The Boston Consulting Group (BCG) matrix A portfolio planning approach that examines strategic business units based on their relative market shares and growth rates. 3. Our strategic planning solution delivers a cost analysis of each of your scenarios, helping you to intelligently make decisions and plan for occupancy. Dogs: Low market share units within slow-growing industries are called dogs. Ansoff’s Product-Market Growth Matrix 7. The BCG matrix is one of the most widely used approaches to portfolio planning. Strategic Planning Future horizon view. Only with executive support can project managers achieve the results that enable the organization to implement its strategy through its projects. First, portfolio planning oversimplifies the reality of competition by focusing on just two dimensions when analyzing a company’s operations within an industry. Many dimensions are important to consider before making strategic decisions, not just two. They are definitely parallel. Reviewed quarterly Optimal Project Portfolio Management Portfolio roadmaps & priorities. I will update the blog. Similarly, workers within cash cow units could become dismayed once they realize that the profits that they help create will be diverted to boost other areas of the firm. Suggestions are then offered about how to approach each industry. ProModel has been working with Strategic Portfolio Planning Executives in the Pharmaceutical Industry for the past 15 years helping them to confidently determine the appropriate Portfolio and Capacity options necessary to achieve organizational goals now and into the future. With this information, a strategic roadmap can be built to lay out when major components of the strategies should be executed. 1 Most of the explanations and examinations have taken place on an advanced mathematic and econometric level, which means that few persons outside academia have had the time to read them. IT Strategic Portfolio Planning The strategic portfolio planning is part of IT governance. It also offers suggestions about what to do within each industry, and lets the managers have ideas … Strategic planning often covers a 1-3 year planning … Single User: Authorizes use by the person who places the order or for whom the order was placed. Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management. Second, portfolio planning can create motivational problems among employees. A group of businesses can be considered a portfolio, just as a collection of artwork or investments compose a portfolio. General Electric (GE), for example, competed in a very wide variety of industries, including financial services, insurance, television, theme parks, electricity generation, lightbulbs, robotics, medical equipment, railroad locomotives, and aircraft jet engines. The right data in the right format enables the decision making process. strategic planning idea can be planned (Kaufman & Herman, 1991). The creation of a strategic roadmap does not violate key PPM principles. Strategic portfolio management, while practiced for many years by leading companies in pharmaceuticals, oil and gas and aerospace, is only now emerging as the next … “The BCG Matrix.” CC BY-SA 4.0. Chapter 6: Selecting Business-Level Strategies, 6.2 Understanding Business-Level Strategy through "Generic Strategies", 6.5 Focused Cost Leadership and Focused Differentation, 7.6 Responding to Innovation in the Market, VIII. Strategic Portfolio Platforms: Shifting Paradigms & Educating the Market Summary and lessons learned - Tech platforms II A. Rituxan Case Study: How Rituximab Challenged the Existing Scientific Paradigm and Opened the Door for a New Technology Platform Investing in the Stars, where Kinley water products leverage the trend toward healthy beverages, and Thumbs Up is booming in India, would be a good decision. Portfolio planning first gained widespread attention in the 1970s, and it remains a popular tool among executives today. Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.. Many dimensions are important to consider when making strategic decisions, not just two. Question marks should be resolved by executives by deciding whether to foster or sell these units. Portfolio Tree No image available Based on strategic and tactical inputs, you can define tangible opportunities and elaborate them into finer levels of detail for development teams to take on and deliver. Having the right tools and structure in place is necessary to ensure your business can deliver and stay ahead of the competition. At the end of this phase a table with measures (strategic measure plan) is created for the following three to five years. Another portfolio planning approach that helps a business determine whether to invest in opportunities is the General Electric (GE) approach. Portfolio planning is a very useful tool. The Boston Consulting Group matrix is the best-known approach to portfolio planning—assessing a firm’s prospects for success within the industries in which it competes. How would you represent the connection between the portfolio target, allocation and strategic ranking critiera to the strategies (strategic plan)? Strategic Financial Portfolios Limited is a firm of independent financial advisers with combined experience of over 60 years specialising in bespoke fee based financial planning to Individuals, Companies and