Portfolio analysis: definition, goals, methods, examples.

Portfolio analysis - in marketing, this term is understood as a tool that helps determine the economic state of an 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 promising divisions of the firm 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 - assessment 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 an analysis of the life cycles of the firm and the position in the market relative to competitors are carried out.

Stages.

The process through which the portfolio analysis passes 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 company departments on 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 all operating areas of the company.

- What type of product is most justified?

- Which industries should be closed or modernized in the future?

- Is it worth bringing new products to the market in the near future?

- What is the amount of investment, ideally suited for a particular group of products at the moment?

- What production and sales strategies should be implemented in the near future?

After the analysis, you can draw conclusions that will further influence 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)

The associated diversification, in turn, is divided into several types:

• The vertical is inverse and direct
• Horizontal acts on the expansion of the spectrum of products or on geographical expansion of territories.

Portfolio analysis. Example.

The company is engaged in the production and sale of baby food - mixtures, cereals, purees, juices.

Periodically, the company needs to find out whether a particular product is popular with consumers, whether it is worth bringing new products to the market, what kinds 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 from the shops where baby food is sold are calculated, 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.