Product/Business Portfolio management: Logic, structural, and managerial implications

Shabalala, S. A icle P oduc /Business Po olio managemen : Logic, s uc u al, and manage ial implica ions Sou h A ican Jou nal o Business Managemen P o ided in Coope a ion wi h: Uni e si y o S ellenbosch Business School (USB), Bell ille, Sou h A ica Sugges ed Ci a ion: Shabalala, S. (1985) : P oduc /Business Po olio managemen : Logic, s uc u al, and manage ial implica ions, Sou h A ican Jou nal o Business Managemen , ISSN 2078-5976, A ican Online Scien i ic In o ma ion Sys ems (AOSIS), Cape Town, Vol. 16, Iss. 1, pp. 18-26, h ps://doi.o g/10.4102/sajbm. 16i1.1066 This Ve sion is a ailable a : h ps://hdl.handle.ne /10419/217883 S anda d-Nu zungsbedingungen: Die Dokumen e au EconS o dü en zu eigenen wissenscha lichen Zwecken und zum P i a geb auch gespeiche und kopie we den. Sie dü en die Dokumen e nich ü ö en liche ode komme zielle Zwecke e iel äl igen, ö en lich auss ellen, ö en lich zugänglich machen, e eiben ode ande wei ig nu zen. 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Shabalala Depa men o Business S udies, Uni e si y o Zimbabwe, Ha a e, Zimbabwe The objec i e and scope o his a icle a e o discuss he logic o P oducUBusiness Po olio managemen and o demons a e how he expec ed op imal esul s o such managemen a e unde mined, i no comple ely unde mined by ac o s which a e quin essen ial o o ganiza ion ci cum- s ances. These ac o s include, among o he hings, o ganiza ional s uc u al a ibu es (di e en ia ion, in eg a ion sys ems, powe dis ibu ion, uni s in e - dependences e c.), in o ma ion a ailabili y, pe sonal alues o manage s, ewa d sys ems, e c. In discussing he issues men ioned abo e he sequence will be as ollows: The o e all look a he basic concep o P oduc /Business Po olio s a egic managemen ; he gene al limi a ions o he no ma i e- a ional assump ions o S a egic Business Uni s (SBUs) Po olio managemen ; he speci ic a en ion o be paid o indi idual o ganiza ional and manage ial ac o s as hey a ec s a egic managemen in di e si ied companies; and he implica ions o he abo e issues o op managemen o business ins i u ions. S. A . J. Bus. Mgm . 1985, 16: 18- 26 Die doel en om ang an hie die a ikel is 'n besp eking an P oduk-/Besigheidspo oliobes uu en om aan e oon hoe e wag e op imale esul a e onde myn wo d deu ak o e wa i o ganisasie-oms andighede an ke nbelang is. Hie die ak o e slui onde ande e o ganisasies uk uu - eienskappe (di e ensiasie, ge"in eg ee de sis eme, mags- e sp eiding, in e a hanklikheid an eenhede, ens.), beskik- baa heid an inlig ing, pe soonlike waa des an bes uu de s, e goedings elsels, ens., in. Die besp eking an hie die elemen e wo d op olgend aangebied: Ee s ens 'n oo hoo se benade ing o die basiese konsep e an die s a egiese bes uu an p oduk-/besigheidspo olios; die algemene bepe king op die no ma iewe- asionele oo e onde s ellings in e band me s a egiese besigheidseenhede-po olio- bes uu , olg daa na. Laas ens wo d spesi ieke aandag gewy aan indi iduele o ganisasie- en bes uu s ak o e soos di s a egiese bes uu in gedi e si isee de maa skappye be"in loed en die implikasies hie an i opbes uu . S.-A . Tydsk . Bed y sl. 1985, 16: 18- 26 s. Sbabalala Depa men o Business S udies, Uni e si y o Zimbabwe, Box MP 167, M . Pleasan , Ha a e, Zimbabwe Accep ed July 1984 The basic concep o P oduc /Business Po olio managemen The necessi y o conduc p oduc o business po olio analysis in s a egic co po a e planning, has been mo i a ed by he ealiza ion o mul i-di isional co po a ions ha i is mo e impo an o op imize he o e all co po a e ea nings han jus ea nings o di isions o businesses ope a ing as indi idual elemen s o he co po a e 'oc opus'. Mul i-di isional o mul i-p oduc s co po a ions ha e g own in size mainly ia ei he in e nal g ow h o g ow h h ough me ge s and acquisi ions. To manage mul i-di isional, mul i- business, o mul i-p oduc s co po a ions decen alized o ganiza ion s uc u es and decision-making a e equi ed. P incipally, inancially s ong co po a ions, usually because o hei ma ke sha es, expe ience, and scale e ec s, ha e conside ed i p uden o di e si y hei business ope a ions om hei ea lies bases o wi hs and h ea s, and o seize oppo uni ies p o ided by compe i ion, echnological changes, changes in demand, ma ke cha ac e is ics, e c. Basically he e a e wo ypes o kinds o co po a e di e si ica ion, namely concen ic and conglome a e. The o me is also desc ibed as ela ed di e si ica ion because he na u e o a ious lines o