Analysis and management of the company's portfolio. Managing the company's debt portfolio. Conditional maintenance costs, thousand rubles

Taganrog: Izd-vo TRTU, 1995. 145 p. ). The main purpose of its use is to help the manager in determining the requirements for the flow of financial resources between SBAs in the firm's portfolio. The BCG approach includes three main steps:
- dividing the scope of the company into SZH and assessing the long-term prospects of the latter,
- comparison of SZH with each other using a matrix,
- development of strategic goals in relation to each SZH.

1. Surplus funds from cash cows should be used to develop selected wild cats and grow developing stars. The long-term goals are to strengthen the position of the "stars" and turn attractive "wild cats" into "stars", which will make the company's portfolio more attractive.

2. "Wildcats" with weaker or unclear long-term prospects should "undress" in such a way as to reduce the demand for financial resources in the company.

3. A company must exit the industry when the SHZs there are classified as "dogs" - by "harvesting", "stripping" or liquidation.

4. If a company lacks cash cows, stars, or wild cats, then concessions and stripping must be undertaken to balance the portfolio. The portfolio should contain enough Stars and Wildcats to support the healthy growth of the company, and Cash Cows to provide Stars and Wildcats with investments.

The main strength of the BCG matrix is ​​to focus on the cash flow requirements for different types of SBAs and indicate how these flows can be used to optimize a corporation's portfolio. However, the BCG matrix has a number of significant drawbacks. This is a simplified model in two dimensions, which does not take into account a number of important factors. A business with a small market share can be very profitable and have a strong competitive position. Likewise, market growth is not the only factor that determines the attractiveness of SBAs.

9.2. Matrix McKinsey

Like the BCG matrix, this matrix is ​​in two dimensions, but these variables depend on many factors (Fundamentals of Management course).

The attractiveness of SZH is assessed in four stages:
- strategic managers identify the criteria for the attractiveness of SZH;
- then the weights of the relative importance of individual factors are established;
- strategic managers register the attractiveness of individual industries in the corporation's portfolio;
- finally, the overall weighted assessments for each SZH are performed (course "Fundamentals of Management").

The competitive status of a firm in the SZH is assessed in a similar way:
- the strategic manager identifies the key success factors for each industry in which the company competes;
- each key success factor is assigned an appropriate weight, determined by the relative importance of the factor for the competitive position;
- then the rank of competitive strength in each SBA is established in accordance with the relative importance of the success factor for the industry;
- further, the full weighted index of the competitive position of SBA is calculated.

Comparison of SZH is performed using the MacKinsey matrix (Fig. 15) similarly to the BCG matrix.

The McKinsey matrix is ​​divided into nine cells. SBAs in three of them are characterized as "winners" or the most desirable areas of business. Three cells are characterized as losers, which are the least desirable for business (relatively weak competitive position in unattractive industries).

Fig.15. Matrix McKinsey

One cell is marked with a "question mark" (analogous to the "wild cat" of the BCG matrix). This is an uncertain but promising business position. With support, these SBAs turn into "winners", but there is also a risk of them becoming "losers". One cell is called "Profit Producer" (analogous to "Cash Cows" of the BCG matrix).

The strategic implications of the analysis based on the McKinsey matrix are clear:
- "losers" must be "undressed", liquidated or subjected to a harvesting process;
- the positions of "winners" and developing "winners" should be strengthened, including, if necessary, by financial investments;
- companies must choose "question marks" that can be turned into "winners";
- "profit producers", given their strong competitive position, should be used to reinvest profits in "winners" or selected "question marks";
- "medium business" should be tried to either turn into "winners", or "undress" if it is unpromising in the long term.

A balanced SBA portfolio should contain mostly "winners" and developing "winners", a small number of "profit makers" and a few small "question marks" with the potential to grow into "winners".

However, companies often have unbalanced portfolios. Various types of such imbalance are reflected in Table. 9.1.

Table 9.1

Types of imbalance in a firm's SHZ portfolio

One of the great advantages of the MacKinsey matrix is ​​its flexibility. The approach takes into account that different industries are characterized by different factors of competitive success. At the same time, a larger number of strategically important variables are taken into account than in the BCG approach. However, not everything is perfect in this approach. One of the main difficulties is that it gives a number of strategic decisions, but does not determine which of them should be preferred. Therefore, the strategic manager must complement this analysis with subjective assessments. Another problem is a certain static display of the firm's market position.

9.3. SZH evolution matrix

The evolution matrix of SZH (Hofer's Matrix) is described in the course "Fundamentals of Management". The advantage of such a matrix is ​​the distribution of the SBA of the company over various stages of the life cycle. For example, high potential "question mark" SBAs and "emerging winners" should be supported to become "excellent winners" and "profit producers" in the future. Potential "losing" SZH should "undress" as quickly as possible. Businesses in SBAs that are in the stages of maturity and decline must be managed in such a way as to use their competitive strength. Any surplus of cash in these SBAs should be used to support the "emerging winners" and SBAs going through a decelerating stage.

Like the McKinsey matrix, this matrix allows managers to assess the degree to which the SBA portfolio is balanced. A balanced portfolio should contain "excellent winners" and "profit makers", few "evolving winners" and high potential "question marks". At the same time, this matrix allows assessing the dynamics of the SBA portfolio. On the other hand, this matrix only complements the McKinsey matrix, since it does not reflect many significant factors.

