McGeorge Holdings plc is a large, international consumer goods company specializing in household cleaning products and toiletries. It has many manufacturing and sales facilities throughout the world. Over several years it has offered an increasingly wide range of products appealing to differing market segments based on both socio-demographic and geographic criteria. However, this product spread has not only resulted in increased sales volume, but production, marketing and distribution costs have also increased disproportionately. McGeorge’s costs are now about 20% higher than those of its nearest competitors. In such a competitive market it is difficult to pass on these extra costs to the customer. To regain a competitive position Adrian Reed, the Managing Director of McGeorge Holdings, has been advised to reduce the range of products and the product lines. Advisors have suggested that a cut back in the product mix by about 20% could increase profits by at least 40%. Reed is keen to implement such a product divestment strategy, but he fears that this cutting back could alienate customers. He needs to know which products need to be removed and which products are important to the survival of the company. He is unhappy about the overall performance of his company\\\'s activities. Benchmarking has been recommended as a method of assessing how his company’s performance compares with that of his competitors.

Required:

(a). Using appropriate analytical models discuss how Adrian Reed might select the products to be removed from the portfolio as part of his product divestment strategy. 

(b). Examine how benchmarking can be carried out and discuss its limitations.

Answer rating: 100% (QA)

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