Page 17 - Portfolio Analysis
P. 17
Figure 6 attempts to show how these two concepts feed into the matrix.
The vertical axis shows the position the product or service or division is at
in its life cycle. If it is at the introductory stage then it is likely that it will be
facing a relatively high market growth rate. On the other hand if it is at the
mature stage with market saturation approaching then there will be a
relatively market growth rate.
Thus the vertical axis relates, roughly, to the PLC and indicates the growth
of the product or service or division being examined. By determining its
position on the PlC we can derive an estimate of its cash usage. This can
then be compared with the relative growth rate of the product market or
market segment.
FIGURE 7
PRODUCT LIFE CYCLE
Sales and profits
Maturity
Growth
Introduction Decline
Sales
Profit
Time