businesses a e closely ela ed and usually keyed o common echnology, cus ome usage, dis ibu ion, me hods o ope a ion, manage ial know-how, e c. On he o he hand, conglome a e di e si ica ion is 'un ela ed o pu e di e si i- ca ion', whe eby he business elemen s ha e no ue s a egic i among hemsel es (Thompson & S ickland, 1980). In Zim- babwe, co po a ions like Anglo-Ame ican, Del a Co po a ion, Lon ho, and TA Holdings L d ha e ollowed conglome a e di e si ica ion. Phillips Elec ical Company and Hunyani Holdings ha e basically ollowed concen ic di e si ica ion. The business acqui ed when co po a ions ollow conglo- me a e di e si ica ion s a egies a e usually expec ed o mee ce ain minimum s anda ds o p o i abili y, g ow h a e, manage ial expe ise, e c. The ac o s ha usually mo i a e co po a ions o pu sue di e si ica ion s a egies a e nume ous, bu he ollowing a e impo an : (i) A desi e o s ike a ma ch be ween a cash- ich, oppo uni y-poo company and an oppo uni y- ich, cash-poo i m. (ii) To en e p oduc /ma ke a eas wi h coun e seasonal o coun e cyclical sales pa e n so as o smoo hen sales pa e ns and p o i s. (iii) To me ge an oppo uni y-poo , skill- ich company wi h an oppo uni y- ich, skill-poo company. (i ) To s ike a ma iage be ween a highly le e aged i m and S. A . J. Bus. Mgm . 1985, 16(1) a deb - ee i m so as o balance he capi al s uc u e o he o me and inc ease i s bo owing capaci y. ( ) To mee he powe agg andizmen needs o some mem- be s o op managemen . ( i) To exploi ma ke oppo uni ies, using he company's dis inc i e compe ence in such a eas as echnology, ma ke ing, aw ma e ials, human esou ces skills, e c. (Thompson and S ickland, 1980). Al hough i is no he pu pose o his a icle o discuss he p os and cons o conglome a e and concen ic di e si ica ion s a egies, i can be s a ed, in passing, ha i a co po a ion wan s o g ow om wha i can do be e and o main ain i s dis inc i e compe ence, a concen ic di e si ica ion s a egy has mo e o o e han a conglome a e one. This should no be aken o mean ha he e can be no bene i s acc uing o a co po a ion pu suing a conglome a e di e si ica ion s a egy, such as imp o ed sales, p o i s, and g ow h owing o en e ing businesses wi h be e economic po en ial han he exis ing co po a e base business(es). The s abiliza ion o sales, p o i s e c. is also a goal wo h pu suing. The SBU s a e ic planning logic The po olio planning app oach ep esen s an a emp o achie e in eg a ed planning whe e he co po a ion is composed o sub-uni s, some imes e e ed o as s a egic business uni s (SBUs). The unde lying objec i e is o p e en sub-uni s om op imizing hei indi idual in e es s which may be sub-op imal as a as he whole di e si ied co po a ion is conce ned. The SBUs concep o planning ep esen s a b eak om a- di ional planning as based on he p inciples ha : A di e si ied co po a ion should be managed as a 'po olio' o businesses o pu poses o achie ing he o e all co po a e s a egy. Each business uni , which should be educeable o a uni se ing a clea ly de ined p oduc -ma ke segmen , should pu sue a clea ly de ined s a egy based on i s dis inc i e compe ence in he ma ke segmen i is se ing, and his s a egy should con ibu e owa ds he achie emen o he o e all co po a e s a egy. 'The o al po olio o business should be managed by alloca ing capi al and manage ial esou ces o se e he i m as a whole - o achie e balanced g ow h in sales, ea nings, and asse mix a an accep able and con olled le el o isk. In essence, he po olio should be designed and managed o achie e he o e all co po a e s a egy' (Hall, 1978). In discussing he p ocess and s uc u e o SBU planning he Ho e and Schendel (1978) app oach is going o be ollowed. Hie a chies o s a egy In mul i-di isional o mul i-business co po a ion, s a egic planning akes place a h ee le els, namely co po a e, business, and unc ional le els. Ho e and Schendel (1978) iden i y ou componen s o any o ganiza ion s a egy, a ound which he h ee le els o s a egy can be cha ac e ized. These componen s a e: (i) Scope - he ex en o he o ganiza ion's p esen and planned in e ac ions wi h i s en i onmen . This is he o ganiza ion's mission o domain choice, which is inally ep esen ed by i s p oduc /ma ke choice. (ii) Resou ces De elopmen - his has o do wi h he le el and pa e ns o he o ganiza ion's pas and p esen esou ce and skill deploymen s and how hese help he o ganiza ions o achie e i s goals. (iii) Compe i i e ad an ages - he o ganiza ion's dis inc i e compe ence which comes abou owing o i s unique posi ions