Pitfalls in using portfolio techniques—Assessing risk and potential

Since share/growth portfolio techniques are often the main tool for strategy formulation in multiproduct corporations, reflection on the possibilities and the limitations in applying such techniques merits attention. It is demonstrated that these techniques cannot distinguish between sometimes subtle but nevertheless strategically important situational characteristics, and therefore they can lead to recommendations that will exacerbate the real problems. Thus, share/growth techniques are at best incomplete for planning, since they are too limited. They should be placed in a broader context using a financial-strategic method. In this article such a method for developing proper directional guidance is dealt with.