An approach to corporate strategy in which top management views its product lines and business units as a series of investments from which it expects a profitable return is called ________

Correct option is C

Portfolio analysis is a strategic management approach where a firm’s products, services, business units, or strategic business areas are treated like a portfolio of investments. Top management evaluates each unit or product based on its market attractiveness, competitive position, and potential return, just as one would evaluate individual stocks in an investment portfolio.

The goal is to allocate resources effectively, ensuring high-performing units are supported and underperforming or non-strategic ones are restructured, divested, or phased out. Popular models used for portfolio analysis include:

• BCG Matrix (Boston Consulting Group Matrix) – classifies units as Stars, Cash Cows, Question Marks, or Dogs

• GE/McKinsey Matrix – evaluates business units based on industry attractiveness and business strength

Portfolio analysis helps companies manage diversification and risk, guiding strategic decision-making at the corporate level.

Information Booster:

• Portfolio analysis treats each business unit as an investment asset.

• It helps in identifying resource allocation priorities.

• Widely used in multi-divisional firms or conglomerates.

• Encourages divesting weak units and reinvesting in promising ones.

• Enhances understanding of business unit performance and synergy.

• Assists in balancing growth (Stars, Question Marks) and profitability (Cash Cows).

• Supports strategic planning by providing a visual summary of strategic positioning.

Additional Knowledge:

(a) Business Mix:
Refers to the combination of different products or services that a firm offers. It is a descriptive term, not a strategic evaluation tool. It doesn’t involve viewing units as investments. Hence, incorrect.

(b) Integrated Strategy:
Means combining various strategies (corporate, business, functional) into a coherent whole. It focuses on alignment and synergy, not individual investment assessment of business units.

(d) Scenario Analysis:
Involves developing and analyzing possible future scenarios (e.g., economic downturn, regulatory changes) to improve strategic preparedness. It’s a forecasting and risk analysis tool, not for evaluating business portfolios.