Skip to content
Home » Corporate Portfolio Analysis – Meaning, Importance, Techniques

Corporate Portfolio Analysis – Meaning, Importance, Techniques

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.

Corporate Portfolio Analysis can help to create a competitive advantage.

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:

  • sales
  • 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.

  1. BCG Matrix or Product Portfolio
  2. GE Nine cell model
  3. Hofer’s Product Market Evolution
  4. Directional Policy & the strategic position
  5. Action Evaluation matrix

BCG Matrix or Product Portfolio

This model was proposed by Boston Consulting Group.

Two factors involved:

  1. Relative market share
  2. Market Growth Rate

BCG matrix model involves four scenario:

  • Star
  • Cash Cow
  • Dogs
  • 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)