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SBU and Portfolio Analysis Overview

This document discusses strategic business units (SBUs) and portfolio analysis. [1] It defines an SBU as an independently managed division of a large company with its own vision and objectives. [2] Portfolio analysis involves identifying and evaluating a company's products/services and developing strategies for each division. [3] Tools for portfolio analysis include the BCG matrix, GE matrix, and analyzing market attractiveness and business strength factors.

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CHITTARANJAN SHETTY
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228 views18 pages

SBU and Portfolio Analysis Overview

This document discusses strategic business units (SBUs) and portfolio analysis. [1] It defines an SBU as an independently managed division of a large company with its own vision and objectives. [2] Portfolio analysis involves identifying and evaluating a company's products/services and developing strategies for each division. [3] Tools for portfolio analysis include the BCG matrix, GE matrix, and analyzing market attractiveness and business strength factors.

Uploaded by

CHITTARANJAN SHETTY
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

SBU AND PORTFOLIO ANALYSIS

BY
GAURAV BARHATE (17)
DEEPIKA NAINANI (13)
CHITTARANJAN SHETTY (11)
WHAT IS SBU?
• Strategic Business Unit (SBU) is an independently managed division of a
large company, having its own vision, mission and objectives, whose
planning is done separately from other businesses of the company.

• It is an important component of the company and must report through


headquarters about their operational status.

• Large enough to maintain internal divisions such as HR, finance,


marketing etc.
IMPORTANCE OF SBU
• SBU's make you organized

• Help in focus

• Investments

• Decision making

• Profitability
FORMATION OF SBU
ADVANTAGES OF SBU
• Responsibility

• Accountability

• Strategy

• Independence

• Funds allocation
EXAMPLES OF SBU
WHAT IS PORTFOLIO ANALYSIS?

• Business portfolio helps to identify and evaluate products and services


offered by a company in the market and preparing strategy for each
division which is termed as portfolio analysis.
FMCG FMCG
PAPERBOARD ITC
-CIGRATTE OTHERS
AND INFOTECH
S
PACKAGING
PERSONAL AGRIBUSINESS
HOTELS
CARE
BCG MATRIX
GE MATRIX

Also known as McKinsey nine-field analysis (9W analysis)


It is a strategic management tool for conducting portfolio analysis on products,
services or an entire SBUs (strategic business units) owned by the company.
It is kind of extension of the BCG Matrix
GE is rated in terms of ‘Market Attractiveness & Business Strength’
Stages of evaluation of competitive position:

I. Identification of the factors of success of the


company.
II. Weighting of relative factor importance.
III. Evaluation of competitiveness on scale from 1
to 5 meaning: 1-weak competitive position, 5-
strong position.
IV. Interpretation of the estimated ratings.
Market Attractiveness

Annual market growth rate


Overall market size
Historical profit margin
Market rivalry
Demand variability
Global opportunities
Business Strength
Current market share
Brand image
Production capacity
Profit margins relative to competitors
R & D performance
Promotional effectiveness
Factors Underlying Market Attractiveness
Factors Weight Rating (1-5) Value (W * R)

0.20
Annual market growth rate
0.20
Overall market size
0.15
Historical profit margin
0.15
Market rivalry
0.15
Demand variability
Global opportunities 0.15

Total: 1.0
Factors Underlying Business Strength
Factors Weight Rating (1-5) Value (W * R)

0.20
Current market share
0.20
Brand image
0.20
Profit margins relative to competitors
0.20
R & D performance
Promotional effectiveness 0.20

Total: 1.0
Classification:
5

3.67

2.33

5 3.67 2.33 1
Quick Quiz
1. SBU has own set of competitors

A. True
B. False

2. What is the key benefit of identifying the organization's SBUs?

A. It helps the development of business-level strategies.


B. It makes financial control easier.
C. It prevents a focus solely on market-based criteria

3. Under the BCG growth-share matrix, low-share, high-growth businesses or products are called:

A. Stars.
B. Cash cows.
C. Question marks.
D. Dogs
Thank You

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