9.4. Conclusions and possible "traps" of the matrix analysis of the SBA portfolio

The undeniable advantages of this technique:
- the opportunity for managers to analyze the consequences of diversification;
- displaying the necessary cash flows between individual SZH, the ability of the top management of the company to correctly allocate resources;
- the concept of SBA portfolio balance allows to identify the current SBA structure and optimize long-term profitability (a balanced portfolio is a company's strength, and an unbalanced one is its weakness).

However, the matrix technique of SZH analysis can also lead to certain "traps":
- a large number of SBAs can create information overload problems for the company's management (in practice this happens if the number of SBAs approaches 40-50), and hence weak overall solutions;
- there may be conflicts between the financial priorities of SZH and the entire company;
- simplified application of the matrix technique can create problems for companies using vertical integration or related diversification (an additional important strategic relationship between SBAs should be taken into account).

9.5. Market entry strategy

The following main strategies for entering a new business area can be considered:
- acquisition;
- new internal enterprise;
- joint venture.

You can acquire a developed company with equipment, personnel. A new internal enterprise starts with nothing (buildings, equipment, personnel, distribution channels), in other words, "from scratch". The choice of a particular strategy depends on a number of factors:
- entry barriers (they depend on the degree of product differentiation, cost advantages and opportunities for economies of scale in production; the more significant they are, the more profitable the acquisition becomes);
- the degree of connection of a new business with existing ones in the company (the larger it is, the lower the barriers to entry);
- the rate of return on investment (here, the acquisition may be more profitable);
- the risk inherent in a particular entry model;
- factors related to the life cycle of the industry.

In general, a new domestic venture may be more acceptable under the following conditions:
- the industry is in the stages of origin or growth;
- entry barriers are low;
- the new SZH is closely connected with the existing business of the company;
- the company agrees to receive additional worries about return on investment and risk.

The acquisition will be more acceptable:
- when the industry is in the stage of maturity;
- high entry barriers;
- unconnectedness of the new business with existing SBAs (the company adheres to the strategy of unrelated diversification);
- the company does not want additional worries about the return on investment and the risk of new entrepreneurship.

In portfolio analysis terminology, a new internal venture is attractive to a company that needs more "question marks" in the portfolio or has an urgent need to strengthen "emerging winners" in the nascent or growth stage. Acquisition is expedient at need of the company in "the developed winners" or "producers of profit" (tab. 9.2).

Table 9.2

Signs of SBA Portfolio Imbalance and Preferred Entry Strategies

It should be borne in mind that if the acquisition strategy is not developed enough, it may be found that instead of acquiring “winners” or “profit producers”, “dogs” have been added to the portfolio. This can happen for the following reasons:
- the company often experiences difficulties when trying to integrate different corporate cultures;
- companies overestimate the potential synergy effect;
- Acquisitions are associated with high costs;
- companies often do not adequately represent the purpose of the acquisition.

As noted above, in terms of portfolio management techniques, new domestic ventures act as "question marks". The probability of errors can be reduced by taking into account the possibility of the following typical miscalculations:
- the entrance is small in scale;
- poor commercialization of new entrepreneurship;
- poor management of the business process by the management of the corporation.

Figure 16 shows the relationship between entry volume, profitability and cash flow for small and large business volumes. Small business volumes lead to smaller losses, but in the long run, large volumes generate a greater rate of return.

In some situations, companies prefer internal new venture acquisition strategies, but they are wary of the need for new investment and risk (for example, in the case of an "evolving winner" in the nascent and growth stages). This leads to their use of joint ventures, which promote insurance against risk and investment in new projects.

Fig.16. Impact of business volume on profitability and cash flows

However, the following disadvantages of this entry method should be noted:
- in addition to investment and risk insurance, a guarantee of sufficient profitability of the new business is required;
- companies entering into such cooperation run the risk of losing priority in "know-how";
- partners must control each other, especially with different business philosophies, planning horizons, investment priorities, etc., otherwise conflicts are possible.

9.6. Exit Strategies

As Table 9.1 shows, exit is usually required when a company has many "losers" or "question marks" and sometimes many "evolving winners." A company can have three strategies in this case:
- "undressing";
- "harvesting";
- liquidation.

"Undressing" includes the sale of a business to another company or management from within the company. Easy to sell "evolving winners" or in some cases "question marks" and very hard "losers".

"Harvesting" involves controlled divestment to optimize a company's cash flow when a company exits an industry. To increase internal cash flows, firm management eliminates or limits new investment, limits operating costs, reduces promotion and R&D costs, and spends profits from past good periods. The effect is illustrated in Fig.17.

Fig.17. The impact of the "harvest" strategy on cash flows

SZH loses the market in terms of sales, but the inflow of funds from it increases for a short time. These funds are used to develop other SBAs of the corporation. With a decline in cash flow, they begin to liquidate SZH.

The choice of an exit strategy is determined by the characteristics of the SBA and the intensity of competition in the industry (Table 9.3).

Table 9.3

Choosing an exit strategy

9.7. Determining the optimal strategy for a diversified firm

In practice, most diversified companies can be classified as follows:
- business with a "main" business in terms of sales with a moderately differentiated part of the related or unrelated business (approximately a third or less of the total sales of the corporation);
- narrowly diversified entrepreneurship with a small number (2-5) associated SBAs;
- a strictly differentiated case from many related SZH;
- a narrowly differentiated business of the few (2-5) SZH in unrelated industries;
- a highly differentiated case from many SZHs in many unrelated areas;
- matter of many SBAs in unrelated industries, but within each industry SBAs are linked into groups.

