Business portfolio analysis evaluates a company’s products and services to determine where to focus investments and business activities. Analysts examine performance, offer opinions, and suggest areas for growth or cost-cutting. The process can be done in-house or by a third-party firm and may be part of a plan to reorganize, improve strategy, or reduce costs.
A business portfolio analysis is an in-depth evaluation of a company’s products and services. The purpose of such a review is to determine where a company should focus its investments and business activities. Companies can hire a third-party firm to carry out this work, or they can do it in-house with the assistance of key management members. This may be part of a plan to reorganize, improve business strategy, or reduce costs to make a business run more efficiently.
The first step in analyzing a corporate portfolio is to determine the contents of the corporate portfolio. For a single company with no holdings, this can be a relatively simple task, as all of the products and services provided will be easy to list. Companies with subdivisions, departments devoted to other businesses, and separate holdings are more difficult to analyze. In these cases, analysts must carefully track all holdings within the portfolio to get a detailed and complete picture.
With information about the portfolio’s contents available, the analyst can begin to examine performance. This may include sales numbers, competitor comparisons, and so on. Corporate portfolio analysis can also complement projections. A company with a large amount of business related to a service that will become obsolete due to changing industry standards, for example, may need to think about ways to compensate for expected declines in business. Comprehensive overviews can highlight areas where companies are growing or struggling.
Analysts can offer opinions as part of corporate portfolio analysis. They could point to specific products and services that could yield better returns with more investment, due to the potential for growth. You can also show where the company could afford to cut spending. Established products may not need lavish budgets, for example, while others may generate low returns on investment. Finally, an analyst can point out products and services that should be phased out.
The time required to perform a comprehensive company portfolio analysis can depend on the size of the company and the level of detail required. Companies hiring third-party consultants can request a quote to learn more about what to expect in the process. With the report in hand, companies can make decisions about their business practices that could benefit them in the long run. The information may also become part of an annual report that discusses business and shareholder-benefit decisions.
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