What is the name of the tool used for allocating resources among products or strategic business units based on market share and growth rate?

What is the name of the tool used for allocating resources among products or strategic business units based on market share and growth rate?

• A. Value Chain Analysis
• B. Portfolio Matrix
• C. Market Growth Model
• D. Competitive Landscape

Answer: (B)

The tool used for allocating resources among products or strategic business units based on market share and growth rate is called the Portfolio Matrix. This framework helps businesses evaluate their various product lines or strategic business units by categorizing them based on their market growth and relative market share. Typically, the Portfolio Matrix, often exemplified by the Boston Consulting Group (BCG) matrix, divides products into four categories: Stars, Cash Cows, Question Marks, and Dogs. Stars are products in a high-growth market with a high market share, generating substantial revenue. Cash Cows have a high market share but are in a low-growth market, providing consistent income with minimal investment. Question Marks require significant resources to increase market share in high-growth markets, while Dogs have both low market share and low growth, often being candidates for divestiture. Understanding this matrix allows businesses to make informed decisions about where to allocate their resources effectively, maximizing returns on investment and strategic focus. By utilizing this tool, companies can monitor their product portfolio's performance and develop strategies tailored to each category, ultimately enhancing their competitive position in the market.

The tool used for allocating resources among products or strategic business units based on market share and growth rate is called the Portfolio Matrix. This framework helps businesses evaluate their various product lines or strategic business units by categorizing them based on their market growth and relative market share.

Typically, the Portfolio Matrix, often exemplified by the Boston Consulting Group (BCG) matrix, divides products into four categories: Stars, Cash Cows, Question Marks, and Dogs. Stars are products in a high-growth market with a high market share, generating substantial revenue. Cash Cows have a high market share but are in a low-growth market, providing consistent income with minimal investment. Question Marks require significant resources to increase market share in high-growth markets, while Dogs have both low market share and low growth, often being candidates for divestiture.

Understanding this matrix allows businesses to make informed decisions about where to allocate their resources effectively, maximizing returns on investment and strategic focus. By utilizing this tool, companies can monitor their product portfolio's performance and develop strategies tailored to each category, ultimately enhancing their competitive position in the market.