Business Portfolio

7 Key excerpts on "Business Portfolio"

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  eBook - ePub

  The Official CIM Coursebook

  Strategic Marketing Decisions 2008-2009

  • Isobel Doole, Robin Lowe(Authors)
  • 2012(Publication Date)
  • Routledge

    (Publisher)

  Units 9 (communications and relationship building) and 10 (pricing, supply-chain and partnership development) to fully understand the value benefits of integrating the marketing mix.

  In this unit we focus on portfolio management, maintenance and development and specifically on the decisions that are made on branding, both at a strategic level to increase brand awareness, impact and equity and at an operational level, in the application of branding to products and services. We then turn to the management of the portfolio of products and services and focus on the management decisions of maintaining and building the portfolio, where necessary, carrying out rationalization, NPD and service enhancement.

  Before starting this unit, students should familiarize themselves with the issues of branding, product and service, and NPD concepts, using the reading mentioned in the ‘Further study’ section.

  Key definitions

  A successful brand – is an identifiable product, service or place augmented in such a way that the buyer or user perceives relevant, unique, sustainable added values that match their needs most closely (de Chernatony, 2001).

  Product portfolio – is the collection of products and services that are managed together rather than as individual products.

  Brand equity – is the net present value of the future cash flow attributable to the brand name.

  Intangible assets – non-material assets such as technical expertise, brands or patents.

  Adding value through branding

  Previously in this coursebook we have emphasized that for many global companies today it is their intangible assets that provide their most significant source of future competitive advantage. Of these intangible assets the brand is the most significant. For example, the brand equity of the Coca-Cola brand was estimated by Interbrand to be worth $70 billion in 2006. The brand has been created through sustained marketing investment in advertising and promoting a consistent message for over 100 years.

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  eBook - ePub

  Return on Strategy

  How to Achieve it!

  • Michael Moesgaard, Morten Froholdt, Flemming Poulfelt(Authors)
  • 2009(Publication Date)
  • Routledge

    (Publisher)

  7 REVISING THE PRODUCT PORTFOLIO

  Most companies’ experience with portfolio management was intense but short-lived. During its short life-time, however, portfo lio management did heighten the demand for MBAs, skilled at the types of analysis strategic management required. 1

  (McGill, 1988)

  In Chapter 6 , working diligently with customer attitude was addressed as the frst key success driver towards increasing the Return on Strategy. Invariably, any strategy must also comprise the supply side of the company, i.e. products and services. Thus, Chapter 7 addresses what companies actually supply as part of the strategy framework, starting off by addressing some of the strategic pitfalls and failures experienced by less successful companies.

  The Rise (and Fall?) of the Product Portfolio Perspective

  The conventional wisdom regarding the strategic management of a company's product portfolio stems from work that Mead Corporation in 1970 contracted Boston Consulting Group (BCG) to perform.2 A major outcome of this project was to view a multi-market business as a product portfolio with the recommendation that each business (SBU – strategic business unit) or product in the portfolio demanded widely different strategies.

  As yardsticks, market share and growth were identifed, leading forward to the BCG four square matrix, in which “stars”,

  Figure 7.1 The Boston Consulting Group matrix.

  “cash cows”, “question marks/new ventures” and “dogs” were described comprising widely different characteristics and subsequently demanding widely different business strategies, see Figure 7.1 .

  The matrix has undoubtedly been a useful tool in some contexts. It has been used for classifying a company's SBUs and confguration of products. Once a company has classifed its portfolio according to the matrix it must decide what to do with them. According to conventional thinking there are four options: Should the company increase the market share, maintain the position, harvest or divest?

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  Overview of Product Portfolio Management

  • (Author)
  • 2019(Publication Date)
  • Cuvillier Verlag

    (Publisher)

  (see Wendt (2013), p. 81 et seq. For a very similar very pragmatic definition see also Schepp, Herold, Schmahl (2009), p. 130 12 Regarding this understanding see e.g. Landauer (2013), p. 6 13 Strategic management mostly uses portfolio management as a tool to evaluate and plan strategic options within product-market scenarios (see e.g. Hahn (2006), p. 218 or Macharzina, Wolf (2010), p. 247) 14 Product management is focusing more the single product or service in contrast to portfolio management looking at all products simultaneously. However, there is an overlapping area. Most authors of product management descriptions look at the sum of all products, too. Normally, they do not use the term “portfolio” but “product programme” or ”product palette” (see e.g. Hermann, Huber (2013), p. 1, Pepels (2013), p. 429 et seq.) 15 Devinney, Stewart, Stocker (1985), p. 110 Dieses Werk ist copyrightgeschützt und darf in keiner Form vervielfältigt werden noch an Dritte weitergegeben werden. Es gilt nur für den persönlichen Gebrauch. 4 3 Product Portfolio Management 3.1 Overview In order to get a good understanding of the different product portfolio approaches it is useful to take a brief look at the origins of portfolio management and its development. Portfolio management first was established in the financial theory. In 1952 Harry Markowitz developed an approach how to compose an optimal securities portfolio under uncertainty. Portfolio in this context means the sum of all assets of an investor. Each asset carries a certain expected return according to its risk. One basic assumption in this context is a positive correlation between risk and return. Fixed income securities for example generally carry lower risk than stocks and thus their return in lower, too. Markowitz developed a mathematical/statistical approach how to compose an “optimal” portfolio.

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  The Sports Management Toolkit

  • Paul Emery(Author)
  • 2011(Publication Date)
  • Routledge

    (Publisher)

  CHAPTER 6

  APPRAISING THE ORGANIZATION'SPORTFOLIO: WHAT STRATEGIC BUSINESSUNITS SHOULD WE FOCUS ON?

