Portfolio Analysis Models: A Review

Abstract

This study, which is qualitative in nature, examined the concept of portfolio analysis with focus on business portfolio analysis. Four portfolio analysis models: Boston Consulting growth-share matrix, General Electric industry-attractiveness matrix, Shell directional policy matrix, and Arthur D. Little strategic condition matrix, were discussed in terms of their nature, characteristics, relevance and strategic implications to marketing and management. The limitations of each of these strategic tools were expounded and some newer variants of portfolio analysis models that emerged as a result of these limitations were briefly discussed. The study revealed that each of the four portfolio models has its own merits and demerits and none can be said to be superior as their proponents had advanced.  Instead, each can be applied depending on the need of the organization and the environment in which it operates and they could sometime be employed in an integrative manner. It also revealed that the newer variants though theoretically sound are not popular in marketing and management literatures and in practice.  The study concluded that most of the criticisms leveled against these strategic tools are as a result of the misplaced role these tools are expected to play.  Portfolio analysis, the study concluded is not to dictate or recommend strategic decision but to provide strategists with the data needed to making informed decision.

Keywords: Portfolio analysis, Boston Consulting growth-share matrix, General Electric industry-attractiveness matrix, Shell directional policy matrix, Arthur D. Little strategic condition matrix