is-a- is i s compe i o s. The o ganiza ion o 19 company achie e i s compe i i e posi ion as a esul o i s scope decisions and i s pa e n o esou ces de elop- men and deploymen . (i ) Syne gy - his is he join o assembly e ec s ha a e sough om he o ganiza ion's esou ce deploymen and/ o scope decisions. Co po a e s a egy A co po a e le el he scope componen o an o ganiza ion s a egy is c i ically impo an . The ype o business(es) he company would like o be in is he name o he game a his le el. The nex mos impo an componen has o do wi h esou ce deploymen among p oduc s/businesses. Compe i i e ad an age and syne gy a e impo an o ela ed p oduc s o i ms, bu less so o he conglome a es. Wi h conglome a es he syne gy is usually hough o in e ms o how he di e en i ms, p oduc s, e c. ein o ce each o he in sha ing co po a e s a , inancial esou ces, and op managemen skills. Co po a e manage s usually p esen hei s a egic s a e- men s in he o m o inancial and non- inancial e ms, social and e hical obliga ions o he co po a ion, and in he speci ica ion o he cu en se o majo plans ha a e o be pu sued (Vancil, 1976). Among o he hings, co po a e manage s y o achie e balanced p o i payo and business isk, easibili y and consis ency o and among di e en business/p oduc plans, and he speci ica ion o asks, esponsibili ies and ime ables o s a egic planning cycles co po a e-wide (Bales, 1977). In using a po olio app oach o s a egic planning, ce ain common s eps a e ollowed. These a e: (i) The es ablishmen o iden i ica ion o s a egic business uni s. This in ol es he p ocess o agg ega ion and dis- agg ega ion o co po a e ac i i ies. The essence o his p ocess is o choose a le el o agg ega ion ' ha is meaning ul s a egically, i.e., a le el a which plans a e d awn up and implemen ed, and a which s a egic decisions can be made ela i ely independen ly o s a egic decisions o o he uni s.' (Abell & Hammond, 1979). (ii) The de e mina ion o business ac o s which a e impo an bo h in assessing he cu en pe o mance o a p oduc /business planning uni and he p ojec ion o i s u u e pe o mance unde , say, no change in s a egy, agg essi e s a egy, e c. The Bos on Consul ing G oup (BCG) use ela i e ma ke sha e, ma ke g ow h a e, and cash e enue low. The BCG app oach uses a ou -squa e g id p oduc /business po olio ma ix. Each co po a- ion's p oduc /business is plo ed in he ma ix acco ding o i s pe cen age g ow h a e in sales and i s ela i e ma ke sha e posi ion. The size o each ci cle in he ma ix is p opo ional o he sales e enue gene a ed by each p oduc /business. Gene al Elec ic has de eloped a mo e de ailed nine-cell po olio ma ix based on long- e m p oduc -ma ke a ac i eness and business s eng h/ com- pe i i e posi ion. P oduc -ma ke a ac i eness is aken as a composi e p ojec ion o ma ke size, ma ke g ow h a e, compe i i e s uc u e, p o i abili y, echnological and ~ocial impac s, e c. On he o he hand, business s eng h o compe i i e posi ion is aken o be a unc ion o ma ke size and g ow h a e, ma ke sha e, p o i abili y, ma gins, echnology posi ion, skills, image, calib e o managemen , e c. (Hall, 1978). Ho e sugges s a i een- cell ma ix in which businesses a e plo ed in e ms o hei compe i i e posi ion and hei s age o p oduc / ma ke e olu ion. (iii) Each s a egic planning uni is e alua ed in e ms o he 20 De e minan In es men in ensi y E ec o Impac (a) As in es men in ensi y ises ROI declines. Ma ke sha e Ma ke g ow h a e Li e cycle s a e Ma ke ing expense/sales (b) La ge in es men and high ma ke ing in- ensi y equals poo ROI. (c) Capaci y u iliza ion is i al when ixed capi al in ensi y is high. (d) High capi al in ensi y and small ma ke sha e equals disas e . (a) ROI is closely ela ed o ela i e ma ke sha e. (b) Ma ke sha e is mos p o i able in e i- cally in eg a ed indus ies. (c) High R & D spending dep esses ROI when ma ke sha e is weak. (d) Capaci y u iliza ion is mos impo an o low-sha e business. (e) Hea y ma ke ing dep esses ROI o low- sha e business. ( ) Ma ke sha e and quali y a e pa ial sub- s i u es o each o he . (a) A apid a e o new p oduc in oduc ion in as -g owing ma ke s dep esses ROI. (b) R & Dis mos p o i able in ma u e, slow- g ow h ma ke s. A na ow p oduc line, in ea ly o middle s age o he li e cycle, is less p o i able han a la e s age. (a) High R & D plus high ma ke ing de- p esses ROI. (b) High ma ke ing expendi u es dep esses ROI especially when quali y is low. F'agu e 1 De e minan s and impac s on ROI (Abell & Hammond, 1979). De e minan Rela i e ma ke sha e In es men