Corporate Portfolio Analysis is simply a portfolio analysis that is used for competitive analysis and strategic planning in various small to large companies including multi-product and multi-business firms.
In this case, we can take an example of a diversified company that can divert its business from one business to another where faster growth is possible. This will help to get maximum returns or to achieve its corporate-level objectives in an optimal manner.
Definition & Meaning of Corporate Portfolio Analysis
It can be defined as a set of techniques that helps strategists in taking strategic decisions with regard to individual products or businesses in a firm’s portfolio.
In this, each segment of company or organisation’s product line is evaluated. This includes:
- production cost
- market share
- potential market share.
Evolution of Corporate Portfolio Techniques
Evolved in Mid 1960
This technique was evolved somewhere between mid 1960s.
Importance of Corporate Portfolio Analysis
- To analyse the current business portfolio
- To decide SBU investment distribution
- To add new products or services or businesses
- To decide product retention or removal
Corporate Portfolio Analysis Techniques
Below is the list of various methods and techniques used for Corporate Portfolio Analysis.
- BCG Matrix or Product Portfolio
- GE Nine cell model
- Hofer’s Product Market Evolution
- Directional Policy & the strategic position
- Action Evaluation matrix
BCG Matrix or Product Portfolio
This model was proposed by Boston Consulting Group.
Two factors involved:
- Relative market share
- Market Growth Rate
BCG matrix model involves four scenario:
- Cash Cow
- Question Mark: also called problem children
GE Nine Cell Model
- It is also called McKinsey Matrix or General Electric’s 9 Cell Model.
- This is a Strategic management tool similar to the BCG matrix.
Two factors involved in nine cell GE model:
- Industry attractiveness
- Business Strength
Three Segments in 9 cell matrix model
- Invest (Expand, Grow)
- Select (Earn, Hold)
- Harvest (Divest)