Optimizing marketing strategies is crucial in today’s market. Based on the business plan and goals, management must identify its business portfolio design as well.
A strong business portfolio best suits the company’s strengths and disadvantages. You can do many things to expand your business portfolio. Some take more time or risk but there are tried-and-true methods to build one’s capital.
Many investors would like to see their investments expand over time. Each investor’s portfolio needs will rely upon different variables such as risk exposure, time period, and investment level, to name a few.
A company first needs to analyze its existing business portfolio to determine its position. Next, the corporation must determine which companies are profitable. It must make long-term choices on portfolio growth and downsizing.
Red Bull is a clear example of how a company portfolio can be skillfully handled. It sponsors extreme sporting competitions and competitors that are often overshadowed by big brands but popular with their consumer base or target market.
Framework for Business Portfolio Design
A portfolio or business model assessment pays more attention to the model’s construction and the possible sensitivity of the outcomes to the dimensions and measurements in place.
For instance, check out the steps needed to analyze a product portfolio:
- Determining what kinds of links bind data sets.
- Identifying single-variable and composite dimensions.
- Realizing the importance of measurements.
- Dimensions are most commonly used to create a matrix.
- Focusing on a particular product or company portfolio dimension.
- Determine which product and business would face the most and least environmental factors, and determine their place in a competitive landscape.
- Choosing a strategy for each product and determining which resources are most successful in supporting those choices.
Product-Market Expansion Strategies for Business Portfolio Planning
Restructure the portfolio to generate growth and capitalize on growth opportunities. Market growth is an accumulation of capital, where the investment price or value increases over time.
In the most general sense, any increase in account value can be considered growth. The interest on the principal of a savings account can be a growth factor.
Growth takes place over both the short and long term, but short-term growth carries a much higher degree of risk. Here are seven strategies for growth that companies can try to expand their business portfolio:
1. Market Penetration
Companies can grow by optimizing existing market penetration. It means that the company takes the same product that already exists and improves it.
For instance, a car maker company could take its existing product, which is already on the market, and make the product better by adding new features, colours, and the like.
The company can also use discounts and promotions to increase sales. Market penetration means getting new customers to buy the same product repeatedly while keeping the pricing consistent.
2. Market Development
A business growth approach should be selected for current yet emerging markets. Through this, it will extend its already established goods to new, potentially lucrative markets.
It can simply be done by finding and creating new market segments for existing goods. To return to the previous example, the carmaker could use its current model X to reach a new market segment, like younger consumers, different locations, and the like.
3. Market Timing
Those who can time the markets correctly and regularly buy low and sell high can beat the buy and hold strategy. This strategy has a lot of promise, but it requires you to forecast the markets accurately.
Some people claim that market timing is not for everyone because most people don’t regularly watch the market. To these people, it may be wise to disregard market timing and concentrate on investment strategies that will last for long periods of time instead of short-term investing.
4. Product Development
Product Development strategy can also be utilized in offering new products to existing markets. The company’s growth would then be achieved by offering modified or new products to current market segments.
The carmaker could produce a newer version for their product market segment, for the older generations of their target market. On the other hand, the company can also release newer models for a younger clientele. It allows the opportunity to incorporate this newer model into their portfolio.
5. Buy and Hold
Buy and hold is a passive investing strategy in which an investor buys and holds shares for a long time regardless of market fluctuations.
An investor who buys and retains stocks does not care about short-term market fluctuations and technical indicators. Investing is commonly considered to be very successful for long-term returns.
Buying and keeping investments is one of the easiest ways for effective business growth. Those investors who simply purchase stocks or other growth investments and keep them in their portfolios with little oversight are easily satisfied by the results because they don’t have to worry about short-term market fluctuations and technical indicators.
6. Dollar-Cost Averaging (DCA)
Dollar-cost average (DCA) is an investment strategy in which the investor splits the total amount to be invested by periodic purchases of the target asset to reduce the effect of the uncertainty on the overall purchase.
Purchases are made irrespective of the price of the asset and at regular intervals. In effect, this approach eliminates much of the detailed work of trying to time the market to buy equities at the best rates. The DCA is also known as the constant dollar strategy.
DCA is a traditional investment strategy most commonly used for mutual funds. An investor will assign a specific dollar sum used to buy shares in one or more particular funds regularly.
Since the costs of the fund will vary from one investment period to the next, the investor can save money because a greater number of shares will be purchased when the fund has a lower price, and a smaller number of shares will be purchased when the price is higher.
DCA thus helps the investor to benefit more from the fund over time. The true value of DCA is that investors don’t need to think about buying at the top of the market or having to time their purchases carefully.
7. Diversification
Finally, a diversification strategy can also help companies achieve business growth. It is true of emerging technologies and markets. The company therefore starts or purchases companies outside its current offers and markets.
From our example, the carmaker may decide to enter a new market by purchasing a clothing brand. It will be a new market for the company and a completely different product range, but it increases the breadth of its market reach, and eventually, the company’s business portfolio.
The brand of clothes may be used to support and strengthen the identity of the car brand. Diversification can take two forms: related and unrelated SBUs. If a vehicle manufacturer adds motorcycles to its portfolio, it is easy to see them as a link between its existing offerings.
7 Top Business Portfolio Design and Growth Strategies
These are just some of the strategies for business portfolio development and growth:
- Market penetration
- Market development
- Market timing
- Product development
- Buy and hold
- Dollar-Cost Averaging (DCA)
- Diversification
There are more business portfolio design strategies for both individuals and businesses utilizing more advanced strategies and alternative investments.
For instance, others employ derivatives and other instruments to manage the amount of risk taken while amplifying possible gains. Improving modern businesses is crucial to keep your company’s edge in an increasingly competitive market in this new normal economy.
Mayleen Meñez worked for seven years in TV and Radio production, and also as a Graphic Artist/Editor. Finding her true passion, she devoted 15 years to NGO and community development work, where she experienced being a coordinator and teacher, traveling both in the Philippines and countries in Asia. She homeschools her three kids and reinvents Filipino dishes in her spare time. Writing has always been a hobby and pursuit, and she recently added content writing with Softvire Australia and Softvire New Zealand up her sleeve, while preparing for her next adventure in the nations.
