How to Manage Business Portfolio and Product Portfolio for Sustainable Business Growth
Business portfolio is business group of specific investments, products, companies and various brands. On the other side, product portfolio is a mix of products and services the company sells in various target markets. Marketing, sales and business managers try to offer products that attract particular customers and they target different market segments or target markets.
Some examples of market segments might be single moms, university graduates, another segment might be teenagers, or baby boomers located in certain region. Each kind of portfolios help business organizations grow their sales and profit.
For example, the BCG Matrix tool might be effectively applied to each kinds of portfolios. They can both be analyzed in the same or different way.
BCG or growth share matrix will visually create a map or chart of your business portfolio or marketplaces among 4 main categories. These categories are star, cash cows, dogs and question marks.
Every successful business pays attention and focus on both product portfolio and business portfolio strategies.
For example, business portfolio analysis will focus on your SBUs or strategic business units. How SBUs are organized depends on your business. They might be different departments, regional business units or completely separate profit centers. When you apply the BCG matrix strategy tool you can quickly learn where you need to focus your limited resources.
At the same time, product portfolios can be analyzed in the same way. By looking at the size of each product or service category, growth potential and market share it is very easy to spot the strengths and weaknesses. This will lead you to develop effective business strategy for your product portfolio.
To successfully control and manage each – the business portfolio and the product portfolio, you can balance the risk in your organization and focus on results in short term and long term.
Organizations will be always trying to develop or maintain cash cows and stars for instance. Business might take the cash from a cash cow and develop new question marks that plan to convert it into stars in the future.
BCG matrix strategy analysis is also used by lower level supervisors and managers – such as operations and product managers whose job is to optimize their short-term performance.