Portfolio Analysis Conclusion

Last Updated on Sat, 02 Sep 2023 | Marketing Planning

Portfolio approaches provide a useful tool for strategists. Granted, these approaches have limitations, but all these limitations can be overcome with a little imagination and foresight. The real concern about the portfolio approach is that its elegant simplicity often tempts managers to believe that it can solve all problems of corporate choices and resource allocation. The truth is that it addresses only half of the problem: the back half. The portfolio approach is a powerful tool for helping the strategist select from a menu of available opportunities, but it does not put the menu into his or her hands. That is the front half of the problem. The other critical dimension in making strategic choices is the need to generate a rich array of business options from which to choose. No simple tool is available that can provide this option-generating capability. Here only creative thinking about one's environment, one's business, one's customers, and one's competitors can help.

For a successful introduction of the portfolio framework, the strategist should heed the following advice:

1. Once introduced, move quickly to establish the legitimacy of portfolio analysis.

2. Educate line managers in its relevance and use.

3. Redefine SBUs explicitly because their definition is the "genesis and nemesis" of adequately using the portfolio framework.

4. Use the portfolio framework to seek the strategic direction for different businesses without haggling over the fancy labels by which to call them.

5. Make top management acknowledge SBUs as portfolios to be managed.

6. Seek top management time for reviewing different businesses using the portfolio framework.

7. Rely on a flexible, informal management process to differentiate influence patterns at the SBU level.

8. Tie resource allocation to the business plan.

9. Consider strategic expenses and human resources as explicitly as capital investment.

10. Plan explicitly for new business development.

11. Make a clear strategic commitment to a few selected technologies or markets early.

Continue reading here: Profit Impact Of Marketing Strategy Pims

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Readers' Questions

  • Sheshy
    What is portfolio analysis in marketing?
    5 months ago
    • Portfolio analysis in marketing refers to the evaluation of a company's products or services in order to determine their profitability, growth potential, and competitive positioning within the market. It involves assessing the performance and potential of individual products or services, as well as their contribution to the overall success of the company. There are various methods of conducting portfolio analysis, including the Boston Consulting Group (BCG) matrix and the General Electric (GE) matrix. These frameworks categorize products or services based on their market share and market growth rate, allowing businesses to identify their most important products and allocate resources accordingly. Portfolio analysis helps marketing executives make strategic decisions, such as investing in promising products, divesting or discontinuing poor performers, or adjusting the marketing mix for different products. It also assists in identifying potential opportunities or threats in the market and helps prioritize marketing efforts and resource allocation. Overall, portfolio analysis in marketing aids businesses in understanding the strengths and weaknesses of their product offerings, making informed decisions to optimize their product portfolio and maximize overall profitability and growth.