The procedure for evaluating the strategy adopted by the corporation should include the following steps:
- identification of the existing strategy;
- construction of one or more SBA portfolio matrices for its analysis;
-assessment and comparison of the long-term attractiveness of each SZH;
- assessment and comparison of the competitive strength of the company in each SZH in order to determine which of them are most suitable for industry conditions;
- ranking SZH according to the history of their activities (stages of evolution) and prospects;
- assessment of each SBA for compliance with the corporate strategy and determination of their relative strategic importance for the corporation;
- ranking SBAs according to priorities for new investments, determining for each SBA the general direction of development and strategic actions (aggressive development, protection of what has been achieved, "undressing", "harvesting", liquidation);
- determination of the state of diversification in the corporation as a whole (the ratio of sales volumes in SZH, in the corporation as a whole, to the current profit in them);
- assessment of the significance for the corporation of expanding or narrowing the base of diversification;
- assessment of the ratio of related and unrelated SZH in the company's portfolio;
- trends in the development of the corporation within the national framework and in the internationalization of business;
- the results of recent actions to develop key SBAs and/or strengthen existing business positions;
- actions to supplement the portfolio with new SBAs;
- actions to reduce weak and unattractive SBAs;
- assessment of proportions of investments in SZH;
- Evaluation of the effectiveness of corporate management in the implementation of strategic goals and the growth of competitive advantages.

As a result of the analysis in these areas, answers to the following questions should be obtained:
- Does the firm's portfolio contain the necessary SBAs in attractive industries?
- Does the portfolio contain a sufficient number of profitable SBAs?
- Is there a balance between developing and fading SBAs?
- are there enough "profit makers" to fund "emerging winners" and "question marks"?
- Does the main business of the company have sufficient profitability and prospects or is it a "cash cow"?
- Can the company's SZH portfolio dampen seasonal and other business fluctuations?
- Does the company really need so many SZH or do they really need to be reduced?
- Is there an industry leader in the company that occupies a significant share in the volume of the corporation, or does the company consist of many SBAs in medium-weak positions?
- what should be removed from the SZH portfolio in order to improve the position of the corporation as a whole?

9.8. Development (adjustment) of a corporate strategy based on the analysis of the SZH portfolio

The best variant of the SZH portfolio is its complete set of SZH with a high degree of attractiveness, taking into account the need to balance them. Various variants of portfolio imbalance and methods for its elimination are discussed above. The final stage in the development (adjustment) of the action plan is to ensure actions to coordinate the relationship of those SBAs that constitute the attractive axis of competitive potential.

Possible ways of such coordination:
- allocation of related activities in the company's value chain (centralization of purchases, joint R&D, full or partial integration of production, integration of the dealer network and sales organization, etc.);
- coordinating the strategies of related SBAs in order to strengthen the firm's strengths in approaches to consumers, supply, distribution channels and the creation of a defensive or offensive front against competitors;
- formulation at the level of corporations of a single strategic plan of action in competition;
- organization of interaction between SBAs, creation of committees and project groups for the transfer of "know-how", advanced technology, experience between SBAs;
- diversification into new business to strengthen strategic relationships, win in the value chain of existing business;
- reduction of SZH, which do not correspond to the basic concept of strategic relationships and which are difficult to coordinate;
- motivation of SZH managers in order to encourage them to work together in the interests of realizing the strategic potential of the company.

9.9. Summarizing conclusions on the topic of chapter 9

1. There are three main techniques for analyzing and managing a firm's portfolio: the BCG matrix, the McKinsey matrix, and the Hofer industry evolution matrix.

2. The strength of the BCG approach lies in its focus on cash flow requirements. The weakness lies in the simplification of business categories and static assumptions about market size, growth, and profitability.

3. The strength of McKinsey's approach is its ability to bring together a wide range of strategically important variables in an analysis. The main weakness is stability in relation to the evolution of the industry.

4. The strength of the SBA evolution matrix is ​​in the distribution of SBAs by life cycle phases. The weakness is that many strategically important quantities are ignored.

5. In general, portfolio analysis helps a company develop a diversification concept, allocate resources, and determine actions to balance a portfolio. However, there are weaknesses in the assumption that a company should be broken down into a foreseeable number of SBAs, the ignorance of potential cash flow priority conflicts between and within SBAs, and the tendency to ignore SBA relationships.

6. Correcting imbalances in the SBA portfolio usually requires the application of an entry or exit strategy.

7. The choice of entry strategy is determined by barriers to entry, links to existing activities, cost of entry, rate of return on investment. risk and stages of the industry life cycle. Domestic new entrepreneurship is appropriate for the strategic goal of strengthening "question marks" and "evolving winners". Acquisition is advisable when it is necessary to strengthen the "producers of profit" or "winners".

8. Many acquisitions fail due to poor post-acquisition integration, overestimation of potential synergy benefits, high acquisition costs, and poor management of the internal business process. The protection against this is a good structure, buying strategy and integration actions.

9. Many new in-house business start-ups fail due to low entry volumes, poor commercialization, and poor management of the process by corporate management. Defenses against this include structural approaches in project selection and management, integration of R&D and marketing for successful commercialization, and high volume entry.

10. Exit strategies include: "stripping", "harvesting" and elimination. The choice is determined by the characteristics of the relevant SBA and the intensity of competition in the industry.

11. There are six main strategies for a diversified firm:
- make new acquisitions;
- "undress" weak SZH or not feed them in the future;
- to reconstruct the SZH portfolio;
- switch to a narrowly diversified SZH portfolio;
- move to the internationalization of business;
- close/liquidate unprofitable SZH if it is impossible to sell them.

