Advantages and Disadvantages of Portfolio Planning Tools




Strategic Portfolio Management
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Frank Bacchus
Management Consultant, United States

Advantages and Disadvantages of Portfolio Planning Tools

What are the pros and cons of portfolio planning tools like the BCG Matrix or the GE/McKinsey matrix?
 
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Sathya Devarakonda
Project Manager, India
 

Disadvantages of Portfolio Planning Tools

Sir, as far as I believe there are not necessarily disadvantage of any framework or a model. But a model or framework has assumptions and limitations like the time or the maturity of your products.
Take for example Proctor and Gamble, Unilever, Colgate Palmolive. These Fortune 500 companies have been into marketing for many years in every known country; and the same product (a shaving cream, toothpaste or soap) is sold by different names in different countries like India, Brazil, China, Germany not to mention US and UK. The world wakes up with these companies. They have established products which have huge revenues that don't die. So they call them Cash cows. Probably BCG must have classified one of these companies products' and then created the BCG Matrix. Their model will probably also fit well to analyze or articulate a strategy for a Biscuit manufacturing company in India. Parle Biscuits has a set of of established brands and some of their revenues cannot be killed. The Indian children know these brands as they grow up. So a VP strategy at this FMCG can also use the BCG Matrix to classify his products and use the word cash cow (for some of their biscuit brands that have sales, that never die).
Models like BCG Matrix are used at various companies to classify their products and analyze to on where they should invest or innovate. A GE/Mckinsey model may be used by some other set of the companies across the globe in various setting based on time and need.

   

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