PORTFOLIO

ANALYSIS
Corporate strategy selection involves making decisions
about which businesses to invest in, and which businesses
to divest, to create a suitable portfolio of businesses that
should enable the company to achieve its strategic
objectives.

Portfolio analysis is simply an approach to analyzing:

a. markets, and their future potential for growth and
profitability, and
b. the position of a business entity within those markets.
 BOSTON CONSULTING GROUP MATRIX (BCG
MATRIX) YOUTUBE HTTPS://YOUTU.BE/GNR49LK5DS0

link
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 Categories Strategy
Cash cow  Defend and maintain market share
 Spending on innovation (R&D) should be limited
 The cash generated by a cash cow can be used to develop other products in
portfolio
Stars  Stars are the cash cows of the future
 An entity should market a star product aggressively, to maintain or increase
market share.
 A large continuing investment in new equipment and R&D will probably be
needed.
 Stars should at some stage generate enough cash to be self-sustaining. Until
then, the cash from cash cows can finance their development.
Problem children / question  The product will need a lot of new investment to increase market share. The
mark strategic choice is between investing a lot of cash to boost market share or to
disinvest/ abandon the product.
Dog  These might generate some cash for the business, and if they do, it might be too
early to abandon the product. The product has a limited future, and strategic
decisions should focus on its short-term future.
 There is a danger that the product will use up cash if the firm chooses to spend
money to preserve its market share.
 The firm should avoid risky investment aimed at trying to ‘turn the business
round’.
THE GENERAL ELECTRIC BUSINESS SCREEN
youtube
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Poj

The GE matrix has 5 steps:

 One - Identify your products, brands, experiences, solutions, or SBU's.
 Two - Answer the question, What makes this market so attractive?
 Three - Decide on the factors that position the business on the GE matrix.
 Four - Determine the best ways to measure attractiveness and business
position.
 Five - Finally rank each SBU as either low, medium or high for business
strength, and low, medium and high in relation to market attractiveness.
SHELL DIRECTIONAL POLICY MATRIX
THE PARENTING MATRIX (ASHRIDGE PORTFOLIO
DISPLAY

The matrix is based on the view that there is degree of ‘fit’ between a parent company and a
business unit (subsidiary). When the fit is high, the parent company understands the business
unit well.
 Category Description Treatment

Parent can add value without Core of the future corporate

Heartlands
risk of harming SBU. strategy.

Parent understands SBU well Needs a light touch from the

Ballasts
but can do little to add value. parent.

Only focus if can be moved to

Parent can add value but may heartlands. For this parent
Value Traps
do more harm than good. must be willing to learn SBU
business.

Parent has poor fit with the

Aliens SBU and can do little to help Dispose of them.
anyway.
PUBLIC SECTOR PORTFOLIO MATRIX
USING THE PUBLIC SECTOR PORTFOLIO MATRIX
Category Recommended strategy Examples
Public sector Maintain or increase future
Education
stars funding

State-owned railways.
Difficult decision whether to
Public hot boxes Some national health
increase funding
services

Golden fleece Viewed as over resourced. At risk Charging points for

services of future budget cuts electric vehicles

Back drawer Public swimming pools

Discontinue
issues near beaches