The project - today it sounds fashionable. Meanwhile, the tasks of a modern company already go beyond the management of individual projects. The number of projects being implemented is constantly growing, the requirements for their quality, deadlines and budgets are becoming more stringent. The main challenges of managing a company include:

• simultaneous implementation of a large number of projects;
• difficulty in prioritizing projects when making decisions;
• weak linkage of projects with strategic goals;
• the complexity of assessing the payback of projects or the benefits received by the company from their implementation, since not all results can be clearly measured.

Moreover, even if each project has a positive impact and is in line with the strategy, many organizations simply do not have enough energy to carry out all the projects at the same time. In such a situation, projects begin to compete for resources, conflicts inevitably arise and project managers, investors and other interested parties face the problem of increasing the duration of the project, its cost, etc.

Therefore, there is a need to move to a fundamentally new level of corporate project management, which implies the inseparable connection of all projects conducted in the company. Many organizations have gone through a difficult path from individual project management to corporate project management, when any project initiated by the company must be considered through the prism of strategic goals. Corporate project management means:

• managing the company's business through projects and programs;
• formation of a project office;
• analysis of activities and allocation of resources in accordance with strategic goals;
• the overall budget of the company;
• coordination of actions in areas, programs based on balanced project portfolios.

Portfolio management is one of the corporate project management tools. Portfolio management allows you to balance possible contradictions between the company's activities, resources and priorities defined in the programs. That is, it aims to create "viable" groups of projects in light of the company's strategic goals.

The project portfolio management process can be divided into the following steps:

1. Formation of a portfolio of projects - the definition of a "viable" set of projects that ensures the achievement of the company's goals.
2. Analysis of the project portfolio - achieving a balanced portfolio for short-term and long-term goals; risks and returns; research and development, etc.
3. Project portfolio planning - planning of work and resources for projects that make up the portfolio.
4. Project portfolio monitoring - analysis of portfolio performance and ways to improve it.
5. Portfolio review and rescheduling - evaluating new opportunities in terms of the project portfolio.

The key step in project portfolio management is the definition of a balanced portfolio. In project portfolio management, the theory, G. Markowitz Modern Portfolio Theory, is widely used. The methods proposed by Markowitz for managing a portfolio of securities were organically transferred to the field of project management. The main position of Modern Portfolio Theory is the diversification of the risk of the project portfolio and the formation of an acceptable risk in terms of the criterion - the advantages of the project portfolio.

The application of the project portfolio management methodology allows you to determine the degree of compliance of investments in projects with the strategic goals of the company. Using portfolio management methods, companies can better assess the risks of projects, the benefits derived from their implementation, monitor the implementation of projects and predict the development of the company.

Project portfolio management tools are fully presented in the corporate information system for project management Primavera Enterprise. A series of software products Primavera Enterprise allows you to create a corporate project management system and includes a number of systems that work with a single database, but provide different functionality. Primavera Enterprise is:

• single information space;
• scalability in terms of project size and organization;
• multi-user environment for each project;
• modularity by management levels;
• single database;
• client/server architecture, web access functions, off-line applications;
• regulated access rights;
• knowledge base of typical solutions (projects);
• Possibility of integration with other information systems:
  • ERP systems,
  • financial management,
  • PDM systems,
  • document management systems,
  • contract management systems, etc.

The corporate project management system based on the products of the Primavera Enterprise series is a flexible information system. The combination of modules operating on a single database with a single regulated system of access rights makes it possible to optimally distribute information flows between all levels of organization management - from company management to local performers.

Brand portfolio management is a complex and complex process that requires the alignment of strategies for the development of individual brands and the brand portfolio.

Brand Portfolio - the totality of all brands and sub-brands owned by a company, including joint brands, as well as brands that the company manages, for example, under a license agreement.

The following brand portfolio management goals can be formulated:

• minimizing brand cannibalism;
• accelerating portfolio growth, for example in terms of sales volumes;
• increase in efficiency, for example, specific profit.

brand architecture. Often, a brand portfolio is formed spontaneously, which ultimately leads to problems in its management. Therefore, there is a need to create a brand architecture.

A brand architecture organizes and structures the brand portfolio by defining the roles of brands within the context of a company's brand portfolio and product markets, and the relationships between them.

Brands within the portfolio are arranged in a certain hierarchy. Each brand at each level of the hierarchy has a role to play in the system and has significant links to brands at other levels. The brand hierarchy according to D. Aaker is represented by four levels:

• corporate brand identifies the corporation behind the product or service (for example, Nestle);
• an assortment (family) brand covers several classes of goods (for example, Carnation-,
• a product line brand is associated with specific company products (for example, Carnation Instant Breakfast)-,
• sub-brand - a brand that is associated with the main (corporate, assortment) brand and strengthens or modifies associations with it (for example, Catenation Instant Breakfast).

D. Aaker and E. Johimsteiler identify two key types of brand architectures:

• Brand house. Represents the only brand (parent, master brand), under which, like under an umbrella, other brands (subbrands) are collected. The sub-brand is necessarily associated with the main brand, but modifies associations with it and directs the understanding of the parent brand in the right direction for the consumer. Thus, the master brand acts as a sign of the quality and reputation of the company, carries the essence of this brand (emotional and rational characteristics), while the sub-brand individualizes the product, determines the target audience, market segment. This architecture requires minimal investment in each new brand, enhances product clarity and synergy. However, there is a risk that the problems of the parent brand will negatively affect the sales and profits of other brands, there is a decrease in mobility, and there are restrictions on the opportunities to work in niches. Companies can serve as examples of such an architecture. General Electric And virgin, as well as many Japanese companies, for example, Yamaha.
• House of brands. This architecture is based on the promotion of individual brands that are not related to each other. It enables clear brand positioning and niche coverage, as well as avoiding unfavorable brand associations in case of market failure and avoiding (minimizing) conflicts between distribution channels. At the same time, this approach requires significant investments in new brands and does not provide an opportunity to obtain synergy. In addition, individual brands are prone to declines, requiring companies to constantly monitor their health. This architecture is used by many companies focused on consumer markets, for example, Unilever And Procter Gamble.

