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Marketing Basics - Kotler Philip

Business portfolio development plan

The main tool in the field of strategic planning is the analysis of the economic portfolio of the company . We are talking about management's assessment of the state of this portfolio, that is, an assessment of the situation of all industries within the company. By “production” can be meant a branch of a company, a product range, or even one simple or branded product.

Such an analysis requires the identification of more or less profitable industries and decisions about what to do with each of them individually. The firm clearly wants to invest the main resources in the most profitable industries and reduce or even stop investing in the weak. She can keep her business portfolio on alert by strengthening or adding to the growing production force and getting rid of those who are getting sick.

For example, the General Electric Corporation’s approach to analyzing a business portfolio involves evaluating a number of indicators in two areas. To assess the attractiveness of a particular industry, the corporation takes into account the size of the market, its growth rate, the size of its profits, the intensity of competition, the cyclicality and seasonality of business activity, as well as the possibility of reducing the cost of a commodity unit in large-scale production or due to the experience gained by managers. General Electric evaluates the strength of commercial production by indicators of its market share, competitiveness of its prices, the quality of its products, its knowledge of its market, sales efficiency and existing geographical advantages. The best are those with good performance in all of these positions, the worst are those with weak performance. Based on this analysis, General Electric then distributes resources among individual industries.