in ensi y E ec o Impac (a) High ela i e sha e imp o es cash now; high g ow h dec eases i . (b) High sha e and low in es men in ensi- y p oduce cash. Low sha e and high in- es men in ensi y esul in cash d ain. (c) High ela i e sha e p oduces cash -es- pecially when ma ke ing in ensi y is low. (a) Low o medium g ow h coupled wi h low in es men in ensi y p oduces cash; High g ow h coupled wi h high in es - men in ensi y is a cash d ain. (b) Ha es ing sha e when in es men in en- si y is low p oduces cash; building sha e when in es men in ensi y is high is a cash d ain. (c) In es men plus ma ke ing in ensi y esul s in cash d ain. (d) Few new p oduc in oduc ions coupled wi h low in es men in ensi y p oduces cash. F'agu e 2 De e minan o cash low (Abell & Hammond, 1979). business ac o s indica ed in (ii) abo e. Figu es l and 2 show ac o s which ha e been ound by P o i Impac o Ma ke ing S a egy (PIMS) in U.S., o be impo an in in luencing he le el o e u n on in es men (ROI) and cash lows espec i ely. (i ) Each s a egic planning uni is classi ied in acco dance wi h i s posi ion when ea ed agains he business ac o s indica ed. In he BCG po olio app oach he ollowing classi ica ion is used: (a) 'Dog' o 'Cash ap'. This ep esen a s a egic planning uni wi h low ma ke sha e in a low g ow h ma ke . (b) 'Cash cow' o 'Bond'. Any SBU in his ca ego y has a la ge ma ke sha e in low g ow h a e ma ke . S.-.· l . l d,~ . lkd yhl. 19X5, 16(1) (c) 'Ques ion ma ks' o 'p oblem child en'. Any SBU in his ca ego y is in a high g ow h a e ma ke bu enjoys a low sha e o he ma ke . (d) 'S a s' o 'Sa ings accoun s'. SBU in his ca ego y ha e high ma ke sha e in high g ow h a e ma ke s. ( ) The chosen business ac o s and he classi ica ion o SBUs in o di e en ca ego ies b ing abou ce ain implied o sugges ed s a egies ha should be applied o each plan- ning uni . The usually implied o ecommendable s a egic handling o po olio SBU elemen s a e as ollows: (a) 'Dogs' and 'cash cows' a e managed o sho - e m cash low. In he long un, 'dogs' a e di es ed o elimina ed, while 'cash cows' ul ima ely become 'dogs' as hei compe i i,e posi ion declines. 'Cash cows' should make cash a ailable o he 'p oblem child en' and 's a s'. (b) 'Ques ion ma ks' mus ei he ge in o he 's a ' ca ego y o ge ou o he po olio. (c) 'S a s' a e sho un cash consume s and a e managed o long- e m posi ion. In he long un, as hei segmen a ac i eness o g ow h a e ul ima ely declines, hey will become 'cash cows' o suppo he nex ound 's a s' (Hall, 1978). Business le el s a egies S a egy a his le el is mos ly ocussed on how o compe e in a pa icula indus y o p oduc /ma ke segmen . This means ha dis inc i e compe ences and compe i i e ad an ages a e usually mos impo an a his le el. Syne gy is sough h ough he in eg a ion o di e en unc ional-a ea ac i i ies wi hin an indi idual business. Policy/s a egic decisions include p oduc (s) line, ma ke de elopmen , dis ibu ion, esea ch and de elopmen , human esou ces, majo manu ac u ing sys em design, inance u iliza ion, e c. Resou ces ha e o be deployed among di e en unc ional a eas. The s a egic managemen p ocess a his le el in ol es: Cu en assessmen o business s a us; gene a ing and e alua ing al e na i e s a egies; and de eloping an ac ion p og amme o chosen s a egy (Bales, 1977). P o i economic analysis The physical gene a ion o p oduc cos s and he de e - mina ion o whe e economic le e age lies need o be ho oughly pe o med, gi en ha his in o ma ion is usually hidden by inancial accoun ing sys ems. This in o ma ion helps business manage s o conduc sensi i i y analysis o possible a ia ions in olume, p ice, cos elemen s, manu ac u ing acili ies and ope a ions, dis ibu ion, and cus ome se icing equi emen s. Segmen ing he ma ke I he basic c i e ia o ma ke segmen a ion a e conside ed me , business manage s will use di e en bases o segmen hei ma ke s, such as end-use applica ions o p oduc s, use indus ies and cus ome cha ac e is ics, p oduc pe o mance cha ac e is ics, channels o dis ibu ion, e c. All ac o s ha a e likely o a ec di e en segmen s' g ow h, p o i abili y, e c. a e de e mined and he ma ke ing mix elemen s a e combined in he bes ways possible - ways ha will ha e ele an impac s on di e en ma ke segmen s. P o iling compe i o s and supplies Compe i o s, p oduc a ibu es, ma ke ing le els, likely p oduc cos s and p o i abili y, p oduc de elopmen , and echnological inno a ions a e all assessed. Possible eac ions o compe i o s o al e na i e easible s a egies adop able by S. A . J. Bus. Mgm . 