What is portfolio analysis used for?
Portfolio models are used to illustrate and characterise strategic alternatives. They can:

• to present the actual situation as a result of the analysis phase of strategic planning
• to illustrate the strategic thrust
• to illustrate the change in market and competitive situations over time, and
• be used to analyse the required basic strategies.

Procedure for the application of portfolio analysis

• Definition and delimitation of strategic business areas. Whenever strategic business areas do not correspond to the organisation of the company, the definition and delimitation pose a considerable problem. Ultimately, the demarcation boils down to the fact that a clear separation and allocation towards the customer/market must be possible in order to be able to formulate independent, autonomous strategies.
• Designation of the most important competitor for the strategic business field
• Determination of own absolute and relative market share,
• Determination of the future average market growth (usually 5-year period) for the strategic business field,
• Determination of turnover, contribution margin, profit for the strategic business field,
• Classification of the strategic business area in the portfolio matrix based on the criteria of relative market share and market growth,
• Marking of the importance of the strategic business field for the company by the circle size (turnover, contribution margin, profit),
• Interpretation and evaluation, derivation of norm strategies from the positioning in the fields of the portfolio matrix. If necessary, conduct further analyses to specify alternative norm strategies.