What is portfolio analysis?
A way of carefully reviewing the products and services that make up a corporate portfolio is portfolio analysis. Any firm is built on a variety of goods and services. Examples of an association's publishing activities include a professional journal, a lay magazine, specialized bulletins directed at certain member groups, CDs, a website, social networking sites, and so on. Portfolio analysis may assist you in selecting which of these products and services should be given priority and which should be discontinued based on objective criteria. The use of externally focused data to enhance management's intuitive judgment, the encouragement to analyze each of the organization's companies independently, the formulation of goals and resource allocation for each, the raising of the problem of cash flow availability for each
In strategic management,
Business Portfolio Analysis emphasizes the formulation of strategies that are
equivalent to the management of investment portfolios. It is founded on the
philosophy of organizational strategy development methods. In strategic
management, business portfolio analysis demonstrates systematic approaches to
analyze products and services that are part of a company portfolio analysis.
The proper organizational actions should be followed, while the wrong ones
should be ignored, in the same manner that the financial investments of the
businesses are addressed. Essentially, business portfolio analysis is a subset
of portfolio analysis in which the corporation stresses the importance of
corporate strategy in decision-making for future goal achievement. Basically,
business portfolio analysis forms a part of portfolio analysis in which the
company emphasizes that the corporate strategies form a significant part of the
decision making for the future accomplishment of the goals.
Importance of Business Portfolio Analysis
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To analyse the current business portfolio
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To decide SBU investment distribution
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To add new products or services or
businesses
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To decide product retention or removal
Current Nepalese Business environment:
Due to the Covid-19
epidemic, the economy of Nepal has been hit hardest. Due to the epidemic,
public health and the shadow economy of human life and even the livelihood of
the people have been affected in a short period of time. Due to the preventive
measures to be taken to save the lives of the people from the Covid-19
epidemic, daily life has become uncomfortable. Naturally, human survival should
be given high priority during epidemics.
Due to the economic
crisis caused by the epidemic, Nepal’s inflation is within the required range,
stable currency, transition and foreign exchange reserves are stained,
financial sector is strong and reconstruction is underway and infrastructure
development is expanding. The economic situation is expected to improve in the
coming days, Covid-19 came under control.
Economic activity has
eased since the first four months of the current fiscal year as health safety
standards adopted for infection prevention have been relaxed. In the post shutdown period, the operating
conditions of small, medium and large-scale industries had significantly
improved, while the production, trade and employment conditions of the
industries and businesses are gradually improving. Furthermore viable business
condition are raising along with new opportunities in the market, in which many
business organization can capitalize the opportunity.
Application of Modern portfolio analysis of CG Group through Hofer matrix
The Chaudhary Group (CG
Corp Global) is a Nepalese multi-national company. Financial services, consumer
products, education, energy, consumer electronics, automobile, real estate, Hospitality,
biotech, and alternative medicine are among the company's operations. The group
owns 136 companies in 15 different business verticals across five continents.
Hofer's matrix depicts
the product or market's stage of development. Business units are arranged in a
grid to represent their product-market evolution stage and competitive
position. The circles represent the industry, while the pie wedges reflect the
business unit's market share. Hoffer's evolution matrix is useful for
developing strategies at different phases of the product life cycle. The
possible use for portfolio analysis of CG group is shown via figure below:
Hofer matrix portfolio analysis of Chaudhary Group |
Trishakti Distillery, a
CG|Holdings is one of the country’s leading and oldest distillery with a
production capacity that ranges from 50-60,000 cases per month. Their famous
and well-known brands of whiskeys are Marshall, Castle Oak, Excellence and most
known vodka is Excellence. Brewery and
Distillery are in average competitive position and in development stage also
holds out prospects for future development deserves expansion and desired
financial resources to be allotted to exploit the opportunities for the CG
Group.
CG Holdings, has an
investment in the Upper Mudi Khola Hydro Power Project which is a 12.73 MW
hydro project. The Hydro project is located on Mudi River in Myagdi district.
This is a run-of-the-river (ROR) type project designed with 45% flow
exceedance. Moto Corp, the automobile division of Chaudhary Group
is the pioneer in the Nepalese automobile industry for the past 30 years. CG
MotoCorp is the sole distributor of Suzuki Motors Corporation (Japan) and
Maruti Suzuki India Limited. Suzuki’s power-packed new generation cars include
Alto 800, Alto K10, Wagon R, Celerio, Swift, Baleno, Dzire, Ciaz, S Cross, Omni
Series and Eeco. Automobiles and Hydropower are in weak competitive position
which is in growth stage of the industry should give lot of attention and
requires a careful formulation of marketing strategies to make it more
competitive in the industry.
