Marketing Strategy and Competitive Positioning pdf ebook

Analysing portfolio balance. In addition to suggesting strategies for individual busi-
nesses, portfolio analysis assists assessment of the overall portfolio balance in terms of 
cash flow, future prospects and risk (see Figure 2.5). Cash flow balance is achieved where 
investments in businesses with potential are met through surpluses from current or past 
breadwinners. The extent to which the cash flow is out of balance suggests opportuni-
ties for expansion or acquisition or the need to raise capital from external investors (see 
Figures 2.6 and 2.7). For example, in the first financial quarter of 2019, Apple reported 
that it had $245 billion cash on hand. Here, ability to mitigate threats, capitalise on 
opportunities and generally manage the balance of a business portfolio competing in 
turbulent markets is significant, and likely not to depend on external sources on funding.
Additionally, a crucial element of portfolio planning is to help assess the future pros-
pects of the organisation as a whole. Too heavy a dependence in the portfolio on yester-
day’s products may indicate a healthy current cash flow, but unless that is invested in 
tomorrow’s products the longer-term future may be in doubt. Too many future invest-
ments without a solid-enough current cash generation may suggest an overstretched 
portfolio. Finally, assessing the risks associated with individual businesses enables a 
firm to spread its overall risk, ensuring not all its ventures are high risk but allowing 
some more risky ventures to be balanced by perhaps less rewarding but more predict-
able activities.
Figure 2.5
Balancing the 
business portfolio
Products that
generate cash
NOW
Others that use
cash now but
promise to generate
cash in the
FUTURE
Long-run corporate health requires a balance of:

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