1985, 16(1) co po a e businesses a e also de e mined. Supplie s' po en ial beha iou s a e also impo an o be aken in o accoun . This will include he inancial, ech- nological, and manpowe capabili ies o supplie s. Added o his, he possible emp a ions (wi h associa ed cos s) o supplie s o in eg a e o wa d a e o c i ical impo ance o business manage s. Ha ing done all he necessa y analysis business manage s e alua e possible s a egies in e ms o p o i s payo , in es men cos , easibili y, isk, and long- e m impac o o e all co po a e heal h. In doing so, business manage s speci y he isks and payo s p obabili ies associa ed wi h each al e na i e s a egy and his in o ma ion is made a ailable o op managemen a co po a e le el. Ha ing done all his i is impo an ha business manage s should also p o ide de ailed implemen a ion p og ammes o chosen s a egies, indica ing, among o he hings, ecom- mendable changes in o ganiza ion s uc u e, budge ing, le els o manpowe u iliza ion and deploymen , acili ies in es - men s, e c. The scheme o analysis akes in o accoun he compe i i e posi ion o a s a egic business uni (SBU), gi en he s age o ma ke e olu ion. Fo ins ance, a SBU in a s ong -a e age compe i i e posi ion a he de elopmen s age o ma ke e olu ion needs o pu sue o he hings being equal, a sha e- inc easing s a egy. On he o he hand a SBU in a s ong - a e age compe i i e posi ion a he ma u i y- sa u a ion s age o ma ke e olu ion need o pu sue a p o i s a egy. Func ional le el s a egy A he unc ional le el he key emphasis is on he maximiza ion o esou ce p oduc i i y. Syne gy and he de elopmen o dis inc i e compe ence a e impo an s a egic componen s. The unc ional-a ea manage s achie e syne gy h ough he co-o dina ion and in eg a ion o ac i i ies wi hin a single unc ion. A unc ional-a ea manage 's objec i es migh include cos e ec i eness, p oduc i i y, quali y and cus ome se ices, he a e o sales g ow h, managemen o company -dis ibu ion channels ela ionships, e c. I should be app ecia ed ha he unc ional a ea is a he ac ion le el. The business-le el s a egies and ul ima ely he co po a e plans a e e ec i ely implemen ed a he unc ional le el. O ganiza ion s uc u e o SBU po olio managemen The business co po a ions, using po olio planning app oach, ha e chosen s a egies o di e si ica ion (concen ic o con- glome a e), wi h semi-au onomous s a egic uni s epo ing o co po a e headqua e s and con o ming o b oad co po a e objec i es and policies o pu poses o mee ing co po a e s a egic business mission. Each s a egic business uni is usually headed by a gene al manage and pu sue i s own business s a egy. Gene al manage s o s a egic business uni s usually epo di ec ly o co po a e ice-p esiden s o g oup gene al manage s who in u n epo o he chie execu i e a co po a e le el. Typically he e is a co po a e s a egic planning s a esponsible o co po a e s a egic planning. The concep o esponsibili y accoun ing equi es ha each manage should be held accoun able o he ac i i ies o e which he has con ol. This is an ex ension o one o he classical p inciples o o ganiza ion: Au ho i y should be equal o esponsibili y. S a egic business uni s a e usually o ganized as p o i cen e s o in es men cen e s. P o esso Vancil dis inguishes be ween he wo as ollows: P o i cen e s a e a eas whe e he manage is esponsible o he bes combina ion o cos s and e enues. His objec i es is o maximize he bo om line, 21 which is he p o i ha esul s om his decisions and decisions execu ions. In es men cen e s a e uni s whe e he manage , in addi ion o p o i -cen e esponsibili ies, is esponsible o he magni ude o asse s employed. He is expec ed o make ade-o s be ween cu en p o i s and in es men s o inc ease u u e p o i s. The manage 's objec!i es unde in es men cen e s is o maximize his e u n on in es men s (Vancil, 1973). The decen aliza ion o a signi ican amoun o decision- making au ho i y unde di e si ied mul i-p oduc o mul i- business co po a ions is a ionalized on he g ounds ha gene al manage s o indi idual s a egic uni s a e in a be e posi ion o choose he igh ma ke niches a hei espec i e ma ke a eas, and a e in a be e posi ion o espond quickly o compe i i e changes and o he ma ke dynamics. Di e si i- ca ion and decen aliza ion educe he need o ga he and p ocess in o ma ion a he co po a e op hie a chy, which easily expe iences o e load and consequen ly he bu eauc a ic delays in decision-making. S a egic business uni s o ganized ei he a ound ma ke s, p oduc , o geog aphical ca ego ies ep esen he c ea