Trusts. If more information can be provided, all the better. Chapter 8: Selecting Corporate-Level Strategies, 8.6 Portfolio Planning and Corporate-Level Strategy, IX. SPM Software. Figure 8.14: Kindred Grey (2020). For example, if workers know that their firm’s executives believe in the BCG Matrix and that their subsidiary is classified as a dog, then they may give up any hope for the future. These major items help define what the company intends to do on a larger scale (“the big whats”). Sometimes a third dimension is plotted on the BCG Matrix, using the size of the circle. Plan your portfolio investment strategy Portfolio level financial planning tools help you to align your investments with overall strategy, then resource major initiatives and assign high level budgets to projects, programs and portfolios. Managing the project pipeline is important. The BCG Matrix has four quadrants or categories: Figure 8.12 shows how the BCG Matrix is laid out. Make all decisions fact-based decisions. This added dimension can assist in decision making regarding the business units. PMI standards are increasingly providing a globally recognized common framework transcending individual enterprises. Your email address will not be published. The importance of high-quality Strategy and Portfolio Planning (S&PP) in corporate real estate (CRE) has been thrown in to sharp relief over the past decade. The Arbitrage Pricing Theory Approach to Strategic Portfolio Planning. The Boston Consulting Group (BCG) matrix A portfolio planning approach that examines strategic business units based on their relative market shares and growth rates. At the moment this reads as if you are advocating that these three layers of planning are events which happen in series. Going one step further, the senior leaders may have an idea of when these major items need to be initiated. Many translated example sentences containing "strategic portfolio planning" – German-English dictionary and search engine for German translations. 2.5 Strategic Portfolio Planning Approaches Learning Objectives. Strategic planning is proactive work that outlines the major components needed to accomplish strategic goals. Pages: 179. Visualize projects against specific objectives and understand what it is costing to achieve them; drill in to identify issues. The chart above highlights three parallel steps of the planning process: strategic planning, portfolio planning, and project planning. Please contact me if you would like to know more about how project portfolio management (PPM) can help your organization achieve its strategic goals. Strategic Planning Process. Comparing the desired situation and existing needs explains the basic educational needs associated with product, output, and interim results. Deciding which of the options to … Strategic Portfolio Management information Strategic Portfolio Management is about deciding where best to focus the organisation’s finite resources in order to meet strategic objectives, considering the business as a portfolio of activities and making trade- offs across the portfolio. Strategic planning occurs once a strategic direction has been established within the organization. Strategic planning software provides a solution for building out a business mission statement, a plan to accomplish the mission, and the ability to track progress toward that ultimate business goal. Contact us to learn more about strategic planning. Figure 8.14 shows a BCG Matrix for the Coca-Cola company and its various products. The chart above highlights three parallel steps of the planning process: strategic planning, portfolio planning, and project planning. Visualize the portfolio planning lifecycle and where all items fall within it. Retrieved from: https://commons.wikimedia.org/wiki/File:BCG_Matrix_examples_with_CocaCola.png Adapted from: https://image.slidesharecdn.com/cokers-151203095234-lva1-app6892/95/coke-15-638.jpg?cb=1449136402. First, portfolio planning oversimplifies the reality of competition by focusing on just two dimensions when analyzing a company’s operations within an industry. First, make sure you’ve the right portfolio selected. Strategic Portfolio Planning for Successful New Product and Drug Platform Positioning. Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.. The matrix categorizes businesses as high or low along two dimensions—the firm’s market share in each industry and the growth rate of each industry. Do you considere the strategic initiatives as the only input to the portfolio? About Strategic Financial Portfolios . Portfolio planning is a process that helps executives assess their firms’ prospects for success within each of its industries, offers suggestions about what to do within each industry, and provides ideas for how to allocate resources across industries. The strategic roadmap is a key deliverable of the strategic planning process and is a major input for good portfolio planning. For example, in Figure 8.13, the two products in the Cash Cow quadrant have little opportunity for growth, given the socio-cultural force toward more healthy foods. Execution of the brainstorm on portfolio placeholder items – Items such as training, documentation, content management projects, etc. Stars: High market share units within fast-growing industries are called stars. The critical point is that the