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The Hare and the Tortoise: The race is not to speedy (XIX). Prelude to portfolio analysis

Have a beautiful weekend.

Today we will be brief. Eleonora Escalante Strategy is making available certain theoretical tools that classically are comprehensive by themselves. Nowadays, with the disruptive technologies in place, the portfolio analysis of your business units is a bit more complex and sophisticated, and at the same time nimble. On the other hand, the chaos ignited by the NAIQIs (Nanothechnology, Artificial Intelligence, Quantum Supremacy and the Internet) is a paradigm for many who want to do business portfolio analysis, because the technologies are replacing the products and services that we used to make.

Never discharge the old by pursuing the new perils. At least partially try to embrace the past, make it part of your current methods to protect, because all the theory, including the one that you simply ignore, is based on that.  Yesterday, we celebrated “Fathers´ day” in town, it was a holiday retreat for many families in El Salvador, which gathered at least for some hours for the first time in 15 months. By this time, many of our citizens have applied at least one vaccine doses. At home, when Mom, Dad and I were dining, we were reflecting about how 12 years of the Smartphone and NAIQI technologies have destroyed more than 2,000 years of our ancient traditions and basic frameworks of living. And we associated this reflection to “The Hare and the Tortoise” fable. Watch the beautiful crafts about the fable, that I found on the internet:

12 years have destroyed 2,000 years of history. In the middle of our lunch, I expressed to them that it is almost impossible to believe that our “savoir vivre” has changed so much. In only 12 years after the appearance of the Smartphone and all touch screen devices, which coincides with the expansion of the cheap products that are manufactured by the global value chains from Asia, our societies modus operandi have altered our culture civilization. For the majority of us who were born after the 70s, regardless that I am not a mom yet, I have seen how the Gen X and Millenials, do not practice nor train their kids, in any type of manual craft anymore. Indeed, the use of the NAIQIs in our daily life have wiped off all the industries of every single hand craft that you can imagine. I already posted about this situation on March 12th this year. Because the Smartphone took all our attention since the year 2010s, the majority of Gen X and Millenial moms did not continue doing hand-crafts, or hand-made art, because the mobile and computers substituted everything. So the next generations continued growing without role models to pursue or to practice with, all these beautiful hobbies or traditions. If 12 years have destroyed 2,000 years of history, this is a sign of alert for our civilization. I told my parents, that before the advent of the NAIQIs in a popular business model of the Smartphone, it was a custom for women to meet and greet meanwhile they practiced crochet, or embroidered or read books weekly (book club), or they created several handmade projects with felt, wool, wood, paper, etc. Kids played with toys, not with video games. All these traditions have almost disappeared, and are in risk of extinction as our animals. It is too much to lose, for the sake of our destiny. What do you think?

Let´s catch up again where we stand. The big wild goals, entitled to Corporate Strategy are:

  1. Decisions about the growth positioning and the pace of progress of the entity (already covered)
  2. Decisions about how to perform a portfolio analysis (today)
  3. Decisions about corporate parenting (to cover next Tuesday 21st of June).

Today we will continue with the second area of decision making: how to perform a portfolio analysis. Before proceeding further, please notice that today´s post will be a skim demonstrative prelude. My next saga will be solely dedicated to portfolio analysis. In consequence, today I will only provide a glance of what is coming.

Let´s conceive that we are considering a company that has grown with at least more than one individual product business lines. The majority of our enterprises is in this position. What jumps as a unique product, then evolves to different products, and that is how we end up with different divisions, because our organization is structured by what we define as SBUs.

Strategic Business Units (SBU). A SBU is nothing else than a division or organizational unit, small enough to be flexible and large enough to exercise control over most of the factors affecting the product long-term performance ( Another definition of a SBU is “a self-sufficient unit within a company”.  For Kotler, a SBU is a unit of the company that has separate objectives and can be planned independently from other SBUs. But we will land into our own definition of SBU, based on the book “Strategic Marketing Planning” from Wilson & Gilligan.

  • Is a separately managed division or unit of an enterprise.
  • Has its own mission statement, objectives, independent strategic planning and with its own management team.
  • Can or might feasibly stand alone from the rest of the organization, because it is regarded as a profit center, because it is responsible for its own viability.
  • Has its own set of competitors
  • Has a manager who has responsibility for it, and who has control of profit influencing factors.

Now, when a company with several SBU enrolls to formulate corporate strategy, the headquarter office Board of Directors (BoD) has the role to decide for the well-being of the SBUs. Usually, the SBUs are organized to perform disjointedly (as when kids become adults and mature, leaving the parents nest. Each kid is independent, but at the same time they also belong together under a parental umbrella). Another way of looking at it, is when we attend a LIVE concert of a band or a symphonic orchestra is playing. Each instrument played by each musician is different, but all together make beautiful music. In consequence, the role of the BoD corporate strategists of that multi-business corporation is to help to identify how all these SBUs can reach success. If the SBUs are left alone, it is difficult for them to succeed or to boost overall performance,  particularly when these are requiring  investments to grow.

For the time being, I will only name different portfolio analysis frameworks that have been designed as tools to perform decision making at this level

  1. The Boston Consulting Group (BCG) Growth-share matrix
  2. The General Electric/McKinsey Matrix
  3. Shell Directional Policy Matrix
  4. Arthur D. Little Strategic Condition Matrix
  5. Abell and Hammond’s 3 × 3 investment opportunity matrix
  6. Volatility, Correlation and Margin (VCM) Matrix
  7. Others as: Strategic Position and Action Evaluation (SPACE) Matrix, the Market Economics and Competitive Position (MC/CP) framework,  Hofer´s product-market evolution Model,  Ansoff product/market expansion grid and COPE Analysis, in between more.  

We won´t land in the detail for each portfolio frameworks today, but be sure that I will dedicate the whole next quadrimester of the year to explain them in detail. Please remember, our academic sagas last a minimum of 26 episodes, and they can expand to 30 episodes easily. In consequence, to create better content, we will shift to three sagas per year. Each saga period of time spans up from 10 to 14 weeks maximum each.

I will close today´s post with a reflection of time when doing portfolio analysis. Because consumers tastes and preferences changes, naturally; this is an important tool if our entity has different SBUs. Nowadays, the change is forced by the disruptive technologies, our business environment is increasingly dynamic, competitive, and globalized. The fact that China was chosen for the implementation of global value chains at the highest level, in search for efficiencies of reducing costs, is not a cause to reject Asians. For reasons beyond our control, this country chose this path as its growth strategy. But it could have happened to any other nation, including yours. The imbalance that the global business value chains has fired, coincides with the adoption of the disruptive technologies without any regulation. In consequence, this situation needs a strong balance to keep our well being. Humans are not machines, and we are in the verge limit of deciding to pursue inadequate technologies and business models that are not integral neither build anything to celebrate humanity. The portfolio analysis models will need to be reframed as much as our basic tools for business modeling and strategy. If we don´t want to destroy our essence, a retrenchment from excessive NAIQIs must be considered.

Have a beautiful week. Blessings from El Salvador.

Sources of reference for today´s post:,1983,-Mixed-Media.html

Disclaimer: Illustrations in Watercolor are painted by Eleonora Escalante. Other types of illustrations or videos (which are not mine) are used for educational purposes ONLY. Nevertheless, the majority of the pictures, images, or videos shown on this blog are not mine. I do not own any of the lovely photos or images posted unless otherwise stated.

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