Company value-oriented portfolio analysis

Company value-oriented portfolio view is the interpretation of the market share / market growth portfolio (portfolio analysis) (created by the Boston Consulting Group with the intention of an inherent financial equalization between the strategic business units) in the context of value-oriented controlling. Ideally, the free cash flow positions explained in more detail in the figure result for the four individual quadrants, which could also be confirmed by empirical studies such as by Hambrick / MacMillan / Day.
The balance of a company portfolio can be assessed in two ways on the basis of the financial equalization intended by the portfolio:

1) Cross-sectional financial analysis: Cash Consumers (Free Cash Flow <0), like the new generation products, can be used by cash generators (Free Cash Flow> 0), such as the dairy cows and partly the star products, are financed.

2) Financial longitudinal analysis: Each product should finance itself over its life cycle by eliminating initial cash deficits (free cash flow <0) in the introductory phase (young products) through cash surpluses (free cash flow>) 0) in the maturity phase and partially in the growth phase (star products).

The financial perspective made possible by the Boston I portfolio creates links to value-based controlling:

Due to the positioning of the business units in the portfolio, the Boston I portfolio allows indications of the current free cash flow situation and thus the so-called period result for the individual strategic business units as well as for the company as a whole.

In addition, assuming ideal-typical developments, forecasts of the future free cash flow situation and consequently future successes are possible if the implementation of the standard strategies is assumed.

Taking into account the Shareholder value-View (shareholder value concept) makes it clear which financial background the standard strategies have.

The current balance of the company portfolio can be assessed on the basis of the first two points, as the available free cash flow should be invested in newcomer products. In terms of future provision, the portfolio should neither have too many cash consumers (young and discontinued products) nor too many cash producers (dairy cows and star products).

If the time dimension is also taken into account, the balance of the company portfolio can also be roughly estimated for the future. If a company currently has a focus in the cash cow area, for example, the current free cash flow (profit for the period) will be high, but the free cash flow to be generated in the future (future profit) could be below average, as there are currently young or star products and thus future cash cows are missing. As a result, shareholder value, which is largely determined by future value contributions, cannot be satisfactory either.

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