McKinsey Portfolio Analysis

How To Run Dynamic Analyses

A very useful application built into the portfolio tools of MM4XL (McKinsey and BCG) is dynamic data analysis. So far, we have described a static application, observing single products, and using a single time period. Alternatively, we can measure the same elements at two or more given points in time and display them on the same grid. This allows the analyst to observe the portfolio and its development over time.

The dynamic nature of markets has an impact on products and therefore portfolios. Being able to look at their past and present condition can help to anticipate changes in the future.

It is very simple to run a dynamic McKinsey analysis. Start the analysis as you have learned in the previous chapter, then input weights for the same products at two different points in time and run it.

The picture above shows the top portion of a Market Attractiveness table. Three products are listed: MultiVit, VitC, and Minerals. Each of them has been weighted with respect to the current year and also to their attractiveness and competitiveness in 1997. You might also want to focus on a restricted number of items (to keep the map readable) and depict their shift over several time periods on the same grid, for instance, 1995, 1996, 1997, 1998, and 1999.

Looking beyond product analysis, remember that both static and dynamic analysis can also be applied to marketing divisions of the same company or to local affiliates belonging to same multinational company. Brilliant analysis is limited only by the users creativity.

Tip:
A reliable portfolio analysis is best achieved by employing both McKinsey and BCG tools, in order to benefit from their strengths while reducing their weaknesses.