Portfolio Analysis Framework
Analyze business portfolios
The Portfolio Analysis Framework is a tool used to analyze a business's portfolio of products or services. It involves evaluating each product or service based on its market attractiveness and competitive strength to determine which ones to invest in, maintain, or divest.
- Evaluate each product or service based on its market attractiveness and competitive strength
- Determine which products or services to invest in, maintain, or divest
- Manage the portfolio to maximize returns and minimize risk
- Evaluate Market AttractivenessEvaluate the market attractiveness of each product or service based on factors such as market size, growth rate, and competition.Pro tipUse market research and analysis to determine market attractivenessWarningBe careful not to overestimate market attractiveness
- Evaluate Competitive StrengthEvaluate the competitive strength of each product or service based on factors such as market share, profitability, and competitive advantage.Pro tipUse financial analysis and market research to determine competitive strengthWarningBe careful not to underestimate competitive strength
- Determine Investment, Maintenance, or DivestmentDetermine which products or services to invest in, maintain, or divest based on their market attractiveness and competitive strength.Pro tipFocus on products or services with high market attractiveness and competitive strengthWarningBe careful not to overinvest in products or services with low market attractiveness and competitive strength
A company uses the Portfolio Analysis Framework to evaluate its portfolio of products and determines that one product has high market attractiveness and competitive strength. The company decides to invest in this product and increases its market share and revenue.
A company uses the Portfolio Analysis Framework to evaluate its portfolio of products and determines that one product has low market attractiveness and competitive strength. The company decides to divest this product and reduces its costs and increases its profitability.
The Portfolio Analysis Framework was developed by the Boston Consulting Group (BCG) in the 1970s. It is based on the idea that a business's portfolio of products or services should be evaluated and managed to maximize returns and minimize risk.