Product Portfolios And Strategic Decision-Making

In old and traditional business studies,product portfolio management and decision-making are deemed as falling under the control of business strategy functions.The author of this thesis was eager to exploring this collective truth and develop a foundation by build theory based on a current and real-life business environment.The topics and concepts,corporate strategy,business strategy,and product portfolio management are building blocks for the process that has been explored in this thesis.The study makes a deep dive into the strategic decisionmaking hierarchies that relate to product portfolio management and further tries to understand what factors around and within a company's product portfolio that influence corporate strategy to be the decision-making function in in portfolio management decisions.The scope of the process had the author focus on the incremental question:What specific internal and external portfolio factors influence product portfolio decisions to move up from business units to corporate level?This established as the overall research question.If factors would be found,there would be legitimacy in further exploration because its existence would make a direct indication as to if the traditional theory in business literature and academic definitions hold water.To make initial theory,the sample and definition of the industry needed to be specific.A small sample of highly differentiated companies would reduce the ability to compare commonalities in surroundings and attributes.Hence,Electrolux and Elekta,two listed global manufacturing corporations with home markets in Sweden,were selected to be the studied subjects.The author studied the product portfolio strategy process at the companies by conducting a qualitative study with its method inspired by grounded theory.The qualitative approach was a conscious selection due the nature of the question,lack of previous exploration,and open-endedness in its questioning.It came clear early in the process that the author needed to make in depth studies of the sample to understand the dynamic of the decision-process.Due to a lack of previous literature on product portfolio decision-making and the authors attempt to build up on a clean slate,grounded theory came to be the inspiration for the method used.Grounded theory highlights an unbiased sample collection and promotes a creative analysis method that grows with the researcher.The foundation is that the grounded theory builds theory and as the researcher navigates the recorded data,theory takes shape with saturation.This structure was followed by the author and culminated in a coding process.The data gathering method came to be interviews,which was the main aspects that made the authors method deviate from traditional grounded theory.Individual sources that were selected came from both studied companies and hade varying positions within the company.The varying areas of expertise helped to address different aspects of the process and created nuance between divisions.In total the author interviewed eight professionals,four from each company.The interviews hade a semi-structured format with an interviewee guide as a base.Reliance on the interviewee guide diminished during the process as the author gradually developed a deeper understanding of the topic and was able to have a much more fluid conversation.What the analysis and its following results indicated was that there are some prominent product portfolio factors that do influence if strategic decisions are taken at business unit level or if they are escalated to higher levels,such as corporate level.The coding analysis formulated that the internal and external factors were accurate depictions of the two general factor categories.With that,they became the core concepts that the other factors branched off from.The external factors,that were found through the analysis were: stakeholders,ecosystems and regional similarities,regulatory influence,and market factors.Stakeholders influenced the process by the degree to which they are homogenous.If stakeholders are requesting similar things,considering demographics and other variables,decision-making become less dynamic and the company can centralize rule at a corporate level.Ecosystems and regional similarities influenced the decision-making process based on the degree of regionalization it demands from the product portfolio.If products can be the same in all regions the company can centralize decision-making and have a further degree of decisions-making at corporate level.Regulatory factors influenced decision-making levels through the company's degree of market and industry change.If a company is active in a market with a high degree of regulatory changes corporate management is more likely to be hands on in portfolio decisions.This is due to the substantial impact that regulatory factors have on company results,which in turn is highly dependent on the product portfolios adaptability.Market factors influenced the process by the degree to which changes and coming opportunities appear in the active market.What could be observed from the analysis was that big changes and opportunities in the market will generally draw corporate managements attention and cause them to make major shifts in the products portfolio.The factors that branched off the other core category,internal factors,were: organizational structure,portfolio management,individual factors,culture,and image.Organizational structure influences the decision-hierarchy based on the degree of centralization in its structure.If an organization has more centralization in its structure,than the decision-making in the product portfolio is likely to have frequent interference from corporate management.The portfolio management factor indicated that the dynamic of the strategic process influenced the way in which organizations handle portfolio decision-making.If there is a lack of channels that allow for transparency in portfolio management work corporate management cannot make decisions,which brings down their involvement.In addition,if the scope that the portfolio covers is relatively large,then less decision-making is kept in the portfolio and they are rather escalated to corporate level.The individual factors were impactful in cases were individuals are having differently aligned interests.In that case information-flow and strategic decisionlevels can be affected.This can cause more elevated decisions,or the opposite,depending on the individual and his/her rank.The culture factor has various affect depending on what it promotes.If the culture promotes hierarchal structures and draws control to higher levels,the portfolio work will be affected accordingly,and corporate managers will have more hands-on influence.Image is a question for products portfolio management when it involves adjustments to accompany an image change.In cases when image change is sought to be impactful for future company success than corporate management is inclined to be forceful in detailed portfolio questions.