Towards a New Model for Product Portfolio Analysis

Like investors in stocks and shares who have a portfolio of different kinds of investments, each with special characteristics regarding risk, rate of return, etc., organisations, too, have a portfolio of products or services with varying characteristics. Top management in such organisations has to find a desirable balance among alternative products. Several prescriptive models have been proposed to aid management in the task of product portfolio analysis and selection. The two most important of these are the Boston Consulting Group model and the GE‐McKinsey model, although there are others, amongst which the “Directional Policy Matrix” and “Sheth‐Frazier Margin‐Return Model” are notable examples. Both of the latter models, however, offer little in the way of improvement on the two former models. The GE‐McKinsey model and the Boston Consulting group model are referred to specifically, their limitations noted, and a model proposed which makes up for some limitations in these earlier models.