CG Institute of
Management (CGIM), an initiative of CG|Holdings, undertaken with the vision and
objective of producing world class business managers. Kathmandu World School,
Premier College, Excel International College are under this sector. They are in
moderately strong position is in the shake-out stage can be probable with close
attention and careful marketing strategy formulation. This may also requires
adoption of growth strategies.
CG has interests across a
variety of FMCG products like Food & Beverages, Beer etc. It has the
following divisions under FMCG. Its product portfolio varies like Extruded
Snacks, Potato Chips, Fried Snacks, Fruit Drinks, Chocolate Enrobed Wafer and
Broken Noodles popularly known as Bhujiya, wai wai, Edible
Oils and so on. With average competitive position and in maturity stage of the CG
group needs to adopt stability, harvest and retrenchment strategies.
CG | Properties a
vertical of CG | Holdings that are committed to enrich the Nepalese skyline
with architecturally excellent landmarks. CG | Properties focus on living,
recreational, as well as work spaces. Completed projects include: CityScape
Towers and Villas – Hattiban, Lalitpur, “The Villa” – Phase 1, Sunakothi,
Lalitpur. Due to Covid 19 crisis along with so many already established
competitors and with moderately weak competitive position and is in the decline
state of the industry life cycle need to be divested immediately to arrest any
cash loss since it is in a position of losing. Revival of this SBU is not
suggested.
Application
of Market life
cycle-competitive strength portfolio analysis by Khetan Group
Khetan Group has grown
from humble beginnings, thanks to the pioneering efforts of the late Shree
Purna Mal Bihari Lal Khetan. Khetan Group has acquired the trust of many
individuals by developing from strength to strength. Today, the Khetan Group,
led by Mr. M. G. Khetan, works to meet its obligations to provide high-quality
goods and services. Khetan Group today, with its ever-expanding range of
businesses and services across Nepal, looks forward to sustainable and stable
growth. The Group is involved in mining, fast moving consumer products such as
drinks and food, and service sectors such as insurance, banking/financial
services, telecommunications, information technology, real estate, investments,
and energy. In 2000, the group further diversified its manufacturing portfolio
by entering into snacks production by establishing the Himalayan Snax &
Noodles Company in a joint venture with Thai Presidents Foods. By doing
thorough portfolio research and applying it, the firm has secured a significant
portion of the Nepali market. Market life cycle-competitive strength is a type
of strategic management portfolio analysis that has a 16-cell structure and
displays competitive strength on vertical axis as: High, Moderate, Low The
horizontal axis, on the other hand, is divided into four stages of the product
life cycle: Introduction, Growth, Maturity, decline.
The market life
competitive strength matrix is a subjective distribution of competitive
strength based on several elements of advantageous advantage maintenance and
growth. The matrix design identifies prospective losers as well as potential
winners. Apart from the above-mentioned distributions, the matrix is divided
into three zones: push, caution, and danger.
Market Life
Cycle-Competitive Strength Matrix: There are potential winners with enough cash
flow for SBUs entering the 'Push zone' sector. In addition, the corporation
uses a variety of growth marketing methods and spends quickly. The Push zone is
a cross between the cash cows and the celebrities. The organization uses
stability methodologies and careful decision-making investment for SBUs in the
'Caution zone' industry. The question marks are highlighted in this section.
SBUs in the 'Danger Zone' industry should pursue methods such as divesting,
liquidation, and harvesting, as well as a decrease in future investment. They
also refer to dogs who have a collapsing structure.
Discussion and result.
The Covid-19 pandemic, which has caused a significant decline in many nations, including the world's three largest economies—the United States, China, and Japan—is the most notable variance in today's economy. Nepal is a growing nation, nevertheless. A technique for evaluating the balance of a company's product range is portfolio analysis. A diversified portfolio can spread risk among several markets. An organization gets more specialized in its knowledge of fewer products and markets when it has a smaller portfolio. The only manufacturing sectors and companies in Nepal that have the potential to significantly contribute to resource mobilization for the nation's economic progress are businesses.
Conclusion
The business climate today is one of a buyers' market. International transitions as well as economical, technical, political, and social developments are to blame for this tendency. The globalization of the economy is a feature of this environment. Therefore, there are countless prospects for business to grow and succeed. For a product or subsidiary strategy to be successful, the concept of portfolio is essential. A technique for evaluating the balance of a company's product range is portfolio analysis. A diversified portfolio can spread risk among several markets. An organization gets more specialized in its knowledge of fewer products and markets when it has a smaller portfolio. The only manufacturing sectors and companies in Nepal that have the potential to significantly contribute to resource mobilization for the nation's economic progress are businesses. By transferring savings from one region to another and communicating with its branches and agencies across the nation, business plays a bigger role in economic growth.