Definition: A business portfolio is a group of products, services, and business units that conform a given company and allows it to pursue its strategic goals. This portfolio can also be defined as the set of available assets that the company posses to develop its mission and reach its vision.
What Does Business Portfolio Mean?
A business portfolio is different from a product portfolio in that the latter is only focused on the physical items sold by the company. On the other hand, a business portfolio is focused on a wider range of elements including productive assets such as equipment, machinery and fixed assets.
It may also include business assets such as business units, subsidiaries and strategic alliances, along with the available product lines, patents, registered brands and other valuable elements that can be employed to produce positive financial results for the company. An adequate management of the business portfolio will increase its performance and results by taking advantage of all its resources.
This portfolio should also be planned and designed according to the company’s mission, vision and strategic objectives, in order to develop those that are required through those that are currently available.
Example
Sunshine Milk Products Co. is a company that manufactures many different dairy products such as butter, cream cheese, condensed milk and ice cream, among others. The company is currently analyzing its strategic approach to allocate its financial resources in the most promising markets.
The Chief Marketing Officer of the company developed a business portfolio including all available business units and products to evaluate them through a management tool called the Boston Consulting Group tool that evaluates which products and businesses are the ones with the most potential. This assessment allowed the company to identify that the butter and ice cream market were the most profitable and the ones with the highest growth potential. This effort lead the company towards a restructuring process that increased its profitability considerably.