The role of brands in the portfolio. Initially, the distribution of the roles of brands within the portfolio is necessary, since brands within the portfolio compete for limited resources.

D. Aaker proposes to distinguish four roles of brands within the portfolio, and not mutually exclusive:

• Strategic brand - a brand that expresses the future level of sales and profits. It can be a currently dominant brand that needs to maintain or strengthen its position, or a small brand that needs to become a major brand in the future. In the company's brand portfolio Biersdorf strategic brand is Nivea Visage.
• The launch brand is the starting point for moving into the main areas of the business or the future vision of the firm. It will indirectly influence the business by creating the basis of buyer confidence. For the company Biersdorf the role played by the brand nivea sun, which became for her a new stage of development - promotion in the category of sun protection products.
• Cash Cow is a brand with a sizable consumer base that does not involve the investment needed for other brands in the portfolio. The role of the cash cow is to build a pool of resources that can be invested in strategic launch brands or silver bullets that will serve as the basis for future brand portfolio growth and viability. An example of a "cash cow" in a company's portfolio Biersdorf - Nivea Creme.
• "Silver Bullet" is a brand or sub-brand that positively influences the image of another brand. Company Biersdorf the "silver bullet" is a branded molecule QIOplus, anti-aging product used in the company's anti-aging product line.

One more important role of a brand in a portfolio can be singled out: flanking brands. These are products that are released to support brand sales during difficult times, such as during a crisis. Usually they are more affordable, but a prerequisite is the presence of a clearly defined

personal connection with the leading brand. In the briefcase Biersdorf an example of a flanking brand is Labello, a brand that usually adapts to the conditions of local markets or is presented on the market as a product included in the product line Nivea lip care.

The role of brands in the context of product markets. There are four sets of roles in product market contexts that work together to define a specific offering:

• Supporting brands (sub-brands) are established brands that provide credibility and value to the offering, with the sub-brand modifying the parent brand associations for market specifics. An example is a series of hair styling products. Taft and shampoos Shauma from Schwarzkopf & /Lenkel Cosmetics.
• Branded benefits are the branding of a feature, component, or service that reinforces the branded offering. Benefit branding is useful when it really adds value to a product or service. Bristle can serve as examples of branded features. Power tip and bristle shape Action Sar(follows the contour of teeth and gums) in toothbrushes Oral-B. Examples of branded components include microprocessors Intel, and for branded services - the tariffs of mobile operators, for example, "World without Borders".
• Collaborative brands are the combined brands of different companies that create an offer in which each of them plays a significant motivating role.
• Inciting Brands - This role shows how much a brand drives a purchase decision and determines the experience of using a product. A brand that plays a motivating role enjoys a certain amount of consumer loyalty. The driving role is usually played by the parent brand or sub-brand. For example, in the line of shaving accessories Mac-3 or Venus companies Gillette it is these brands that have the driving force rather than associations associated with sub-brands such as Turbo or divine.

Brand portfolio management. In the mid 1990s. many large international companies (for example, Unilever, Procter&Gambie, L "oreal, Akzo Nobel), especially those operating in the FMCG markets (fast moving consumer goods, FMCG) are facing a glut in their brand portfolios.

According to the company mackinsey, Firms in this sector manage portfolios averaging 250 brands. And for 1997-2004. the number of brands in the portfolio increased by 75%.

Much of the reason for this significant portfolio inflation was the strategy of these companies, aimed at mergers and acquisitions with the subsequent involvement of brands previously owned by merger partners or acquired companies into the portfolio of the revitalized company. The consequences of these strategic decisions were

excessive costs, difficulty in disseminating information within companies, lack of flexibility and slow decision-making.

However, the wave of over-expansion of FMCG brand portfolios is slowly fading away. Moreover, some companies such as Unilever And Nestle attempted to reduce them.

Anglo-Dutch concern Unilever- one of the largest and most influential companies operating in the consumer goods markets. Unilever for many years used the strategy of growth through acquisitions in different countries of companies along with their brands.

However, this growth was accompanied by additional costs and the complexity of managing a huge portfolio, the size of which by the end of the 1990s. reached 1600 brands. Therefore, in 2000 Unilever announced the start of a five-year "Road to Growth" program, under which the company had to cut three-quarters of its portfolio.

In the early 2000s, thirteen of the company's brands (up from four in 1999) generated revenues in excess of $1 billion, including Dove, Lipton, Knorr. The standardization of supply chains and the improvement of the marketing mix allowed the company to increase operating profit to 15% (11.2% in 1999).

But in 2003, the plan began to falter: growth rates fell from 5.4% to less than 4%, a number of new products failed in the market. As a result, the company needed to achieve a much higher level of sales from those brands that remained in the portfolio than they could bring.

