PREPARED BY

ISHVEEN KAUR

WHAT IS BUSINESS PORTFOLIO

ANALYSIS?
The business portfolio is the
collection of businesses and products
that make up the company. The best
business portfolio is one that fits the
company's strengths and helps
exploit the most attractive
opportunities.

Business portfolio analysis as an

organizational strategy formulation
technique is based on the philosophy
that organizations should develop
strategy much as they handle
investment portfolios. Just as sound
financial investments should be
supported and unsound ones discarded,
sound organizational activities should
be emphasized and unsound ones
deemphasized.

BCG Growth-Share Matrix

The GE Multifactor Portfolio Matrix
Matsushita Strategy Matrix
Road-mapping
The GE Multifactor Portfolio Matrix was
deliberately designed by General
Electric Company (GE) and McKinsey
and Company to be more complete that
the BCG Growth-Share Matrix.

Promotes competitive analysis at the

level of SBUs.
Better utilization of financial
resources
It reduces risk, increase
concentration, identification of
strategies at corporate level.

The short term financial condition and health of

the company must be determined to assess whether it
is a feasible entity or likely to go bankrupt

The relative competitive position of the business

must be ascertained because even if the business is
not about to become bankrupt, liquidation of the
business may be one of the strategic choices.

It is then necessary to determine the position of

evolution of the market that the business competes
in. This will help decide whether the preferred strategy
is share increasing, growth or profit.

A plot is then made of the businesss basic

strategic position.

Liquidity trends
Profitability trends
Turnover trends
Ratio analyses should be calculated
Short and long term cash flows
should be examined
Corporate and business financial
models can also be of assistance

To develop a better measure of the

long-term growth potential and profit
potential of the organizations
businesses.
Method is more comprehensive
Market Share is an indicator of profit
potential but other factors also
influence this measurement
Success factors of the organization's
businesses vary from business to
business

Examples of success factors

Hofer-Schendel (1978)

Market share
SBU growth rate
Breadth of product line
Sales distribution effectiveness
Capacity and productivity
Experience curve effects
Raw materials cost
Value added
Relative product quality and ETC.

Charles W. Hofer and Dan Schendel,

they described seven stages of the
life cycle, each with certain
characteristics by which the position
of the market can be identified.

1.A major blunder by the industry leader

2.A major investment program by a well
positioned follower
3.Through the acquisition and effective
integration of another firm within the
industry
4.Through a sustained effort to produce
small, consistent incremental
advantages over a long period of time.

 He took series of research studies

showing that the stage of the life
cycle of the product represents a
factor that influences to greater or
smaller extent the success of a
strategy

According to Hofer and Schendel, "The

Principal difficulty with GE Business Screen
is that it does not depict as affectively at it
might the positions of new businesses that
are just starting to grow in new industries.

In such instances, it may be preferable to

use a fifteen-cell matrix in which businesses
are plotted in terms of their competitive
position and their stage of product/market
evolution". Thus, Hofer developed the
Product/Market Evolution Portfolio Matrix, or
Life Cycle Matrix.

Dimensions
STAGE OF INDUSTRY EVOLUTION
Early Development
Rapid Growth/Takeoff
Shake-Out
Maturity/Saturation
Decline/Stagnation
COMPETITIVE POSITION

The Life-Cycle
Portfolio Matrix

Th e Industrys stage in the

evolutionary life cycle

Developme
nt

Growth

Competitive
shakeout
Maturity

Saturation

Decline

The business unit competitive

position
Strong

Average

Weak

Advantages
Used to identify developing winners
Illustrates how businesses are
distributed across the stages of
industry evolution

THANK

YOU