Business portfolio analysis

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Business portfolio analysis
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Business portfolio analysis - is the type of corporate process that defines in which industries the corporation will operate and how it will allocate its resources [1]. Business portfolio analysis is also known as portfolio analysis or product portfolio analysis[2].

At the beginning of the portfolio analysis, it was used in investment management. Directly into strategic management, it was introduced during the 1960s. Several portfolio analysis techniques have been developed since then. One of the best known is the BCG growth-share matrix [3].

It is important to clarify an additional two concepts: business portfolio and portfolio analysis. Kotler P. and Armstrong G. write that business portfolio is "the collection of businesses and products that make up the company" [4] and that portfolio analysis is "the process by which management evaluates the products and businesses that make up the company" [5].

The aim and advantages of a portfolio analysis

In contrast to small businesses, huge companies in its offer have a lot of diversified products to their clients. To make the work of managers easier they need a method that will allow them to determine which products deserve greater funding and which should not be invested anymore because they do not bring the intended results. And thanks to portfolio analysis, they can identify the strengths and weaknesses of the company [6].

The advantages of portfolio analysis[7]:

  • It involves many products.
  • It applies capital in a variety of business firms.
  • It minimizes the risk and maximizes the return on investment in various projects.
  • It helps us decide which business should receive more or less capital or not receive it at all.

The strategic business unit

The strategic business unit, popularly known as SBU, is a unit of a business that has its own perspective and aim. The SBU is an important part of the company, but usually, it operates as a separate unit. This can be a single product, brand, company division or product line [8].


  1. Lussier R. 2009, p. 136
  2. Gupta C.B. 2014, p. 202
  3. Gupta C.B. 2014, p. 202
  4. Kolter P., Amstrong G. 2010, p. 65
  5. Kolter P., Amstrong G. 2010, p. 65
  6. Boone L.E., Kurtz D.L., MacKenzie H.F. , Snow K. 2009, p. 65
  7. Hiriyappa B. 2018
  8. Kolter P., Amstrong G. 2010, p. 65


Author: Justyna Siudy