CHEEZ GENERAL PORTFOLIO MANAGEMENT FRAMEWORK

Through the investigation of the Mother Company, empirical findings were obtained with the intention of generalizing to a wider generic context. The authors used the logic of pattern matching, i.e. a mapping and comparison of the theoretical and the empirical patterns. The theoretical framework was tested against the crafted empirical framework of the Mother Company and the product area the Division (see figure 26). The idea was to find gaps in the theoretical pattern in relation to the empirical pattern with the aim of understanding the mechanisms impacting portfolio management.

 Cheez - General Portfolio Management Framework (6.2)

o Current Situation (6.2.1) o Desired Situation (6.2.2)

o Linkage Current and Desired Situation (6.2.3)

 Implications for the Mother company and the Division (6.3)

o Current Situation (6.3.1) o Desired Situation (6.3.2)

o Linkage Current and Desired Situation (6.3.3)

After a comparison of the two patterns, theoretical explanations as well as discrepancies were discussed, which in turn generated a research contribution. The study's purpose was to increase the understanding of the mechanisms impacting portfolio management in an increasingly complex competitive and corporate environment, why portfolio management theory was of great importance. The authors did not perceive the studied theoretical pattern to cover this area enough to fulfill the stated purpose. Thus, other complementing theories were added to the theoretical framework. To be able to work efficiently with portfolio management in today’s fast moving global business climate, the authors claim that it is of great importance to put everything into a context, taking external and internal market factors and strategy processes into account. As of today, the portfolio management theories do neither take any external or internal market factors nor important strategy processes into pragmatic consideration (Cooper, Edgett, Kleinschmidt, 1999; 2001; Rajegopal, 2013). It is stated in the current theories that the external and internal market factors are of great importance, but despite this fact they do not cover how to consider them, what factors to consider, or what is preventing the factors from being tackled (Cooper, Edgett, Kleinschmidt, 1999; 2001; Gorchels, 2003; 2012). This is where the content theories contribute to the final theoretical framework. Additionally, strategy processes theories are added to support the framework since strategic changes are dependent on soft mechanisms within and outside a company. Stating these processes, and how they impact the portfolio management, is also left out in current portfolio management theories (Cooper, Edgett, Kleinschmidt, 1999; 2001; Gorchels, 2003; 2012; Cantamessa, 2005).

The combination of portfolio management theories accompanied with content and strategy process theories laid the groundwork for the theoretical framework, and the studying of the Mother Company led to the findings visualized in the empirical framework. The utilized theories and the empirical findings were then generalized

The Mother Company’s Corporate Culture Low market focus

into a final generic portfolio management framework named Cheez (see figure 27). The Cheez framework takes an increasingly complex competitive and corporate environment into consideration, and is applicable on acquisition focused, capital and technology intensive industry companies operating within multinational B2B contexts, in line with the purpose and delimitations of the paper. The generic portfolio management framework is discussed below, step by step. Important to note is that the framework does not give pragmatic hands-on guidance on detailed level, since that is beyond the scope of the study. Instead, a broader perspective is applied, where factors impacting the portfolio management on both close and distant level are covered, such as corporate processes and internal and external market factors. Hence, the drawback with the Cheez framework is the comprehensive approach that omits pragmatism and detail level.

Organization & Management:

 Degree of centralization

 Degree of control

 Incentive structure

 Employee role definitions

 Resource allocation

 Communication structure

 Right competence on right place Current Portfolio Management Desired Portfolio Management Path Dependency

Corporate Culture

Figure 27. Cheez - Generic portfolio management framework showing the movement towards desired portfolio management (Authors’ figure).

6.2.1 Current Situation

Depending of the company’s situation and how developed the portfolio management is from an all-around perspective, the current portfolio management status looks different. Hence, the starting point of a potential portfolio management transformation is different from situation to situation.

6.2.2 Desired Situation

Like the current situation (6.2.1), the desired portfolio management situation looks different from company to company. Despite this, the desired situation is in all cases represented as the highest level of optimized and customized portfolio management. To be able to tackle today’s emerging importance of multidimensional portfolio management, and move from the current to the desired situation, awareness of the complexity is a must, regardless of company or situation. Further, a clear connection between the company’s corporate strategy and portfolio management is demanded to succeed in the best way, and all processes should be permeated by this fact. A company’s management of product portfolios has to, in addition to internal processes, consider internal and external market factors to be successful. The whole spectrum of relevant content theories needs to be covered. For instance, to fulfill this, a PESTLE analysis and a Porter’s five forces analysis should be conducted and processed. Which external and important market factors that is most important, and to what extent they impact the portfolio management, differ from company to company, depending on the specific prevailing situation. A comprehensive collection of PESTLE factors and market forces can be seen in Appendix 2. After choosing the company-specific relevant factors, a mapping of them and the future strategic objectives has to be done, together with a thorough analysis of how the company currently tackles the factors one by one and interdependently. Important to note is that this is a dynamic process, which implies that the current situation must be revised continuously. The important internal and external market factors of today may not be the most relevant factors of tomorrow. Further, an analysis of what soft or hard organizational and managerial factors that prevent and/or facilitate the tackling of the vital factors is crucial to conduct.

In order to manage a successful portfolio management and be able to make the desired change, it is further vital for the company to understand and utilize its strategic resources and capabilities, in line with the resource-based view, in depth. Possessing self-awareness and insight about the background and origin of the strategic resource and capabilities, is the key for a company to value maximize the utilization of them in relation to the portfolio management. Another element to consider in order achieving portfolio management excellence, is to be aware of how the company positions itself in the market, something that Porter’s generic strategy theory treats. The market position should be aligned with the company’s external

and internal market conditions, strategic resources and capabilities, and overall vision and strategy.

6.2.3 Linkage Current and Desired Situation

A company cannot simply move from the current portfolio management situation to the desired in a jiffy, since the impacting surrounding is so complex and several barriers exist. There are deeply rooted organizational and managerial processes within the corporate culture on the way to improve the portfolio management, which makes it a complicated matter. Hence, the authors argue that it is essential to be aware of what the company’s current corporate culture is characterized by, how it is manifested within the company or not, and how it impacts all cornerstones within the company, and hence the portfolio management. The corporate culture of an acquisition focused, capital and technology intensive industry company operating within a multinational B2B context, is permeated of, and dependent on, following process attributes: the degrees of centralization and control, the incentive and communication structures, the employer role definitions, the resource allocation, and right competences on the right time and place. These attributes are all vital processes impacting the portfolio management to consider. By adjusting the attribute processes on different dimensions and levels, the best suited situational mix contributes to creating an optimized portfolio management applicable in these specific companies. Further, there are hidden barriers to tackle in the movement towards improved product management, impacting all of the mentioned processes. Path dependency is such a barrier, which specifically is believed to impact the portfolio management in the kind of companies addressed in the purpose.

The discrepancies between the authors’ portfolio management framework and the existing portfolio management theories can be detected within the “linkage between the current and desired situation”, presented above (6.2.3) and visualized in the cultural box influenced by path dependency in figure 28. The states of the current and desired situations are as mentioned before company specific, and are therefore constant or discretionary in both cases. Current portfolio management theories all treat important factors required for a desired management of product portfolios, and why a company should work with it at all. However, the progress from current to desired portfolio management is not treated in depth, why it is hard for a company to know what to tackle, and how to tackle it, on the journey of progress. A company’s corporate culture and organizational and managerial structure hide a lot of barriers and driving forces with different layers of complexity. All these factors are impacting a company’s journey from current to desired portfolio management, which the author’s framework states.