Shell Directional Policy Market for Portfolio Analysis
SHELL DIRECTIONAL POLICY MARKET FOR
PORTFOLIO ANALYSIS
Strategic Implications
Unlike the Boston Matrix in which one is looking for a balance of business opportunities spread amongst growth and maturing markets, in the Directional Policy Matrix the concentration of business opportunities should be focused around the ‘Leader’ domain, i.e. the top left hand area of the matrix. Under such circumstances, one is looking at a strong portfolio where the company is focusing on markets that are attractive and where it is acknowledged as being competitive. Note that metrics relating to market size and growth may not feature in the ‘Segment Attractiveness’ axis; it is quite possible for segments labelled as ‘Cash Cows’ (bottom right hand corner in the Boston Matrix) to appear in this domain.
The closer an opportunity is towards the bottom and the right hand corner of the matrix, the weaker the company is in relation to market requirements, and the less attractive the Market. If the company finds significant elements of the portfolio in the ‘Divest’ domain it needs to think quickly about what actions to take, e.g. to what extent should they be ‘milked’ and how quickly should they be disposed of. Despite its potential, an opportunity labelled as a ‘Question Mark’ product in the Boston Matrix could fall into this domain if it is not strategically aligned with the holding group!
Areas in between are more problematic. The company will need to make a strategic decision on whether or not to keep the segment in the portfolio, the amount to invest in it, whether it can ever hope to achieve market leadership, the extent to which it should generate cash and so on. Generally speaking the further towards the top and right, the more likely one is to invest, as one is approaching markets that the company would deem as attractive, despite the fact that the company is not yet competitive. Conversely those opportunities towards the bottom and left are in areas that the company would
PORTFOLIO ANALYSIS
Strategic Implications
Unlike the Boston Matrix in which one is looking for a balance of business opportunities spread amongst growth and maturing markets, in the Directional Policy Matrix the concentration of business opportunities should be focused around the ‘Leader’ domain, i.e. the top left hand area of the matrix. Under such circumstances, one is looking at a strong portfolio where the company is focusing on markets that are attractive and where it is acknowledged as being competitive. Note that metrics relating to market size and growth may not feature in the ‘Segment Attractiveness’ axis; it is quite possible for segments labelled as ‘Cash Cows’ (bottom right hand corner in the Boston Matrix) to appear in this domain.
The closer an opportunity is towards the bottom and the right hand corner of the matrix, the weaker the company is in relation to market requirements, and the less attractive the Market. If the company finds significant elements of the portfolio in the ‘Divest’ domain it needs to think quickly about what actions to take, e.g. to what extent should they be ‘milked’ and how quickly should they be disposed of. Despite its potential, an opportunity labelled as a ‘Question Mark’ product in the Boston Matrix could fall into this domain if it is not strategically aligned with the holding group!
Areas in between are more problematic. The company will need to make a strategic decision on whether or not to keep the segment in the portfolio, the amount to invest in it, whether it can ever hope to achieve market leadership, the extent to which it should generate cash and so on. Generally speaking the further towards the top and right, the more likely one is to invest, as one is approaching markets that the company would deem as attractive, despite the fact that the company is not yet competitive. Conversely those opportunities towards the bottom and left are in areas that the company would