The PIMS Principles: Linking Strategy to Performance

Unlike Portfolio Planning methods, PIMS explores many possible dimensions of strategy and market environment, such as investment intensity, product or service quality, labor productivity, and vertical integration, all of which have powerful effects on business performance. For example, PIMS shows how the quality edge boosts performance two ways and earns superior profit margins. It verifies how market share and profitability are strongly related but also shows why that does not mean that every business can or should strive to increase its share, as demonstrated by the disastrous "kamikaze attack" launched in the early 1980s by Yamaha on the market leader Honda. Most important, it analyzes why forecasts of cash flow based solely on the growth-share matrix are often misleading and why, in fact, many so-called "dog" and "question mark" businesses actually generate cash, while many "cash cows" are dry.