Portfolio analysis: definition, objectives, methods, examples.

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2018-09-09 15:00:22

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Portfolio analysis – in marketing understand this term tool to determine the economic condition of the enterprise, the propriety of certain investments in different spheres of activity. As a result of the analysis, “fold” or decrease investment in the region, non-profit, resume or increase investment in the promising departments of the company.

The Aim of portfolio analysis is considered to be the best negotiation strategies of the company and proper allocation of funds.

Methods of portfolio analysis

The Most common in this area methods – a different matrix. Widely used by six matrix methods:

1) BKG – the essence of this technique is to analyze the market share and growth of the company.

2) ICC – compares the company's mission and core competence of the business for compliance.

3) McKinsey – assessment of attractiveness and competitiveness of the enterprise activity on the market.

4) shell – calculates the attractiveness of the industry based on competitiveness

5) ANCOVA – analyzes the strategy and its applicability to the market and products.

6) ADL – with the help of this matrix is analyzed the life cycles of firms and market position relative to its competitors.

Phases.

The Process through which the portfolio analysis can be divided into several important stages:

1) Definition of divisions of the company.

2) select the method of analysis

3) the Collection of information that will be needed in the process of constructing the matrix

4) Build matrix

5) development of a new strategy on the basis of the analysis.

To information collected to conduct portfolio analysis, include:

1) the State and development of industries that are involved in the process of activity of the company.

2) the Competitiveness of enterprises

3) Life cycle stage life cycle of the company.

4) the Share of the divisions of the company in the market.

Portfolio analysis gives answers to the most important issues for the company. These include:

- What is the competitiveness of the enterprise?

- How balanced is the system of distribution of the product in the market?

- What is the maximum number of markets could be covered by the company in its activities?

- the Life cycle of each of all operating areas of the company.

- Receipt of the type of product most justified?

- What sectors in the future it is necessary to close or upgrade?

- whether to soon bring to market new products?

- What is the size of investment that is suitable at the moment for a particular group of products?

- What are the strategies of production and marketing should implement in the near future?

After the analysis we can conclude that in the future will influence the development of the enterprise. Can be taken decision about diversification of the enterprise, that is, the implementation of the strategy, which are developed and deduced on the market new products and services. Diversification has several subtypes:

Related and unrelated (conglomerate)

Related diversification, in turn, is divided into several types:

  • Vertical is backward and forward
  • Horizontal acts on the extension of the product range or the geographical extension of territory.

Portfolio analysis. Example.

The Company is engaged in the production and sale of baby food – mixes, cereals, purees, juices.

Periodically the enterprise needs to ascertain whether popular among consumers or that the products, whether to market new products, what types of baby food can generally be removed from production due to low demand, how strong is the competition in the field of child nutrition. To answer all of these questions is to conduct portfolio analysis.

Data are Collected from the stores, which sold products of baby food, calculated profitability, costs, competitiveness, etc. According to the results of the analysis it turns out that baby cereal competitive firms bought up faster, and the juices of the considered companies do not demand. For the first group of products need marketing improvement – the new appearance of the packaging, variety of flavors, etc. the production of the second group, it is best to stop, not to be left at a loss.

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