By 2014 Unilever retained thirteen brands (Dove, Lipton, Knorr, Axe and others), whose sales revenue exceeds 1 billion euros, while the company continues to constantly strengthen its brand portfolio. In particular, in 2014 the company sold some non-key brands in the food category, added a new brand - regenerate(oral care), and also bought out from its main competitor - the company Pmcter&Gamble- brands Camay And Zest.

The goal of brand portfolio management is not just to eliminate some of the brands that do not bring sufficient profit to the company, but to achieve higher growth rates for the entire portfolio and individual brands that remain in it. One of the key principles of effective brand portfolio management is to achieve a balance between the costs of maintaining each individual brand included in the portfolio and the income generated by this brand: income must exceed costs. Brand portfolio planning should be carried out in order to reallocate resources to the fullest use of market opportunities and identify sources of competitive advantage to prevent its loss.

Company MSKiteu proposes to rely on three general rules for the reorganization of the brand portfolio:

• portfolio restructuring should be carried out in order to succeed not just one brand, but the entire portfolio;
• we need to develop brand affinity to consumer segments, not product categories, to ensure that brands meet consumer needs and identify new growth opportunities;
• it is necessary to optimize investments in the portfolio (distribution of resources between brands).

The first step towards creating a balanced brand portfolio is a portfolio audit, which involves determining the contribution of each brand to the portfolio and assessing the perception of these brands by target consumers, as well as analyzing the relationships between brands in the portfolio. Various matrix methods can be used to audit a portfolio of brands (for example, matrices BCG Boston Consulting Group and Company McKinsey) allowing to determine the position of the brand in the market, with the subsequent development of strategies for its development.

In addition to the possibility of using individual tools for auditing a portfolio of brands, complex approaches can be applied that contain both elements of assessing the contribution (primarily financial) of each specific brand to the portfolio, and the position that the brands included in the portfolio occupy in the market. One such approach was proposed by S. Hill et al. It involves not only an assessment of the financial contribution of each individual brand to the portfolio, but also an analysis of the hidden benefits and costs associated with the brand, respectively increasing or decreasing the contribution of the brand to the portfolio (Fig. 10.7).

On the first stage it is necessary to agree on how many and which brands will be considered. There are several options here:

• 1) following the brand portfolio definition, include all brands owned and operated by the company;
• 2) focus on a detailed analysis of the most significant brands (no more than 50).

In the first case, large resources will be required; in the second, the company may miss out on some brands that could open up new growth opportunities.

On the second stage an assessment is made of the individual contribution of each brand to the portfolio (Fig. 10.8). The individual contribution is determined on the basis of the "explicit" contribution of the brand, which is calculated as the difference between its income and the cost of promoting it, and the "implicit" contribution, which is estimated using the analysis of hidden costs and hidden benefits.

When evaluating brands' individual contributions to a portfolio, managers rank brands by how:

• the contribution of a particular brand in relation to other brands in the portfolio is important;
• weighing the contribution of this brand to the current performance of the company;
• the brand in question will be important to the company in the medium term.

Third stage involves assessing the market position of brands. The task of this stage is to assess both the current position of the brand and the potential for its development.

To assess the current situation, marketing research is carried out, during which indicators of awareness among existing and potential consumers, the opinion of consumers and intermediaries regarding the price, quality and other characteristics of the brand, the level of consumer loyalty to the brand, etc. are revealed.

Potential assessment is carried out using surveys of both internal and external stakeholders, which reveal, for example, the desire to buy a brand in the future, the tendency to switch to competing brands, the desire to continue working with the brand. Market trends and their possible impact on the future of the brand can also be analyzed here.

Fourth stage dedicated to identifying opportunities.

Based on an analysis of the brand's contribution, its current position and growth potential, it can be classified into one of eight categories:

• "strongman" - a brand that requires serious protection and reasonable investment of resources;
• "Sonya" - a brand that, with a little push, can move into the status of a strong brand;
• "confused" - a valuable brand that squanders its potential and quickly loses its strength; requires immediate intervention to prevent complete destruction;
• "soldier" - a valuable brand that makes a significant contribution to the portfolio, but does not require close attention from management (a kind of "cash cow");
• "rocket" - a brand that is on the way to becoming a strong brand (often these are new brands that have yet to gain a strong position);
• "black hole" - a brand that actively absorbs resources, but does not guarantee their return (it may or may not become a strong brand);
• Cinderella is a small, undervalued brand with a very loyal consumer base. Often such brands do not receive sufficient support from the company and may be sold at reduced prices;
• "burden" - a brand that should be got rid of.

Two categories cause the greatest difficulty: "black hole" and "rocket", since they have the same indicators (Table 10.1). Therefore, brand managers need to set clear performance metrics.

of these brands and track their progress in order to make a decision to maintain or abandon this brand in the future.

Table 10.1

Choosing a strategy based on key brand indicators

On the fifth stage a portfolio development action plan is being developed. It is also important here to create a list of performance indicators, which should be constantly monitored by brand managers. The development plan may contain instructions for reducing the number of brands, repositioning or expanding them, etc. The important question here is how much the portfolio can be reduced without losing consumers and sales revenues, which were provided by the brands given "for write-off". The answer to this question is complicated by the fact that even weak and unprofitable brands have a certain set of assets: in particular, a pool of consumers and relationships with partners through distribution channels.

