You are the CEO of a firm with five distinct SBU/LOBs. It is your responsibility to...

You are the CEO of a firm with five distinct SBU/LOBs. It is your responsibility to decide how to manage them. Develop a model using the following intelligence, and then briefly comment on what you would do with each SBU/LOB.

The GNP is growing at 8%.

SBU/LOB A. This is your newest product line and it was just introduced. You anticipate significant competition from the bigger existing competitors but there is still plenty of room to grow in the industry, even faster than the GNP . Its contribution to the corporate portfolio is 5%.

SBU/LOB B. This product is in the decline stage of its life cycle and your competition have already exited because of lack of growth in the industry. Contribution is 5%.

SBU/LOB C. This is an established product with 25% market share. Your competitors have 50%, 20% and 5% respectively. There is almost no industry growth and contribution is 65%.

SBU/LOB D. You are the market leader in an industry. growing at 5%. Its contribution is 15%.

SBU/LOB E. You were the first to introduce this product so now you are the biggest guy on the block. Because of the potentially unlimited value of this great product this industry is growing at 20% and its contribution is 10%.

Determine the relative market share (RMS) of each LOB/SBU.

Solutions

Expert Solution

Answer:

Product A: it comes under "question mark" because since its new product, market share is low as of now but growth is significant so the company can think of investing some money into this product line initially and wait for some time to gain some market share.

Product B: product has lesser market share and its market is also declining and competitors have exited the market. so the company should think of divesting the amount invested in this product in some other products. this comes under "Dog".

Product C: This is "cash cow". since grosth is low but market share is pretty much high with good amount of return. company should continue investing in it to continue pumping in money generated from this product line.

Product D: Product is growing at decent rate and company is market leader so company should invest in this product to continue generating revenue. this is "Cash Cow".

Product E: Growth is good, market share is good and it's generating good revenue for the company. it is "Star" and company should continue investing into this product line.

jeff jeffy answered 1 year ago

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