Analyzing the Current Business Portfolio

The major tool in strategic planning is business portfolio analysis, whereby management evaluates the businesses making up the company. The company will want to put strong resources into its more profitable businesses and phase down or drop its weaker businesses. It can keep its portfolio of businesses up-to-date by withdrawing from declining businesses and strengthening or adding growing businesses.

Management’s first step is to identify the key businesses making up the company. These can be called its strategic business units. A strategic business unit (SBU) is a unit of the company that has a separate mission and objectives and can be planned independently from other company businesses. An SBU can be a company division, a product line within a division, or sometimes a single product or brand.

The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment.

The company must determine what role each will play in the future. One of four strategies can be pursued for each SBU. The company can invest more in the business unit in order to build its share. Or it can invest just enough to hold the SBU’s share at the current level. Or it can harvest the SBU, increasing its short-term cash flow by investing little or nothing in it regardless of the long-term effect. Finally, the company can divest the SBU by selling it or phasing it out and using the resources elsewhere.

Such analysis is no cure-all for finding the best strategy. But it can help management to understand the company’s overall situation, to see how each business or product contributes, to assign resources to its businesses, and to orient the company for future success. When used properly, strategic planning is just one important aspect of overall strategic management, a way of thinking about how to manage a business.

I. Key terms:

Business portfolio — портфель продукції компанії — the collection of business and products that make up a company.

Marketing strategy — стратегія маркетингу — specifies a target market and a related marketing mix.

Mission statement — формулювання місії компанії — a statement of the organization’s purpose — what it wants to accomplish in the larger environment.

Portfolio analysis — аналіз портфеля продукції компанії — a tool by which management identifies and evaluates the various businesses and products that make up a company.

Strategic business unit — стратегічний підрозділ компанії — an organizational unit (within a larger company) that focuses its efforts on some product-markets and is treated as a separate profit centre.

Strategic planning — стратегічне планування — the managerial process of developing and maintaining a match between an organization’s resources and its market opportunities.

IV. Vocabulary notes:

maintain, v.

1. keep up, retain; continue — підтримувати, зберігати; maintain friendly relations — підтримувати дружні стосунки; maintain prices — тримати ціни стабільними; maintain law and order — підтримувати закон і порядок;

2. support — утримувати; підтримувати; maintain one’s family — утримувати сім’ю; надавати підтримку, субсидіювати (партію, рух тощо);

3. defend — захищати, обстоювати; maintain one’s rights — захищати свої права;

4. keep in good repair or working order — обслуговувати, тримати в доброму стані;

5. assert as true — запевняти, наполягати, обстоювати;

maintenance, n.

1. maintaining or being maintained — підтримання, підтримка; збереження, продовження;

2. what is needed to support life — утримання, засоби для існування; maintenance money — гроші на утримання; retail price maintenance — practice of maintaining fixed retail prices;

sound, adj.

1. healthy, in good condition — здоровий, міцний, кріпкий; be sound of body and mind — бути здоровим і тілом і душею; sound in wind and limb — (colloq.) physically fit;

2. not hurt, injured or decayed — доброякісний, добрий, незіпсований, свіжий, непошкоджений; sound fruit — свіжі фрукти;

3. dependable, based on reason; prudent — правильний, розсудливий, логічний; a sound argument — переконливий доказ; передбачливий, тверезий; a sound policy — тверда політика; глибокий, старанний; a sound analysis — глибокий аналіз; платоспро­можний, надійний, сталий; a sound bank — надійний, платоспроможний банк;

4. capable, careful, good — умілий, добрий, поважний; a sound scholar — поважний учений;

5. legal — законний, дійсний; a sound title to land — законне право на землю;

engage, v.

1. obtain the right to employ; to get the right to use or occu- py — наймати, запросити, ангажувати; engage sb. as an inter­preter;

2. engaged in — take part in; busy oneself with — займатися; engage in politics — займатися політикою;

3. be engaged (in) — be busy, be occupied (with); take part in — бути зайнятим; The line is engaged — номер (телефону) зай­нятий;

4. promise, undertake, bind (oneself), guarantee — зобо­в’я­зува­тися, гарантувати, переконувати; He engaged himself to do it — він зобов’язався зробити це;

5. attract (usu Passive) — привертати, займати; Her attention was engaged by the display of new machines;

6) be engaged to marry — be bound by a promise to marry — обручитися, заручитися;

asset, n.

1. (usu Pl.) anything owned by a person, company, etc. that has money value and that may be sold to pay debts — майно, з якого можуть бути сплачені борги; майно неплатоспроможного боржника; актив, капітал, фонди; assets and liabilities — актив і пасив;

2. valuable or useful quality or skill — цінна (позитивна) якість, перевага, плюс; good health is a great asset — добре здоров’я — велике благо;

equity, n.

1. fairness, right judgment; principles of justice outside common law or statute law, used to correct laws when these would apply unfairly in special circumstances — справедливість, об’єктивність, неупередженість, юр. право справедливості;

2. (often Pl.) ordinary stocks and shares not bearing fixed interest — звичайна акція; акція без фіксованого дивіденду; частка акціонера в капіталі підприємства; маржа; чиста вартість капіталу, не враховуючи зобов’язання; активи (підприємства) за винятком заборгованості;

assign, v.

1. smth. (to smb./smth.) — give for use or enjoyment, or as a share or part in a distribution, e.g. of work, duty — здавати, доручати, зобов’язувати;

2. name, put forward as a time, place, reason, etc. — призначати, вважати; Can one assign a cause to these events?

3. assign smb. (to/to do) — appoint, name — призначати на по­саду;

4. assign to — (legal) transfer property, rights, etc. — передавати, переуступати (права тощо).