New Markets
Diversified New Market Entry
Enter New Emerging Market
Develop New Market Potential
Amazon’s Efforts• Attract More customers
– Free Shipping on orders over $25– Result – 3rd quarter revenue increased 33%
• Lower Fulfillment Costs– Now 12% of revenue vs. 15% last year– How? Better inventory control at 6 warehouses– Reduce deliveries
• Free shipping has slower delivery dates• Provides time to consolidate more orders• Work with Postal Service• By delivering books from warehouse to USPS depot get
reduced rates
Expand Distribution
• Expand Offerings– New Clothing Store with items from The Gap
and Nordstrom
• Amazon Marketplace– Provide services for other merchants– Fulfillment for Bertelsmann, Borders
Wall Street Likes Amazon• Stock Performance
– $12.2 in Jan 2002
– $21.3 in Jan 2003
– $54 end of Nov 2003
• Market Capitalization
– $21.6 billion for Amazon
– $2.2 billion for Barnes & Noble
• ($5. 6 billion in sales & $132 million profit)
Why Wall Street Likes Amazon• Tremendous Sales Growth
– $3.1 billion (2001)
– $3.9 billion (2002)
– $5.0 billion est. (2003)
• Improving Net Income
– (-$1.4 billion) in 2001
– (-$567 million) in 2002
– (-$149 million) in 2003