MANAGING DIVERSIFIED COMPANIES: USE OF MODELS: WHO NEEDS CAPITAL AND WHERE DOES IT COME FROM? PLUS OTHER CONSIDERATIONS ( E.G. SYNERGIES) 1. BCG: USE

BCG Matrix

A strategic planning tool that uses relative market share and industry growth to categorize business units into Stars, Cash Cows, Question Marks, and Dogs.

Stars

Business units in the BCG matrix that have high market share and high growth, requiring heavy investment.

Cash Cows

Business units in the BCG matrix that have low growth but high market share, generating excess cash to fund others.

Question Mark/Problem Child

Business units in the BCG matrix that have high growth but low market share, requiring investment or divestment decisions.

Dogs

Business units in the BCG matrix that have low growth and low market share, usually considered for divestment.

Nine Cell Model

A strategic analysis model that considers business strength/competitive position and long-term industry attractiveness.

Industry Life Cycle Model

A model that describes the stages of an industry, including Introduction, Growth, Maturity, and Decline.

Overall Low-Cost Leadership

A strategy where the aim is to become the lowest-cost producer in the industry.

Broad Differentiation

A strategy where a company offers unique value to customers, making its products or services distinct from competitors.

Focused Low-Cost Strategy

A strategy that targets a specific market segment while maintaining low costs.

Focused Differentiation Strategy

A strategy focusing on a specific market segment with unique product offerings.

Best-Cost Provider Strategy

A strategy that combines low cost with differentiation, aiming to provide more value for the same or lower price.

Offensive Strategy

A tactic aimed at attacking competitors’ weaknesses while being cautious with market leaders.

Defensive Strategy

A strategy to protect a company’s current market position and reduce competitor threats.

Structure Follows Strategy

A principle in organizational design where the organizational structure should align with the company's strategy.

Key Success Factors (KSFs)

Elements that are crucial for a company to achieve its business objectives.

Synergies in Diversified Companies

The benefits that arise when different business units within a company work together effectively.

Competitive Advantage

The attributes that allow an organization to outperform its competitors.