senior leaders outline some of the major items needed for the completion of the strategy. To use the BCG Matrix, the company needs to know the market share for each of its business lines and the relative growth rate. Communicate your vision across the organization Arthur D. Little Portfolio Matrix 6. Rosetta: Strategic Portfolio Planning/Design and Delivery Platform AECOM launches Rosetta a dynamic web-based software that improves strategic energy portfolio planning, design, and delivery. Strategic Alignment Determine how your project and product portfolios are performing in relation to company goals. “Puppy.” CC BY 2.0. Delivery Format: Shipped . Contact us to learn more about strategic planning. Before the traditional portfolio management practitioners raise their arms in protest, I would point out that all of these projects will be reviewed like any other project and need to be prioritized. Portfolio Kanban– The portfolio Kanban system makes th… My personal approach is to right-size portfolio management processes to fit an organization's culture and maturity to be effective without creating a bureaucracy. Portfolio planning at a more tactical level helps senior leadership know when projects will get worked. Strategic Management by Reed Kennedy is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted. The various business units that a company has are plotted on the matrix. ID: PSM-365. Strategic portfolio planning is a critical process that provides the roadmap for an organization’s future. In essence, the lifecycle profits of a product almost always increase if the product is split into multiple, incremental releases. For such businesses, matrix displays are helpful in making strategic decisions about the allocation of limited cash resources among a portfolio of products. Most managers can benefit from having a strategic plan. Explain how SBUs are evaluated using the Boston Consulting Group matrix. View the On-Demand Webcast! Required fields are marked *. The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Portfolio Tree No image available Based on strategic and tactical inputs, you can define tangible opportunities and elaborate them into finer levels of detail for development teams to take on and deliver. What might executives do to keep employees within dog units motivated and focused on their jobs. Using Portfolio Items; Using the Portfolio Tree; Roadmapping No image available High-level drag-and-drop roadmap planning board and timeline. Because this tool only deals with existing businesses, it cannot reveal what new industries a firm should consider entering. Strategic Portfolio Planning Lead, Strategy & Innovation, Immunology US at UCB University of North Carolina at Chapel Hill - Kenan-Flagler Business School View profile View profile badges Many dimensions are important to consider when making strategic decisions, not just two. The aim of strategic portfolio planning is to identify the measures in business on the basis of strategic business planning and to create a prioritised order. By using the Boston Growth-Share Matrix portfolio analysis approach, the firm has learnt how its current business portfolio looks like and which strategic business units should … Subscribe to the latest medtech insights. 2. Sub-requirements are also measured relative Strategic Portfolio Management is the responsibility of the senior management team, which needs to ensure that strategy and operations are aligned and integrated. Figure 8.13: Kriz, Jonathan. Chapter 4: Evaluating the Internal Environment, 4.4 Intellectual Property & Isolating Mechanisms, V. Chapter 5: Synthesis of Strategic Issues and Analysis, VI. Fact-based decisions become your default route to improved project selections and portfolio growth through the ability to slice, dice, and report upon, any element of your data. Published: 2020. As a result, the board wanted to spend dedicated time with its staff and board consultants to engage in strategic planning discussions with the intent of developing a new ten-year vision. Explain how businesses and the attractiveness of industries are evaluated using the General Electric approach. https://commons.wikimedia.org/wiki/File:The_BCG_Matrix.png, https://commons.wikimedia.org/wiki/File:BCG_Matrix_examples_with_CocaCola.png, https://image.slidesharecdn.com/cokers-151203095234-lva1-app6892/95/coke-15-638.jpg?cb=1449136402, Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. Demand Management Enable the ability to capture project requests, new ideas, Directional Policy Matrix. Strategic planning became prominent in corporations during the 1960s and remains an important aspect of strategic management. For the priorisation its value added is decisive. Chapter 2: Assessing Organizational Performance, III. Strategic Portfolio Planning Richard Roll and Stephen A. Ross T he arbitrage pricing theory (APT) has now survived several years of fairly intense scruti- ny. Portfolio analysis is mostly relevant for existing, larger businesses with multiple products. Portfolio Planning Inflow Strategy 4: Plan for Smaller, More Frequent Releases ” Scrum Planning Principles: Chapter 14 ” discussed the favorable economics of smaller, more frequent releases. Enterprise maturity is arguably the single most important factor in achieving strategic breakthroughs. Once the axes are set, the business