To determine the future cash contributions and cash requirements expected for each SBU, managers can use the Boston Consulting Group's portfolio matrix. The challenge is to balance the organization's portfolio of SBUs for the best long-term performance. Some SBUs generate large amounts of cash, and others need cash to foster growth. Management must find a balance among the SBUs that yields the overall organization's desired growth and profits with an acceptable level of risk. However, it can be very profitable when a firm is entering markets with little or no competition. 'There are some UGG customers that will be interested in the Collection product, but it will also bring in new customers for us,' says Leah Larson, UGG's vice president and creative director.* A diversification strategy can be risky when a firm is entering unfamiliar markets. The shoes are inspired by rock'n'roll legends such as Jimi Hendrix and Jim Morrison, and are meant to appeal to new customers. For example, UGG, a popular footwear brand known for its casual boots, has introduced an upscale men's footwear collection. Beats hopes this service's novel features, sleek design, and celebrity endorsements will catapult it to the front of the music streaming pack, which is currently fronted by competitors such as Spotify and Rdio.*Дiversification: Diversification is a strategy of increasing sales by introducing new products into new markets. In January 2014, Beats Electronics launched Beats Music, a subscription-based streaming music service that offers advanced personalization systems and forward-thinking family sharing plans. Product development: A product development strategy entails the creation of new products for present markets.

In the nonprofit arena, the growing emphasis on continuing education and executive development by colleges and universities is a market development strategy. McDonald's, for example, has opened restaurants in Russia, China, and Italy and is eagerly expanding into Eastern European countries. Ideally, new uses for old products stimulate additional sales among existing customers while also bringing in new buyers. Market development: Market development means attracting new customers to existing products. Though these markets were already served by separate, well-established energy companies, FTR Energy hoped to penetrate the energy market by allowing customers to lock in competitive rates and offering five percent cash back on energy usage.* Customer databases, discussed in Chapter 9, would help managers implement this strategy. FTR Energy Services, a division of Frontier Communications, introduced a Green-e certified energy service into New York, Ohio, and Indiana markets served by Frontier's telephone and broadband services. Market penetration: A firm using the market penetration alternative would try to increase market share among existing customers. One method for developing alternatives is Ansoff's strategic opportunity matrix (see Exhibit 2.1), which matches products with markets.

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