Portfolio Strategy

Once the managers of a large, diversified organization decide on a grand strategy, they develop a portfolio strategy.

A portfolio strategy determines the mix of business units and product lines that will provide maximum competitive advantage.

Developing a portfolio begins by identifying strategic business units (SBU’s), autonomous businesses with their own identities but operating within the framework of one organization.

The SBU framework was invented by General Electric in the 1970’s. it was used to provide a framework for managers for directing GE diverse businesses. An SBU has its own product lines, markets and competitors.

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