Page 7 - Portfolio Analysis

In considering these findings it is important to understand that, if a product
is differentiated so that it is competing in a definable, relevant market
segment, then it is the market share of that segment that is important.
Successful companies make almost all their profits from those products
which dominate their market segment.

However, the business which is the furthest experience curve must guard
against complacency. Over time the gains from the experience curve
effect diminish and competitors catch up. Moreover, experience curve
advantages can be quickly lost if new technologies are developed and
implemented.

Thus it is evident that the concept of the experience curve is of
fundamental importance to the BCG approach to portfolio management.
Equally important is the concept of the product life cycle.