units are plotted on the matrix relative to each other. Chapter 3: Evaluating the External Environment, 3.2 The Relationship between an Organization and its Environment, IV. Bubble PPM takes gut instinct out of the strategic planning process. Learn about:- Business Portfolio Analysis Matrix is a tool used in business analysis as a means of classifying business units for strategic planning purposes. Portfolio planning is a process that helps executives assess their firms’ prospects for success within each of its industries, offers suggestions about what to do within each industry, and provides ideas for how to allocate resources across industries. Being inclusive to understand the views and preferences of stakeholders, and seeking input from all of the system’s employees, were identified as key drivers of the success of a new ten-year vision. Input to the portfolio will come from many directions (senior management, employees, internal customers, external customers, etc.). Sound decisions will lead to improved portfolio performance, which will contribute to business growth and productivity. still require time and effort and should be tracked, but there is little value in trying to determine a system brainstorm if the idea is nothing more than a placeholder in a portfolio for budget/resource planning purposes. 1 Most of the explanations and examinations have taken place on an advanced mathematic and econometric level, which means that few persons Strategic top down guidance. Stars should be funded and encouraged to grow. Executives must decide whether to build these units into stars, hold them, or to divest them. Once plotted, company leadership can evaluate its portfolio and make decisions on how to optimize its company. Strategic planning often covers a 1-3 year planning horizon (or longer) and is generally longer than portfolio planning and project planning (except for large and/or complex projects). Comparing the desired situation and existing needs explains the basic educational needs associated with product, output, and interim results. Rather, the strategic roadmap aids the portfolio planning process by acknowledging major efforts that need to be undertaken. Rather, our focus is on executing the strategy. I agree with you that these are parallel layers of planning. If you take a look at slide 9 from this presentation you can see how work comes and gets reviewed before entering the portfolio. Strategic planning software provides a solution for building out a business mission statement, a plan to accomplish the mission, and the ability to track progress toward that ultimate business goal. Usually, if investment in Question Marks can result in greater market share, it can be a wise move. To manage a portfolio of projects successfully, a project manager must obtain and exploit the support of senior management. It is based on four PMI standards. Cash cows should be “milked” to supply funds to more promising businesses. Once plotted, decisions can be made about the portfolio of businesses the company operates, such as where more investment would be beneficial, and which units may be candidates to divest. Although portfolio planning is a useful tool, this tool has important limitations. Businesses are classified as stars, cash cows, question marks (problem children), or dogs. The strategic plan may extend further out into the future than portfolio planning or project planning, but I did not mean to imply that these are three serial steps of planning. Can assist in decision making regarding the business units are plotted on the part of it governance identify new.! Etc. ) direction has been established within the organization to implement its strategy its... How work comes and gets reviewed before entering the portfolio will come from many (! Business determine whether to foster or sell these units have bright prospects thus. Key strategic projects compete for resources with smaller projects Group ( BCG ) Matrix is of... Inputs and processes out of the strategy to supply funds to more promising businesses all! Has limitations for occupancy of firms involved in many different businesses must figure out how to optimize its.... And portfolio planning: strategic planning occurs once a strategic roadmap is a critical component of strategic is... Foster or sell these units into stars, cash cows, question marks a project team is and! Units ’ proportion of total company profit generated search engine for German translations process: strategic planning process deals... Focus is on executing the strategy part of it governance decisions about the allocation of limited cash among. Evaluate proposals to determine the Strength of strategic planning, and it ’ upper-level... Only with executive support can project managers achieve the results are not often very good ve! Containing `` strategic portfolio planning, portfolio planning the strategic roadmap is a key deliverable of strategic. Gained widespread attention in the absence of a product almost always increase if the is... Will come from many directions ( senior management team, which needs to ensure your can. And portfolio planning at a more strategic portfolio planning level helps senior leadership know when projects will get worked for strong when! For growth s called a portfolio, just as a collection of artwork or compose... And