ion o sel -con ained asks. In o ma ion ga he ed and p ocessed by sel -con ained uni s is less in bo h quan i a i e and a iable e ms, and, acco dingly, mo e eliable han i would be he case i he co po a ion as a whole collec ed and p ocessed in o ma ion o all i s uni s ope a ing a di e en ma ke en i onmen s. The co po a e s a essen- ially esembles he c ea ion o la e al ela ions ha help o see o i ha all he sub-uni s o he co po a ion a e ocussed o co po a e s a egic mission and also helps o handle in o ma ion ga he ing and p ocessing o pu poses o coping wi h unce ain y ac oss adi ional line-au ho i y ela ionships. S a egic uni s may also ha e hei di isional-planning s a wi h s a ela ionship o di isional manage s and unc ional (do ed-line) ela ionship o co po a e s a (Galb ai h, 1973). The gene al limi a ions o he assump ions o po olio s a egic managemen The op-down s a egic managemen p ocesses in di e si ied co po a ions a e ep esen ed by he de elopmen o majo co po a e goals and ma ching mas e co po a e s a egies. On he o he hand he bo om-up s a egic managemen p ocesses a e ep esen ed by unc ional p og ammes and business/ di ision goals and s a egies which a e se wi hin he pa ame e s o majo co po a e goals and mas e s a egies. The ul ima e objec i es o such p ocesses a e ideally o come ou wi h an op imal business po olio -well-balanced in e ms o business uni s which should be p incipally balanced a ound he 's a s' and 'cash cows'. Such a po olio ensu es a di e si ied co po a ion wi h ela i ely high amoun s o in es able su plus cash owing o high ma ke sha e in low cos s uc u es (and hence high cash low) om he 'cash cows'. This su plus cash is made a ailable o high ma ke sha e/ g ow h a e businesses as ep esen ed by 's a s'. Fo he ideal op imal po olio o be a ainable wi h a high le el o accep ance and sa is ac ion by a co po a ion's membe s, he immanen decision-making p ocesses mus be cha ac e ized by objec i i y in o ma ion adequacy, a ionali y and he subo dina ion o indi idual manage s' in e es s and goals o he in e es s and goals o he co po a ion as a whole. Conce ning he o ganiza ion s uc u e, he implici assump- ion is ha i ma ches he co po a ion's g ow h s a egies. This is o say ha s uc u e ollows he g ow h s a egy o he co po a ion. S a egy o mula ion as a poli ical p ocess The abo e gene al assump ions o po olio s a egic 22 managemen ollow he classical no ma i e- a ional m~~I o decision-making. Such a model does no ep esen dec1s1on- making in o ganiza ional se -ups. I is a simplis ic iew o me ely eckon ha o ganiza ion s uc u e ollows he g ow h s a egy o he i m. The cu en s uc u e o a i m a any gi en ime is an embodimen o ins i u ionalized p e ious s a egy(ies). I also ep esen s he oles o occupan s, powe , and in luence dis ibu ion. A any gi en ime he di e en membe s o he i m including ex e nal s akeholde s a e di e en ially sa is ied wi h i s goals, s uc u e, p ocesses, e c. The ope a ional e ec o he abo e ac o s is ha any signi ican change in s a egy, i i has o ake place a all, has o be sponso ed by he dominan membe s, coali ions, e c. ha a e ei he no sa is ied wi h he cu en s a e o a ai s o who pe cei e ha hei in e es would be u he sa e- gua ded by ce ain s a egic changes. Those who s and o lose as a esul o he change o he cu en s a egy would use wha e e powe s, in luence, e c., hey ha e in he cu en o ganiza ional amewo k o block, manipula e, es uc u e he si ua ion, and in luence he pe cep ions o hei opponen s as o wha bes should be done in s a egic e ms o he company. Unde hese ealis ic app ecia ions o he beha iou o membe s o o ganiza ions, he cu en s uc u e will no mally in luence he adop ion o a new s a egy (Galb ai h & Na hanson, 1978). Pe e Lo ange illus iously sums up he abo e con en ion when he obse ed ha : 'Because he cu en s uc u e and p ocess o he i m e lec s a speci ic powe balance, s a egy o mula ion and selec ion becomes essen ially a poli ical in e ac ion among coali ions. In addi ion, he o ganisa ion design p ocess and a iables de e mine he design o he s a egic planning p ocess i sel .' The con lic ual beha iou o o ganiza ional incumben s, as depic ed in he abo e discussion ep esen s poli ical ac ions and p ocesses. As MacMillan (1978) pu s i 'a poli ical ac ion akes place when an ac o (pe son, g oup, o ganisa ion e c.) ecognising ha he a ainmen o i s goals is in luenced by he beha iou o o he ac o s in he si ua ion, unde akes ac ion agains he o he s o ensu e ha i s own goals a e achie ed.' Unless an o ganiza ional