Business Portfolio Introduction
Business portfolio is primarily an accumulation of the various constituents of the company like the products and the services. A decent business portfolio helps the companies to utilize the profitable business options by fitting into the positives of the company.
There are certain steps that are needed to be followed in order to achieve success in business. The companies are required to be careful in making decisions on their investment priorities. Any decision should be made only after careful examination of the various portfolios available.
The businesses must also develop plans that help them to incorporate new products and expand their business. They should also decide on the ones that they need to dispense with.
Business Portfolio Planning
An important part of the business portfolios is planning them well. Different companies may follow separate techniques but there are certain fundamental ways as well. The most basic step is to recognize the important business units in a business portfolio.
These important strategic business units differ in the various companies according to the way they are organized. They are separate entities; requiring planning that is specific to them. Normally the strategic business units range from being a company division, a certain product or even an individual brand.
The market strength of a business portfolio could be assessed from two indicators – the relative market share and market growth rate. The relative market share indicates at the durability of the business portfolio in the market. The market growth rate points at the rate at which the portfolio will draw investors in the market.
There are four kinds of strategic business units given by the Boston Consultancy Group Matrix, which may be mentioned as follows:
- Dogs
- Stars
- Question Marks
- Cash Cows
Under normal circumstances there are four types of investment policies that could be used for each of the strategic business units:
- Build Share
- Hold
- Harvest
- Divest