A. PROCESSAnalyzing the Current Business PortfolioWe have discussed in last Lesson that in order to analyze the current business portfolio, thecompany must conduct portfolio analysis (a tool by which management identifies and evaluatesthe various businesses that make up the company). Two steps are important in this analysis:1). The first step is to identify the key businesses (SBUs). The strategic business unit(SBU) is a unit of the company that has a separate mission and objectives and which can beplanned independently from other company businesses.2). The SBU can be a company division, a product line within a division, or even a singleproduct or brand.3). The second step is to assess the attractiveness of its various SBUs and decide how muchsupport each deserves.d. The best-known portfolio planning method is the Boston Consulting Group (BCG) matrix:1). Using the BCG approach, where a company classifies all its SBUs according to thegrowth-share matrix.a). The vertical axis, market growth rate, provides a measure of market attractiveness.b). The horizontal axis, relative market share, serves as a measure of company strengthin the market.2). Using the matrix, four types of SBUs can be identified (Discussed in detail in lastLesson)a). Starsb). Cash Cowsc). Question Marksd). DogsOnce it has classified its SBUs, a company must determine what role each will play in the future.The four strategies that can be pursued for each SBU are:1). The company can invest more in the business unit in order to build its share.2). The company can invest enough just to hold at the current level.3). The company can harvest the SBU.4). The company can divest the SBU.As time passes, SBUs change their positions in the growth-share matrix. Each has its own lifecycle. The growth-share matrix has done much to help strategic planning study; however, there areproblems and limitations with the method.1). They can be difficult, time-consuming, and costly to implement.2). Management may find it difficult to define SBUs and measure market share and growth.