Market Portfolio Planning Method
All the assets available to investors in proportion to its value relative to the market value are involved in portfolio.
A market portfolio is a package of investments which contain all assets available in the investment market and each asset biased in proportion to its total availability in the market. The expected return of a market portfolio is equal to the expected return of the market as a whole.
Market Portfolio Analysis
Portfolio analysis is one of the major part of strategic planning, in which business management assesses the products and businesses that set up the company.
What is Strategic Business unit
Strategic Business unit can be:
- Company Division
- Product line within division
- Single Product or brand
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As soon as the business has analyzed its current portfolio and decide which business unit need more investment and which need less investment? It will shape the future portfolio.
If companies want to know how its current business portfolio is going on, then Boston Growth-Share Matrix portfolio analysis approach is to be used.
Boston Growth-Share Matrix Method
Growth Share Matrix is portfolio planning method, which evaluates the company’s strategic business units in term of market growth relative to market share. Using this approach, company may learn how its current business portfolio going on and which business units require more attention and which required being less focused. Companies must be prepared for the future due to rapidly changing market environment.
Constant novelty in the market is totally critical to survive. If the companies desire to contest more efficiently and to satisfied the investors, it needs profitable growth. Thus, companies should focus on the part of designing the business portfolio which contains finding products the company should consider in the future. This is called as Portfolio Planning method.
Disadvantage of Boston Growth-Share Matrix Method
- Difficulty in defining Strategic Business Units and measuring market share growth.
- It is also time consuming.
- It is very expensive.
- It only focuses on the current business units rather than future.
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