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The Hofer portfolio matrix is a tool used in marketing to graphically visualize a company's competitive position in each phase of a market's life cycle. It is a 15 square matrix with the company's competitive position mapped on the vertical axis and the market's life cycle phases on the horizontal axis. Circles represent business units and their shaded portions indicate market share. The matrix helps identify strategies for different positions, like emphasizing winners in growth phases or harvesting losers in decline. While it provides an overview, it does not consider all factors influencing attractiveness and the market life cycle is just one influence on portfolio attractiveness.

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92 views16 pages

Assignment (Scribd)

The Hofer portfolio matrix is a tool used in marketing to graphically visualize a company's competitive position in each phase of a market's life cycle. It is a 15 square matrix with the company's competitive position mapped on the vertical axis and the market's life cycle phases on the horizontal axis. Circles represent business units and their shaded portions indicate market share. The matrix helps identify strategies for different positions, like emphasizing winners in growth phases or harvesting losers in decline. While it provides an overview, it does not consider all factors influencing attractiveness and the market life cycle is just one influence on portfolio attractiveness.

Uploaded by

Vatsal Banwari
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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CHARLES W.

HOFER’S
MODEL
WHAT IS HOFER’S
PORTFOLIO MATRIX ?
Ch. W . Hofer’s Portfolio Matrix (or just Hofer’s Portfolio Matrix) is a
tool used in the field of marketing; it belongs to the group of
portfolio matrixes. It facilitates the graphic visualization of the
competitive position of a company for each of the individual phases
of the life cycle of the market branch.
15 squares matrix was created by Ch.W. Hofer. It is a development
of the ADL (Athur D. Little) and McKinsey matrices and is especially
useful when analysing strategically diversified entity.
WHAT IS BUSINESS
PORTFOLIO ANALYSIS
Business portfolio analysis as an organizational strategy
formulation technique is based on the philosophy that
organizations should develop strategy much as they handle
investment portfolios. Just as sound financial investments should be
supported and unsound ones discarded, sound organizational
activities should be emphasized and unsound ones deemphasized
OTHER BUSINESS
PORTFOLIO TOOLS
BCG Growth-Share Matrix
The GE Multifactor Portfolio Matrix
Matsushita Strategy Matrix
Road-mapping
ASSESSING THE FINANCIAL
CONDITION OF THE
BUSINESS
•Liquidity trends
•Profitability trends
•Turnover trends
•Ratio analyses should be calculated
•Short and long term cash flows should be examined
•Corporate and business financial models can also be of assistance
Strong Average Weak

The Life-Cycle Portfolio


Matrix Development

Th e Industry’s stage in the evolutionary life cycle


On the vertical axis the Growth
competitive position of the
company is mapped,
whereas on the horizontal
axis the individual phases
Competitive
are entered. The circles
shakeout
represent the size of the
branch and the turquoise
sections of the circles show Maturity
the market share of the
company.
Saturation
Decline
X-AXIS AND Y-AXIS
INTERPRETATION OF FIELDS
In Hofer matrix, we can characterize groups of products:-
Products A - Dilemmas that have chance of success with appropriate marketing strategies
and financial aid
Products B - Winners, require appropriate marketing strategies and financial aid, if company
has limited resources for advertising managers must make a choice between products A and
B
Products C - Potential losers, the weak position, the sector in the growth phase - managers
should make additional analyses to rule out the possibility of going through the shock phase
Products D - despite the current difficulties can become market leaders or profitable
producers
Products E and F are profitable, so it is possible to introduce other products in the phase of
shock and generate considerable profits
Products G and H are the losers are in the exit phase of the market, ahead of the full
withdrawal managers should use strategies for "gathering the harvest"
STRENGTHS
The main strengths of the matrix resides in the fact that it provides
an image regarding the manner of distribution of the businesses
undertaken by a company during specific stages of a life cycle.
Another advantage of the present matrix is that it manages to
divert the management’s attention from the corporate level and
focus on potential strategies specific to the strategic business unit.
According to specialty literature, the market life cycle represents
one of the main factors that contribute to the adoption of strategic
decisions at the level of the strategic business unit.
WEAKNESSES
The disadvantage of the matrix resides in the fact that it does not
focus on all the relevant factors that influence the level of
attractiveness of a market. According to the McKinsey matrix, the
present model illustrates as well the fact that the stage of the
market life cycle is very important, but this element must not be
deemed as being the only and the main influence factor of the level
of market attractiveness. Therefore, there are other significant
factors that may exert influence over the company’s portfolio,
without being dependent on the stage in which the market
evolution is found.
RELATIVE COMPETITIVE
POSITION
•To develop a better measure of the long-term growth potential and
profit potential of the organizations businesses.
•Method is more comprehensive
•Market Share is an indicator of profit potential but other factors also
influence this measurement
•Success factors of the organization's businesses vary from business
to business
STEPS OF BUSINESS
PORTFOLIO ANALYSIS
•The short term financial condition and health of the company must be
determined to assess whether it is a feasible entity or likely to go bankrupt

•The relative competitive position of the business must be ascertained because


even if the business is not about to become bankrupt, liquidation of the business
may be one of the strategic choices.

•It is then necessary to determine the position of evolution of the market that the
business competes in. This will help decide whether the preferred strategy is
share increasing, growth or profit.

•A plot is then made of the business’s basic strategic position.


MAJOR DETERMINANTS OF
BUSINESS STRATEGY
Nature of buyer needs
Degree of product differentiation
Rate of technological change in the process design
Ratio of market segmentation
Ratio of distribution costs to manufacturing
Value added
Frequency with which the product is purchased
CONCLUSION
Taking into consideration the above mentioned, we must
emphasize the fact that the restriction of the portfolio analysis to a
single method, is not a very wise decision. Each method presents a
series of advantages and disadvantages and each of them tries to
offer, at one time, a diagnostic of the business portfolio specific to
a company.
REFERENCES
CEOPEDIA
MANAGEMENTMANIA
Steconomiceuoradea
Slideshare
Business Managament Ideas
Marketingstudyguide
THANK YOU

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