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.
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