Corporate Portfolio Planning: A Framework for Strategic Business Unit Elimination

Abstract

The portfolio analysis with its planning matrices as the most useful tools is still widely used in corporate strategy's formulation. A stream of literature indicates precisely when a Strategic Business Unit (SBU) should be eliminated, yet does not show how to do so. This paper aims to develop a theory-based model for SBU elimination. A framework was developed through an extensive literature review of portfolio analysis in which each standardized matrix structure, assumptions, strengths-weaknesses and strategic applications were thoroughly outlined. This framework includes four dimensions: cost, revenue, structure of capital and strategic dimension. This proposed framework would be considered as a strategic tool for both professionals and practitioners when time comes to take a decision about SBU elimination.Having a business portfolio may prove to be a dreadful experience if not handled properly. Thus, this study will surely help the business community in the manifestation of structural business planning, analysis and management for the ultimate business success.