Disadvantages
• Portfolio analysis relies heavily on estimates of future patterns. Even a slight change in a forecast can significantly impact the results of the analysis.
• Excessively short-term use of portfolio analysis can lead to frequent and expensive switches of company resources.
• Acquiring or divesting businesses can be complex and time-consuming. One should take these costs into account before acting on marginal recommendations on portfolio changes.
• Most businesses are actually “average” but should still be kept. For example, Apple’s laptop business is not growing and the market for laptops isn’t growing, but it is still important to keep it in the firm.
• Market share is not the same as profitability: firms with low market share can be quite profitable (e.g. mail order catalogs).
• There may be better places to put your money than in your surplus cash cows (e.g. the open market).
• Portfolio analysis techniques do not generally consider synergies across businesses or products.