  TECHNIQUE DESCRIPTION

  Sport organizations exist to provide something of value, usually in the form of different products and services to meet and hopefully exceed customer needs. Collectively these outputs constitute your organization's product mix or Business Portfolio. Within this portfolio some products as well as product lines will naturally be more profitable than others, currently and/or in the future. So the frequent management dilemma arises: how do you balance the conflicting demands of different products and services competing for often scarce organizational resources? What level of priority and balanced investment risk should you adopt to ensure a sustainable future?

  Addressing such questions requires the application of strategic marketing analysis tools of Business Portfolio analysis. Applying the ubiquitous concepts of the product life cycle (the time period between the inception of a product and its discontinuation in the marketplace – Johnson, 2009) and strategic business units (autonomous operating businesses or departments, product lines, or products or brands that are sold to a well-defined market or segment – Kotler and Keller, 2006), this chapter will introduce you to two of the most effective and popular diagnostic marketing techniques:

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  Market-Driven Management

  Strategic and Operational Marketing

  • Jean-Jacques Lambin, Isabelle Schuiling(Authors)
  • 2012(Publication Date)
  • Bloomsbury Academic

    (Publisher)

  For markets in which differentiation is possible and valued by target customers, three types of differentiation strategies are possible: product differentia-tion, price differentiation and image differentiation. The objective of the company will then be to communicate clearly the chosen positioning to potential customers so that it is clearly recorded in their minds. Step 7: How to get a well-balanced product portfolio? (see Chapter 12) The purpose of a product portfolio analysis is to help a multi-business firm decide how to allocate scarce resources among the target segments it competes in, called the Strategic Business Units (SBUs). Product portfolio analysis relates attractiveness and competitiveness indicators to help guide strategic thinking by suggesting specific marketing strategies to achieve a balanced mix of SBUs that will ensure growth and profit performance in the long run, given their differentiated positions along the attractiveness–competitiveness dimensions. Portfolio analysis is obviously not a panacea, but it has the merit of emphasizing some important aspects of strategic management. It moderates excessively short-term vision by insisting on keeping a balance between ■ immediately profitable activities and those that prepare the future. It encourages the firm to keep both market attractiveness and competitive potentials ■ in mind. It establishes priorities in allocation of human as well as financial resources. ■ It suggests differentiated development strategies per type of activity on a more data-■ oriented basis. It creates a common language throughout the organization and fixes clear objectives to ■ reinforce motivation and facilitate control. The output of these seven steps of the strategic marketing process constitutes the back-bone of the operational marketing plan. Once the answers to these questions are obtained, the task remains to define the positioning options to be taken, to define the means required

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  Marketing

  A Relationship Perspective

  • Svend Hollensen, Marc Oliver Opresnik(Authors)
  • 2019(Publication Date)
  • WSPC (US)

    (Publisher)

  Boston Consulting Group (BCG). Briefly, the portfolio matrix is used to establish the best mix of businesses in order to maximise the long-term earnings growth of the company. The portfolio matrix represents a real advance in strategic planning in several ways (Hollensen, 2006):

  • It encourages top management to evaluate the prospects of each of the company’s businesses individually and to set tailored objectives for each business based on the contribution it can realistically make to corporate goals.

  • It stimulates the use of externally focused empirical data to supplement managerial judgment in evaluating the potential of a particular business.

  • It explicitly raises the issue of cash flow balancing as management plans for expansion and growth.

  • It gives managers a potent new tool for analyzing competitors and for predicting competitive responses to strategic moves.

  • It provides not just a financial but also a strategic context for evaluating acquisitions and divestitures.

  The portfolio matrix approach has given top management the tools to evaluate each SBU in the context of both its environment and its unique contribution to the goals of the company as a whole and to weigh the entire array of business opportunities available to the company against the financial resources required to support them.

  The portfolio matrix concept addresses the issue of the potential value of a particular business for the company. This value has two variables: first, the potential for generating attractive earnings levels now; second, the potential for growth or, in other words, for significantly increased earnings levels in the future. The portfolio matrix concept holds that these two variables can be quantified. Current earnings potential is measured by comparing the market position of the business relative to that of its competitors. Empirical studies have shown that profitability is directly determined by

  relative market share

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  The Elements of Strategy

  A Pocket Guide to the Essence of Successful Business Strategy

  • M. Daniell(Author)
  • 2006(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  This point of departure sum- mary will include company history, business definition, an overview of customers, markets and sources of profitability. It will address historical and current financial results, summarize the strategic balance sheet and identify any organizational issues. 2. Portfolio Perspective The era of businesses attempting to be all things to all people in all places at all times is well and truly over. Clear strategies require a fresh look at the collection of businesses and activities being pursued. The value of the entire • Point of departure • Portfolio perspective • Profit pool perspective • Competitive perspective • Business dynamics • Organizational assessment • Range of strategic options portfolio as a system needs to be assessed as well as looking at each separate business unit. Assessing competitiveness by analyzing both business unit and business process portfolios is essential to provide an inter- nal and external view of the business system: Business unit portfolio: This typical analytical tool looks at the relative strength and performance of each business unit. One logical outcome from this perspective is a restructuring of the portfolio of businesses to focus resources only on those selected strategic business units (SBUs) that can create the highest economic value for stakeholders. By eliminating low yield activities, adding to profitable businesses and focusing investment, a senior management team can lift the performance of a collection of businesses to a much higher level. Business process portfolio: Restructuring an internal port- folio of activities can also lead to a more efficient business model. Analysis can lead to spinning off processes, outsourcing, combining entities, insourcing, reengineering and pursuing corporate transformation programs. 3. Profit Pool Perspective It is no longer enough to analyze only the traditional view of profits earned by a business in a modern industry.

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