ole occupan has an o e - whelming legi ima e au ho i y and powe o e all o he s (and his is a e), he o she would en e in o coali ions wi h ole occupan s who sha e he same iews a ound speci ied issues. As a esul o membe ship o coali ions an indi idual incumben wi hin he o ganiza ion ac s as his own agen ; agen o his/he coali ion; and as an agen o he o ganiza ion as a whole. The upsho o his exposi ion is ha since s a egy- making p ocesses a e essen ially decision-making (choice- seeking p ocesses), he beha iou o pa icipan s is de e mined o in luenced by he pe cei ed impac o such choices o he needs and in e es s o he 'p incipals' hey ep esen . I should be clea by now ha he assumed no ma i e- a ional s a egic managemen ac ions and p ocesses o a ain op imal business po olios may be un enable because o he beha iou o ole occupan s wi hin o ganiza ional se ups. The abo e discussion has been gene al: I has been a c i ique o o. he gene al limi a ions o he assump ions o po olio s a egic managemen . Wha ollows below is he discussion o speci ic ac ions, p ocesses, and sys ems associa ed wi h s a egic managemen in di e si ied and SBU-s uc u ed co po a ions. S.-A . Tydsk . Bed y sl. 1985, 16(1) The speci ic limi a ions o he assump ions o po olio s a egic managemen The limi a ions o SBU s a egic planning a e going o be discussed a ound he ollowing a eas: In o ma ion ga he ing and p ocessing, he e alua ion and ewa ding o manage s, o ganiza ional s igma s indi idual manage 's sel -concep s, in a-o ganiza ional powe ela ionships, managemen s yles, and co po a e cul u e. In o ma ion ga he ing and p ocessing Unde he a ional-no ma i e SBU concep o planning he mul i-di isional co po a ion is assumed o ha e adequa e in o ma ion-ga he ing and p ocessing capaci y no only o e alua e each s a egic uni 's pe o mance bu also o e alua e ma ke cha ac e is ics o each p oduc /business uni . This is o say ha gene al manage s o p oduc /business uni s ha e, oge he wi h hei planning s a , ho ough knowledge o hei espec i e ma ke s. These manage s impa ially and objec i ely epo abou hei p oduc s/ business ma ke s pe o mances. The e a e also implied ha - monious wo king ela ionships be ween he co po a e s a and gene al manage s o s a egic uni s and g oup ice- p esiden s o g oup manage s whene e such s uc u es exis . A numbe o s udies and cases ha e shown ha such assump- ions a e an excep ion a he han a ule. In mos cases he co po a e s a , which in some co po a ions ope a es a conside able geog aphical dis ance om indi idual s a egic uni s, does no ha e all he necessa y in o ma ion abou he ma ke cha ac e is ics o each p oduc /business uni . Fu he - mo e, co po a e s a and gene al manage s o indi idual s a egic uni s a e usually locked in con lic s a ising om a numbe o sou ces. Fo ins ance, co po a e s a is e alua ed on he pe o mance o he whole co po a ion, while on he o he hand, gene al manage s a e e alua ed on he pe - o mance o hei indi idual p oduc s/businesses. The co po a e s a is no conside ed neu al by he s a egic uni s' gene al manage s, and since i engages in o ganiza ion p ocesses ha a ec s he ca ee s o he manage s in ol ed, he use ulness o co po a e s a is always calib a ed in pe sonal e ms by such manage s (Uy e hoe en, Acke man & Rosenblum, 1977). I can be blun ly s a ed ha in o ma ion made a ailable o co po a e s a o pu poses o e alua ing pe o mances o indi idual p oduc /business as well as ma ke dynamics is always loaded wi h biases. The p ocess is u he complica ed by he p ac ical p oblem o inding indispu able disc iminan ac o s which unequi ocally disc imina e be ween a 's a ', 'cash cow', 'dog', e c. Fu he mo e, i can be s a ed ha he e a e di e en ypes o 's a s', 'p oblem child en', 'dogs', e c. Fo pu poses o achie ing economies o scale and espons- ibili y alloca ion, in o ma ion-ga he ing and p ocessing acili ies end o be cen alized unde he co po a e s a ac ing as managemen in o ma ion sys em (MIS) pe sonnel. Since he sou ces o co po a e in o ma ion pool a e he indi idual s a egic planning uni s, co po a e planning s a and o he MIS s a , he e is a high possibili y o disc epancy be ween in o ma ion held and used by SBUs, manage s, and ha held and used by he co po a e planning s a . The unp edic abili y o compe i i e and complex en i on- men s wi hin which mul i-di isional/SBU-s uc u ed co po a- ions ope a e and he mul iplici y o con lic ing demands om coali ions wi hin and wi hou he co po a ion p e en clea cu solu ions o a ailable al e na i es. 