Meaning of Portfolio

 A business portfolio is a collection of businesses and products that make-up the company.

The best business portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment.

 In portfolio analysis top management views its product lines and business units as a series of investments from which it expects returns. Portfolio analysis is a growth share matrix. Depending upon analyses management may develop growth strategies for adding new products or businesses to the firm’s portfolio. In order to design the business portfolio, the management must analyze its current business portfolio and decide which business should receive more, less, or no investment. Portfolio analysis is a technique that helps strategists in taking strategic decisions with regard to individual product. Portfolio analysis is primarily used for competitive analysis and corporate strategic planning in multi-product and multi-business firms. They may also be used in less-diversified firms, if these consist of a main business and other minor complementary interests. The main advantage of adopting a portfolio approach in a multi-product, multi-business firm is that the resources could be channelized at the corporate level to those businesses that possess the greatest potential. For instance, a diversified company may decide to divert resources from its cash-rich businesses to more prospective ones that hold promise of a faster growth so that the company achieves its corporate level objectives efficiently.