Business Portfolio Analysis, Growth Strategies & Marketing’s Strategic Role

Corporate‐Level Strategic Planning Recap

Strategic planning process stages:
• Define Mission ➔ Set Objectives ➔ Craft Corporate Strategy ➔ Generate Functional (e.g., Marketing, Finance) Plans.
Modern firms rarely sell a single offering; portfolio thinking is essential.
Example anchor: Apple Inc. with multiple product‐based units—Mac, iPhone, iPad, Apple Watch, Services, etc.
• Question asked by planners: “Does the mix of these units advance the firm’s long-term mission?”
• Issues assessed: complementary fit, profitability, growth prospects, resource allocation, need for addition or divestiture.

Portfolio = Total collection of products & businesses that compose the firm.
Each identifiable operating piece is called a Strategic Business Unit (SBU).
• SBU ≈ a quasi-independent company within the larger corporation (may be a brand, product line, or full subsidiary).
Portfolio analysis objectives:
• Gauge attractiveness of each SBU (growth, share, profitability, strategic fit).
• Decide whether to invest, harvest, divest, or shut down.
• Re-direct corporate resources toward stronger/strategically aligned SBUs.

Developed by Boston Consulting Group; most famous portfolio tool.
Two analytic dimensions:
• Market Growth Rate (industry attractiveness) – High / Low.
• Relative Market Share (competitive strength) – High / Low.
Creates a 2 \times 2 grid (four cells):
• Stars (High Growth, High Share) – strong positions in expanding markets; require heavy investment; can become Cash Cows.
• Cash Cows (Low Growth, High Share) – mature, dominant; generate excess cash; fund other SBUs.
• Question Marks (High Growth, Low Share) – "problem children"; high potential but weak position; decision: build or abandon.
• Dogs (Low Growth, Low Share) – weak positions in stagnant markets; often candidates for divestiture/closure.
Visual: SBUs plotted as circles; size often reflects revenue.
Illustration: HP’s Printer & Ink unit = Cash Cow (large share, low growth). Revenue from this unit can finance Question Marks.
Criticisms:
• Data collection & analysis are costly/time-consuming.
• Growth & share may be hard to measure/define for some SBUs.
• Matrix diagnoses but offers little prescriptive guidance.

Examines opportunities for a specific product line by combining Product (Existing/New) with Market (Existing/New).
Another 2 \times 2 framework:
• Market Penetration – Existing Product, Existing Market.
◦ Goal: increase usage among current buyers (e.g., promotions, loyalty incentives).
• Market Development – Existing Product, New Market.
◦ Goal: geographic, demographic, or channel expansion (e.g., iPhone growth in India & China).
• Product Development – New Product, Existing Market.
◦ Goal: introduce modified/new items to current customers (e.g., Apple Watch, iPad to iPhone buyers).
• Diversification – New Product, New Market.
◦ Goal: build or acquire unrelated offerings (often via M&A).
Acquisition as shortcut: firms may buy startups with desired technology/markets instead of in-house R&D.

Timeline: within 30 years Starbucks expanded from a single Seattle shop to 20{,}000{-}30{,}000 stores in 75+ countries.
Applied multiple grid strategies:
• Market Penetration – grow traffic per store via rewards, seasonal drinks.
• Product Development – add pastries, sandwiches, in-store merchandise.
• Market Development – open stores globally.
• Diversification – packaged beans & ready-to-drink beverages sold through grocery channels.

Over time SBUs may lose fit, profitability, or strategic relevance.
Common actions: sell, spin off, downsize, or shut down units.
Drivers: market decline, tech shifts, vision change, competitive loss, resource reallocation.

Marketing is both functional plan and strategic lens—guides how the firm meets customer needs while supporting corporate goals.
Value is co-created by a network, not a single department.
• Internal partners: R&D, Operations, Finance, HR, etc.
• External partners: Suppliers, Distributors, Retailers, Consumers.
Total Value Delivery Network = Company departments + External stakeholders collaborating to craft, deliver, and communicate value.
Marketing planning tasks:
• Analyze consumer needs & market environment.
• Coordinate with other departments to design offerings.
• Select & manage outside partners (supply chain, channel).
• Produce a Marketing Plan aligned with SBU & corporate strategy.

Firms use portfolio analysis to ensure their collection of SBUs advances mission & maximizes returns.
BCG Matrix classifies SBUs by growth & share to guide resource flows.
Product–Market Expansion Grid identifies growth paths for individual products (penetration, development, diversification).
Ongoing review may trigger downsizing of misaligned or weak units.
Marketing plays a central integrative role, partnering across internal departments and external entities to create a holistic value network and produce actionable marketing plans.