Page 9 - Portfolio Analysis

PRODUCT LIFE CYCLE Sales and profits Maturity Growth Introduction Decline Sales Profit Time Normally a company would have a mix of products/businesses with representation in each of the stages of the life cycle. Thus the concept of a PLC is a further aid to understanding product/business strategies. However, this will only be the case if we can clearly place a product/business in a particular stage and can also determine the duration of the cycle. Moreover, the strategic use of the PLC often hinges on forecasting changes in the growth rate and in particular in establishing the end of the growth and maturity stages. When studying both the experience curve and the product life cycle much reference was made to market share. It is important that we understand what is meant by the term and indeed how market share is measured. MEASUREMENT AND INTERPRETATION PROBLEMS WHAT IS MARKET DOMINANCE? Market share is the ratio of sales by a company,in a given time period, to total sales by all competitors in the same market. The “market” includes all of the