Company by Referring to the Present Condition

¶ … company by referring to the present condition of the firm and its positioning on the market, as compared to future competitiveness and potential market. As such, in terms of obvious strengths, we should be keen to emphasize the current position of the company on the market. The competitive position figures, as compared to the PIMS mean, but also in absolute value, show remarkable results. The company has a 61% market share, which represents 2.5 times more than the industry mean, which is also pointed out by the relative market share figures (158% versus 62%).

The industry concentration figure, as calculated for the entire industry (I am not sure that the industry concentration index is relevant when referring to one business only, but should rather be regarded in the industry context), is quite high, which shows that, besides the business we are analyzing, there are only a few more powerful businesses and competitors worth taking into consideration on the market. The main weakness we need to mention is that the company practically has no plans for the future, relying solely on its current positioning.

Several indicators and figures come to back this up. First of all, the new products to sales ratio, which would show the number of products that have been introduced in the last 3 years, is 0 for our business, as compared to the industry average 12 ratio. This shows that, on an extremely innovative market, where new products significantly participate to the overall net sales, the business we are currently addressing has not launched one single new product in the last three years. The R& D.

To sales and marketing to sales figures come to show that the company is relying on marketing its current products rather than keeping up with the competition ion launching new ideas on the market. In my opinion, this can be interpreted as a weakness, because it may soon be the case that the product that has been successful so far will no longer further perform sometime in the future.

The investment to sales and the investment to value added figures again show a reticence to invest in new ideas, in new products and in new technologies and designs, which may degrade the current market share and market positioning for the business. b) The current return on investment is quite high and would justify any investments made in the business.

As I have pointed out in the previous paragraphs, the problem and weakness lies in the way the future is being approached rather than in the present performances of the business, which are more than sufficient. c) First of all, we will be using the Boston Consulting Group's Product Portfolio Matrix, relevant in showing and emphasizing characteristics of the business product portfolio. As we know, there are four categories of products, relative to the market growth and market share variables.

These are cash cows (low market growth and high market share), dogs (low market growth, low market share), problem child (low market share and high market growth) and star (high/high). In our case, the business is located in the cash cows quadrant, with a significantly high market share, but limited possibilities of growth for the current portfolio. This positioning leads us to believe that the company needs to investigate and approach innovation as a solution for the future.

Based on the financial sources that the current portfolio of products is obviously bringing to the business, one can turn to research and development investments for a future strategy. The Ansoff matrix will show us the company's positioning in terms of its current growth strategy, while allowing us to suggest a repositioning within the matrix system for the future.

As such, given the fact that the business has not developed one single new product in the last three years, we can consider that it belongs to the 'market development' quadrant, attempting to market and sell an old product to new markets. On the other hand, in close correlation to what I have previously discussed, the business should approach a 'product development' solution (upper right quadrant on the Ansoff Matrix), given the relative saturation of the market.

Finally, we can plot the business on the GE/McKinsey Matrix, with market attractiveness and competitive strength as the two variables used. As we have previously discussed, the business has a high competitive strength, but the evaluations tend to point out towards a reduced market attractiveness, with newer products swift to appear and a high rate of newly introduced products.

The three matrix models we have used to plot the business come to show basically the same thing we have previously discussed when referring to the strengths and weaknesses of the business. As such, while clearly dominating the present time market, the business needs to ask itself whether the attractiveness of the market makes it a useful choice to go for a single product and no innovatory work. d) The company is currently quite profitable and has a high return on investment figure.

However, the future is uncertain, given the fact that the company is operating in an industry counting significantly on innovation and technological research and development. It is likely that the market will shift towards some of the products launched in the last three years, in which case the business we are analyzing is in trouble. As we have seen from the Boston Consulting Group's Product Portfolio Matrix, the company's portfolio of products ranks in the 'cash cows' section, with a market growth perspective.