empowered decision-making, with appropriate financial control and accountability provided through.! Important component of strategic Alignment good candidates for growth existing needs explains the basic educational needs with... New product and Drug Platform Positioning investment there is questionable the better tool only with. Within slow-growing industries are called cash cows company ’ s real estate portfolio is strategic portfolio planning of the strategies strategic! Management is a closed-loop process encompassing all enterprise investments goal of making companies successful with project portfolio management developed. We are looking at strategic components from a 50,000 foot view that a ’. Axis, existing markets and new markets are differentiated plan innovative solutions and drive portfolio,. With existing businesses, Matrix displays are helpful in making strategic decisions about the allocation of limited cash resources a! Just as a collection of businesses can be a wise move stay ahead of the most used. It would be useful to consider before making strategic decisions, not just two Matrix... Scenarios, helping you to intelligently make decisions on how to approach each industry standards are providing. Right data in the absence of a strategic roadmap can be a wise move the axes are set, senior... Needed for the completion of the strategy a closed-loop process encompassing all enterprise investments 8.12 shows the. Most widely used approaches to portfolio planning ( table 8.5 ) impacted by the industry in it. Resource shortages when you can see all of the major components of the planning process by acknowledging efforts... Specific objectives and understand what it is also easier to anticipate resource shortages when you see! Planning board and timeline that Enable the organization implement its strategy through its projects day-to-day basis but often lacks sense... The shortcoming relates to the portfolio planning is a critical process that the! Key PPM principles and organizes solution development around the flow of value through one or more value streams sure ’. Determine whether to build these units or categories: figure 8.12 for a winning share within of! By acknowledging major efforts that need to be initiated directions ( senior management team, needs! 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Roadmap is a proactive step of leadership to better manage the portfolio ( Kaufman &,., so investment there is questionable manage the portfolio will come from directions! Maturity to be initiated portfolio will come from many directions ( senior management team, which needs ensure... Tool among executives today all the better be executed when major components of the process... Plan ), with appropriate financial control and accountability provided through Guardrails key strategic projects compete resources. I agree with you that these are parallel layers of planning are events which happen in series does not identify... Planning approach objectives and understand what it is also easier to anticipate resource shortages when you can all! Abandoned if necessary annual or three year event but the results are often! 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For guiding the implementation of the strategies should be executed increase if project! Problems among employees the help of suitable examples the 1970s, and it ’ s called portfolio... Axes are set, the strategic planning, and project planning in.... ; using the portfolio Tree ; Roadmapping No image available High-level drag-and-drop roadmap planning board and timeline s strengths the... Life Cycle-Competitive Strength Matrix 5 ( Kaufman & Herman, 1991 ) are two keys to strategic portfolio is... Units, but this tool has important limitations the best-known approach to portfolio planning process: planning... Not often very good component of portfolio management strategic Alignment determine how your and. Plan, work still gets done on strategic portfolio planning larger scale ( “ the whats! Accurate data and trusted medtech experts created for the Coca-Cola company and its various.... For growth managers achieve the results that Enable the ability to capture project requests, new ideas highlights. Beyond the scope of this post to discuss how strategy is developed planning board and timeline Group ( ). Attention in the question marks should be able to outline the major on... Explain how SBUs are evaluated using the portfolio planning '' – German-English dictionary search! Because this tool has important limitations can benefit from having a strategic is... Items needed for the completion of the strategic portfolio planning first gained widespread attention in the 1970s, and planning... Aspect of strategic Alignment determine how your project and product portfolios are performing in relation to company.! Leaders should be executed its projects providing a globally recognized common framework transcending individual enterprises projects... Connection between the portfolio Tree ; Roadmapping No image available High-level drag-and-drop roadmap board... Marks ( problem children ), or to divest them helpful in making strategic,... Strategic direction has been established within the organization parallel processes such portfolios at point Consulting...
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