For liquidated brands, N. Kumar suggests using one of four scenarios:

• The general principle of selling brands is that companies should not get rid of key brands: only those brands should be sold that will enable the company to focus on developing its core brands.
• Companies resort to profit-making in cases where the brand still enjoys the support of a limited circle of loyal consumers, but does not act as a strategic one for the company and a chain for other groups of stakeholders. This scenario assumes a complete cessation of brand marketing support (narrowing the product line, curtailing advertising support, transferring brand managers to other brands), which gives an increase in short-term profit. At the same time, brand sales are steadily declining, and the brand is completely withdrawn from the market.
• Acquisition involves the merging of two brands into one, if the "smaller" brand is in demand by consumers and generates a relatively large volume of sales. Often, such "pulled" brands are local brands with specific characteristics that are in demand among consumers. Then the companies go for brand merging, in some cases retaining the name of only the "larger" brand, but giving it the special characteristics of the "smaller".
• Write-offs are usually used for minor brands with low sales volume.

At the same time, Paul Temporal identifies several key reasons for the liquidation of brands:

• the brand is rapidly deteriorating, and there is no visible way to improve it;
• the brand has ceased to be profitable, and the probability that it will again generate income is zero;
• the brand is completely obsolete due to market innovations;
• Kumar II. Marketing as a strategy. M.: Pretest, 2008. S. 234-235.

Most directors and business owners do not really understand what project portfolio management is and why it is needed. Most often, their presentation comes down to managing an investment portfolio. This material is a small guide on how to explain project portfolio management in business terms.

Let's start with a small case. The author of the article worked for a major European bank before, during and after the 2008 financial crisis. The bank was severely affected by the impact of the crisis and was literally surviving. The bank's portfolio included more than 150 major projects, with a budget of more than €500,000, but no one knew exactly what their status was and the value that each of them should bring. It was decided to use the tool from the top right of the Gartner box, but the lack of discipline in providing data and using it nullified all efforts and costs.

The launch of the project was driven by available resources and feasibility, not strategy. That is, if experts and other resources were available, the project was launched. If not, rejected. And only during the crisis, the management asked the question of the quality selection of projects in the portfolio.

Most directors do not have a clear understanding of project portfolio management. And the first task of the team of the author of the article was to convey this knowledge to the top management of the company. For this, a short guide was written, which we will give below.

What projects should be included in the portfolio to maximize value? What is the best use of the company's present and future financial and other resources? Or, on the contrary, what projects should be frozen or stopped altogether? All these questions are answered by the project portfolio management methodology. The most important aspects of project portfolio management:

1. A standardized and structured process for collecting all project ideas and needs. A process that extends throughout the organization must be carried out consistently, otherwise the next step - comparing ideas - will be difficult and ineffective. Each idea needs a business case (business case or feasibility study) and a qualitative indicator for evaluation and selection. For example: alignment with strategy, level of risk, relationship with other projects. Ideas for the strategic projects themselves, such as acquisitions or mergers, usually come from top management itself. But even in this case, a single process must be followed. It is also important to remember that this is not only about strategic, research or business ideas. Ideas for internal transformations, cost reductions, and other internal projects should also be screened.
2. Procedure for prioritization and selection of new project ideas. Projects already underway should also be prioritized, immediately after the implementation of the process itself, and projects that receive low priority should be stopped. The evaluation process should be transparent and fair. Consultants and gurus often recommend developing formulas to automate this process. If there are a large number of projects of the same type, this can be useful, but this solution is not applicable for all companies. Focus on a few important criteria, such as alignment with strategy, risk, complexity, etc. After all, decisions are made on the basis of their knowledge and experience, and this assessment is designed to help them.
3. A strategic roadmap that sets out strategic projects for the next 2-3 years. This map should reflect the main strategic goals of the company, and the list of projects should be carefully evaluated and prioritized. The most important projects from the point of view, as a rule, are not changed or suspended without a good reason, and the attention of management is focused on them. The roadmap is communicated to all employees of the organization.
4. Creation of a governing body that will decide which projects to invest in and which not. This body also approves the developed roadmap. The composition of the committee may be different, but the members should have very broad powers and access to information. The author recommends appointing the CEO or one of the vice-presidents as the chairman of the committee, and inviting directors and heads of directions to the committee itself. When creating, it is important to understand the limitations of this committee. Most often, in companies, such a committee is created within the framework of one business area, for example, an IT department, or an R&D department. In the example given at the beginning, the goal was to create a committee for the entire company to break down barriers between departments and encourage employees from different departments to work together on a common cause.
5. The application of the gate approach allows more effective control of project financing. The point of the approach is to establish several specific phases of the project life cycle - for example, "preparatory stage", "development", "implementation", "testing" and the like. At the end of each phase of the project, its feasibility is assessed and a decision is made whether to allocate funds to the project for the next phase. If the project does not show the required results, the project environment and the company's priorities have changed, then the project financing is terminated.
6. Monitoring the implementation of the roadmap. Creation of monthly and quarterly reports on the project using such tools as project milestones, risk assessment, problems.
7. The process of extracting and managing benefits. One of the main problems with projects is that it is very difficult to extract value and benefit from them. This is due to lack of sponsorship, difficulty in measuring value, and long cycle times to benefit from most projects. For example, some projects do not begin to bring benefits until 5 years after completion.

BCG matrix

The main purpose of its use is to help the manager in determining the requirements for the flow of financial resources between SBAs in the firm's portfolio.

The BCG approach includes three main steps:
- dividing the scope of the company into SZH and assessing the long-term prospects of the latter,
- comparison of SZH with each other using a matrix,
- development of strategic goals in relation to each SZH.

1. Surplus funds from cash cows should be used to develop selected wild cats and grow developing stars. The long-term goals are to strengthen the position of the "stars" and turn attractive "wild cats" into "stars", which will make the company's portfolio more attractive.

