Taking a more careful look at the business from these angles will help a company determine the specific role that each business should play in the overall portfolio—and whether it should remain in the portfolio at all.
The outcome of the Portfolio X-Ray is a differentiated view of the roles that various businesses should play in the corporate portfolio. Each unit has a unique starting position and specific goals, and it should be treated individually.
Instead of making the common mistake of allocating capital according to each business’s size, set investment budgets for each business based on its role in the overall portfolio. Should the business unit be a priority for growth or managed for returns? Or is it a candidate for divestiture?
Establishing specific roles for each of the businesses in the portfolio is a critical step in maximizing the value the company as a whole can create.
