AWL (GE/McKinsey approach)

Describe the business portfolio and the options available to AWL - AWL (GE/McKinsey approach) introduction. The business portfolio of AWL’s 1998 fiscal year consists of three SBUs, namely three new marketing textbooks, including Advertising and Sales Promotion Strategy, Analysis for Strategic Marketing and Marketing Engineering. We can also see these three textbooks in the GE Portfolio Matrix as shown in Graph 1 and Graph 2. AWL should have clear understanding of these three new textbooks in order to prioritize the promotional resources for them.

For example, the book named Marketing Engineering is a bit different from the other two, since it doesn’t currently have a large natural market but might ultimately be a big winner if it is promoted properly. Besides, since AWL is already a publisher with a traditional image, AWL should pay much attention to which direction they want to go on. That is to say, AWL is suggested to taken the area they intend to exploit into consideration when allocating the promotion resources and investments to these three new textbooks.

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2. What does the GE approach suggest about the relationship between AWL’s strategic objectives and its promotional plans? The GE approach tells us that how AWL allocates the resources to market these three new textbooks depends a lot on AWL’s strategic objectives and their promotional plans. That is to say, how AWL draws its promotional plans depends on in which direction that AWL wants to go. The three cells in the upper right of the GE Matrix are those in which AWL has a relatively strong market position and should be considered for more investment in order to gain substantial growth.

The three cells along the diagonal are of intermediate overall attractiveness, and AWL should consider a policy selectively enhancing businesses in those cells to generate profit. Last but not the least, the three cells in the lower left corner are low in overall attractiveness, and AWL should consider harvesting and divesting businesses in those cells. For example, if AWL wants to keep its “traditional” feature, it is recommended to allocate more resources and invest more to Analysis for Strategic Marketing written by Rao and Steckel.

As can be seen in Graph 1, from the traditional perspective, Analysis for Strategic Marketing written by Rao and Steckel is plotted the highest with respect to the Horizontal Axis “Business Strength” and the Vertical Axis “Industry Attractiveness”. On the contrary, if AWL wants to build its “leading-edge” image, it is suggested to promote Marketing Engineering written by Lilien and Rangaswamy with more resources and effort.

As can be seen in Graph 2, from the leading-edge perspective, Marketing Engineering written by Lilien and Rangaswamy is plotted the highest with respect to the Horizontal Axis “Business Strength” and the Vertical Axis “Industry Attractiveness”. In a word, AWL’s strategic objectives and its promotional plans depend on which weight of “traditional” and “leading-edge” they want to focus. 3. What should Mark do? From the history of AWL we can easily tell that AWL has already established its traditional image in the publishing industry and also in customer’s mind.

Therefore, according the GE Matrix in Graph 2 and from my perspective, Mark is recommended to promote Marketing Engineering written by Lilien and Rangaswamy in order to exploit the leading-edge area and to gain long-term success. The detailed interpretation is as follows: The three cells in the upper right are those in which AWL has a strong position and should be considered for investment and growth. The three cells along the diagonal are of intermediate overall attractiveness, and AWL should consider a policy selectively enhancing businesses in those cells to generate earnings.

Finally, the cells in the lower left corner are low in overall attractiveness, and AWL should consider harvesting and divesting businesses in those cells. As can be seen in Graph 2, the majority of circle indicating the textbook Marketing Engineering written by Lilien and Rangaswamy is located in the upper right cell, which indicates that from the “leading-edge” prospective the textbook Marketing Engineering written by Lilien and Rangaswamy ranked the highest in terms of “Business Strength” and “Industry Attractiveness”.

Hence, if AWL decides to allocate more resources to promote Marketing Engineering written by Lilien and Rangaswamy, there is a higher chance of success and as a result AWL is more likely to exploit the new “leading-edge” area in the publishing industry to gain further stable sales increase and long-term success. 4. What other factors should Mark consider in setting and allocating the budget? The first factor Mark should consider is the cost of implementing the selling of the textbook Marketing Engineering written by Lilien and Rangaswamy.

Although the circle indicating Marketing Engineering written by Lilien and Rangaswamy is plotted in the upper right cells which mean it has relatively advantage regarding to “Business Strength” and “Industry Attractiveness”, the promoting cost, the expected profit as well as the ROI should also be considered to make sure the decision won’t be an error. Besides, he should also consider the reaction of the board of AWL, because they may hold different viewpoints. Mark should prepare for the opposite opinions from the members of AWL’s board, since stepping into the new area of “leading-edge” may take a certain extent risks. . Comment on the uses and limitations of the GE model. Uses: the GE model is easy to implement, communicate and understand. It gives the marketers a clear and vivid analysis of business portfolio. Besides it also helps the marketers to decide on which SBUs the company should allocate more resources and invest more. Limitations: Its main limitation is that it attempts to boil down business strategy to the interplay of a small number of somewhat arbitrary dimensions that may ignore important specific aspects of the business planning environment.

Besides, the aggregation of the indicators is sometimes too difficult for marketers to implement. In addition, the interaction between SBUs is not taken into consideration, so the decision may be not suitable for the always changing market. Last but not the least, the core competencies of the corporation are not represented in this analysis. The core competencies may be leveraged across SBUs and can be a deciding factor while judging the competitive strength of the SBUs.

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