2. "Wildcats" with weaker or unclear long-term prospects should "undress" in such a way as to reduce the demand for financial resources in the company.

3. A company must exit the industry when the SHZs there are classified as "dogs" - by "harvesting", "stripping" or liquidation.

4. If a company lacks cash cows, stars, or wild cats, then concessions and stripping must be undertaken to balance the portfolio. The portfolio should contain enough Stars and Wildcats to support the healthy growth of the company, and Cash Cows to provide Stars and Wildcats with investments.

The main advantage of the BCG matrix is to focus on the cash flow requirements for different types of SBAs and how to use these flows to optimize a corporation's portfolio.

However, the BCG matrix has a number of significant drawbacks. This is a simplified model in two dimensions, which does not take into account a number of important factors.

Matrix McKinsey

The attractiveness of SZH is assessed in four stages:
- strategic managers identify the criteria for the attractiveness of SZH;
- then the weights of the relative importance of individual factors are established;
- strategic managers register the attractiveness of individual industries in the corporation's portfolio;
- finally, the overall weighted assessments for each SZH are performed (course "Fundamentals of Management").

The McKinsey matrix is ​​divided into nine cells:

Key recommendations:
- "losers" must be "undressed", liquidated or subjected to a harvesting process;
- the positions of "winners" and developing "winners" should be strengthened, including, if necessary, by financial investments;
- companies must choose "question marks" that can be turned into "winners";
- "profit producers", given their strong competitive position, should be used to reinvest profits in "winners" or selected "question marks";
- "medium business" should be tried to either turn into "winners", or "undress" if it is unpromising in the long term.

One of the great advantages of the MacKinsey matrix is ​​its flexibility.

One of the main difficulties is that it gives a number of strategic decisions, but does not determine which of them should be preferred.

SZH evolution matrix

SZH evolution matrix (Hofer Matrix).

Like the McKinsey matrix, this matrix allows managers to assess the degree to which the SBA portfolio is balanced.

On the other hand, this matrix only complements the McKinsey matrix.

Benefits of Martitz Hofer: Distribution of the company's SZH over various stages of the life cycle.

Conclusions and possible "traps" of the matrix analysis of the SBA portfolio

but The matrix technique of SZH analysis can also lead to certain "traps":
- a large number of SBAs can create information overload problems for the company's management (in practice this happens if the number of SBAs approaches 40-50), and hence weak overall solutions;
- there may be conflicts between the financial priorities of SZH and the entire company;
- simplified application of the matrix technique can create problems for companies using vertical integration or related diversification (an additional important strategic relationship between SBAs should be taken into account).

Market entry strategy

The following main strategies for entering a new business area can be considered:
- acquisition; - new internal enterprise; - joint venture.

The choice of strategy depends on a number of factors:
- entry barriers (they depend on the degree of product differentiation, cost advantages and opportunities for economies of scale in production; the more significant they are, the more profitable the acquisition becomes);
- the degree of connection of a new business with existing ones in the company (the larger it is, the lower the barriers to entry);
- the rate of return on investment (here, the acquisition may be more profitable);
- the risk inherent in a particular entry model;
- factors related to the life cycle of the industry.

A new internal enterprise may be more acceptable under the following conditions:
- the industry is in the stages of origin or growth;
- entry barriers are low;
- the new SZH is closely connected with the existing business of the company;
- the company agrees to receive additional worries about return on investment and risk.

The acquisition will be more acceptable:
- when the industry is in the stage of maturity;
- high entry barriers;
- unconnectedness of the new business with existing SBAs (the company adheres to the strategy of unrelated diversification);
- the company does not want additional worries about the return on investment and the risk of new entrepreneurship.

However, the following disadvantages of this entry method should be noted:
- in addition to investment and risk insurance, a guarantee of sufficient profitability of the new business is required; - companies entering into such cooperation run the risk of losing priority in "know-how"; - partners must control each other, especially with different business philosophies, planning horizons, investment priorities, etc., otherwise conflicts are possible.

Exit Strategies

A company can have three strategies in this case:
- "undressing"; - "harvesting"; - liquidation.

"Strip" involves the sale of a business to another company or management from within the company. Easy to sell "evolving winners" or in some cases "question marks" and very hard "losers".

"Harvesting" includes controlled divestment to optimize the company's cash flow when the company exits the industry.

With a decline in cash flow, proceed to liquidation of SZH.

The impact of the "harvest" strategy on cash flows

Development (adjustment) of a corporate strategy based on the analysis of the SZH portfolio

The best variant of the SBA portfolio is its complete set of SBA with a high degree of attractiveness, taking into account the need to balance them. The final stage in the development (adjustment) of the action plan is to ensure actions to coordinate the relationship of those SBAs that constitute the attractive axis of competitive potential.

Possible ways of such coordination:
- allocation of related activities in the company's value chain (centralization of purchases, joint R&D, full or partial integration of production, integration of the dealer network and sales organization, etc.);
- coordinating the strategies of related SBAs in order to strengthen the firm's strengths in approaches to consumers, supply, distribution channels and the creation of a defensive or offensive front against competitors;
- formulation at the level of corporations of a single strategic plan of action in competition;
- organization of interaction between SBAs, creation of committees and project groups for the transfer of "know-how", advanced technology, experience between SBAs;
- diversification into new business to strengthen strategic relationships, win in the value chain of existing business;
- reduction of SZH, which do not correspond to the basic concept of strategic relationships and which are difficult to coordinate;
- motivation of SZH managers in order to encourage them to work together in the interests of realizing the strategic potential of the company.