Portfolio Planning: uses and limits

Abstract

The diversity of large industrial — and mostly multinational — corporations can be at once their greatest source of competitive advantage and the wellspring of their most fundamental difficulties. Diversity provides an opportunity for these companies to use cash flow generated by their mature basic businesses to gain new leadership positions. Internally, however, this same diversity also creates a managerial gap between the corporate level, which has the power to commit resources but often only a superficial knowledge of each business, and the business level, where managers have the substantive knowledge required to make resource allocation decisions but lack the ‘big corporate picture’.