Portfolio analysis - in marketing under thisconcept understand the tool that helps determine the economic state of the enterprise, the justification of certain investments in various areas of activity. As a result of the analysis, investments in non-profitable areas are reduced or reduced, investments in perspective departments of the company are renewed or increased.
The goal of portfolio analysis is to agree on the best strategies of the firm and the proper allocation of monetary resources.
Methods of portfolio analysis:
The most common methods in this area are different matrices. Six matrix methods are widely used:
1) BCG - the essence of the methodology is reduced to analyzing the market share and growth rates of the enterprise.
2) IWC - the mission of the enterprise and the key competence of the business for compliance are compared.
3) McKinsey - evaluation of the attractiveness and competitiveness of the company's activities in the market.
4) Shell - the attractiveness of the industry is calculated on the basis of competitiveness
5) Ansofa - the strategy and its applicability to the market and products are analyzed.
6) ADL - with the help of this matrix, the life cycles of the firm and the position on the market relative to competitors are analyzed.
The process through which portfolio analysis is conducted is divided into several important stages:
1) Definition of company divisions
2) Selection of the method of analysis
3) Collecting the information that will be needed in the process of compiling the matrix
4) Construction of matrices
5) Development of a new strategy based on the analysis.
To the information collected for carrying out of portfolio analysis, it is possible to carry:
1) The state and the possibility of developing industries that participate in the process of the company's activities.
2) Competitiveness of the enterprise
3) The life cycle, the stage of the company's life cycle.
4) The proportion of the firm's divisions in the market.
Portfolio analysis provides answers to critical questions about the company's work. These include:
- What is the competitiveness of the enterprise?
- How balanced is the product distribution system in the market?
- What is the maximum number of markets that a company can cover in the course of its activities?
- The life cycle of each of the company's operating areas.
- What kind of product is most justified?
- Which industries in the future should be closed or upgraded?
- Is it worth bringing new products to the market in the near future?
- What is the amount of investment that is ideally suited at the moment for a particular group of products?
- What production and sales strategies should be implemented in the near future?
After the analysis, we can draw conclusions,which in the future will affect the development of the enterprise. It may be decided to diversify the enterprise, that is, the implementation of a strategy in which new products and services are developed and introduced to the market. Diversification has several subspecies:
Bound and unbound (conglomerate)
Associated diversification, in turn, is divided into several types:
Portfolio analysis. Example.
The company is engaged in the production and sale of baby food - mixtures, cereals, purees, juices.
Periodically the enterprise needs to find out,whether a particular product is popular with consumers, whether new products should be introduced to the market, what types of baby food can be removed from production altogether due to low demand, how strong the competition in the field of baby food. To answer all these questions, it is worthwhile to conduct a portfolio analysis.
Data are collected from shops in whichchildren's food products are realized, profitability, costs, competitiveness, etc. are calculated. As a result of the analysis, it turns out that children's porridge of competitive firms is bought up more quickly, and the juices of the company in question are not in demand at all. For the first group of products, marketing improvements are needed - a new appearance of the packaging, a variety of tastes, etc. Production of the second group will be best stopped altogether, so as not to remain at a loss.