Guided by the company’s mission statement and objectives, management must plan its business portfolio - the collection of businesses and products that make up the company.
The best business portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment.
Business portfolio planning involves two steps.
First, the company must analyse its current business portfolio and decide which businesses should receive more, less, or no investment.
Second, it must shape the future portfolio by developing strategies for growth and downsizing.