STRATPORT (Larreche and Srinivasan)

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Allocating a firm's financial resources across its Strategic Business Units. Explanation of STRATPORT of Larreche and Srinivasan. ('81)

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What is STRATPORT? Description

The STRATPORT model of Larreche and Srinivasan (1981, 1982), is an on-line computerized mathematical decision support model, that utilizes empirical and (managerial) judgment-based data. STRATPORT is an abbreviation of: "STRATegic PORTfolio planning". This system was designed to assist top managers and corporate planners in the evaluation and formulation of business portfolio strategies, and it represents both an operationalization and an extension of the business portfolio analysis mentioned at the bottom of this page.

It is a decision support system for the allocation of a firm's financial resources across its Strategic Business Units (portfolio analysis). This approach to decision support models the impact of general marketing expenditures on both market share and on the firm's cost structure. Given a specific portfolio strategy, the system can evaluate the profit and cash flow implications over time when that strategy is followed. Alternatively, the approach can determine the optimal allocation of marketing expenditures across Strategic Business Units in order to maximize net present value over a specified time horizon.


In the approach by the Boston Consulting Group (BCG Matrix), relative market share and the market growth are used to classify business units as Question Marks, Stars, Cash Cows, or Dogs.


In the GE Matrix approach, the business units are classified into nine groups according to company strength and industry attractiveness. The position of a given business unit on each of these dimensions is determined qualitatively from a number of market, competitive, environmental, and internal factors.


The approach by Royal Dutch Shell is somewhat similar although the two dimensions are called "company's competitive capabilities" and "prospects for sector profitability", and the set of factors and their integration into these composite dimensions are also different. The philosophy underlying these approaches is, however, similar. At a given point in time, each business unit has a specific role in the portfolio according to its short-term and long-term economic potential. This role determines the allocation of financial resources among elements of the portfolio. A minimum of maintenance investments will be made in a group of business units so that they generate a maximum cash flow in the short term.


STRATPORT Forum
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STRATPORT Restrictions and Limitations

The main restrictions in the structure of STRATPORT concern the specific forms selected for each function, the absence of cost and market inter...
Usage (application): Portfolio Analysis
 
 
 

Advantages of STRATPORT

The primary value of the STRATPORT model is that it provides a quantitative operationalization of business portfolio analysis. It facilitates t...
Usage (application): Portfolio Analysis
 
 

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Compare with: Brand Asset Valuator  |  BCG Matrix  |  GE / McKinsey MatrixADL Matrix  |  Core Competence  |  Reputation Quotient  |  Brand Personality Dimensions  |  Product Life Cycle  |  Bass Diffusion Model  |  Positioning


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