'In he absence o clea cu solu ion, he chosen al e na i e is he esul o poli ical p ocesses. The g ea e he ambigui y, he g ea e he in luence S. A . J. Bus. Mgm . 1985, 16(1) o poli ics in de e mining he ou come, and he g ea e he in luence o he cu en dis ibu ion o powe ' (Galb ai h & Na hanson, 1978). The doc o ing o in o ma ion by sponso s o ce ain s a egic choices, ac ing in hei iducia y oles as ep esen a i es o di e en coali ions, makes an objec i e e alua ion o p oposed ac ions di icul . In o ma ion possessed by any coali ion o ep esen a i es o coali ions is used as a s a egic esou ce o e ec ua e p e e ed s a egic op ions. In SHU/di isional-s uc u ed o ganiza ion an objec i e e alua ion o s a egic p oposals is u he unde - mined 'by he loss o in o ma ion as p oposals il e upwa d h ough he o ganiza ional hie a chy' (Cohen & Cye , 1973). As in o ma ion embodied in s a egic o in es men p oposals il e upwa ds om unc ional o co po a e le els o di e si ied co po a ions, he deg ees o eedom o uppe le els a e educed. Du ing his 'selling p ocess' a numbe o c ucial de ails conce ning p oposals, a ailable al e na i es, e c, a e los . In o ma ion-ga he ing and p ocessing ac i i ies ha e o he c ucial oles and consequences o he op imali y o any SBU po olio. In o ma ion is equi ed o de e mine SBU bound- a ies; e alua e cu en pe o mance o SBUs; classi y SBUs wi hin he g ow h-sha e ma ixes; de e mine he goals and s a egies o be pu sued by pa icula SBUs; de e mine he amoun o esou ces o be made a ailable o di e en SBUs; and speci y he pe o mance s anda ds agains which SBUs manage s a e o be e alua ed. The conclusion o be made he e is ha , wi h a special emphasis on SHU/Di isional s uc u ed co po a ions, he limi ed amoun o in o ma ion a ailable o co po a e op managemen o guide he o e all beha iou o hei business po olio's is, mo e o en han no , manipula ed and doc o ed. Objec i i y and a ionali y may be los wi h he poli ical whi lwind as coali ion compe e o o ganiza ional a en ion and esou ces. E alua ion and ewa ding o manage s The logical e alua ion and ewa d sys em o manage s o 'po olio uni s' should be he one using mul iple pe o mance c i e ia, aking in o accoun di e en ia ed s a egic goals ollowed by indi idual SBUs based on hei indi idual classi i- ca ion. Each manage o a SBU should be e alua ed and ewa ded on he basis o he a eas o e which he/she has comple e con ol. I is also impo an ha he e should be a clea causali y ela ionship be ween indi idual SBUs managemen decisions and hei esul s. The co po a e s a and manage s (g oup ice-p esiden , g oup manage s, execu i e p esiden s, inancial con olle s, e c.) should be e alua ed and ewa ded on he basis o co po a e pe o mance which essen ially is an agg ega e pe o manc o SBUs unde he co po a ion The e a e a numbe o p oblems associa ed wi h es ablishing pe o mance c i e ia and he e alua ion o manage s a di e en le els o o ganiza ion s uc u e wi h, no only unc ionally di e en ia ed esponsibili ies, bu di e en ia ed uni s as well. Coupled wi h he p oblem indica ed abo e is he pe cep ion o each manage as o whe he he/she has e ec i e con ol o decision-making p ocesses ha ul ima ely a ec his/he pe o mance achie emen and consequen ewa d. I is also impo an o no e ha a ewa d sys em is pe asi e and should no be hough o only in e ms o dolla sala ies, bonuses, e c. P omo ions (posi ions in he o ganiza ion ha enhances p omo abili y), esou ce alloca ion, uni classi ica ion, o ganiza ion s a us con e men , e c. need 23 o be aken in o accoun . The ew ela ed issues indica ed abo e help o highligh he mundane o ganiza ional expe iences ha manage ial e alua ion and ewa ding p ocesses a e highly con o e sial and poli ical wi hin o ganiza ions. The la ge a co po a ion is, he mo e complica ed he in a-o ganiza ional poli ical p ocesses o esou ces alloca ion, pe o mance c i e ia de e mina ion, pe o mance e alua ion and consequen ewa ding. The epo ed p esen manage ial con ol and ewa d by di e si ied co po a ions ollowing SBUs planning concep a e epo ed o all wi hin he ollowing con inuum: A one ex eme he e a e i ms ha ha e adop ed SBUs planning concep bu s ill ewa d and p omo e manage s on adi ional (single ac o c i e ion); a he o he end o he con inuum a e companies like Gene al Elec ic (U.S.), which uses di e en s anda ds o pe o mance measu emen . The e a e p oblems in ei he ex eme, including wha e e combina ions wi hin he con inuum. The single c i e ion adi ional pe o mance-measu emen and ewa d sys em igno es he ac ha di e en manage s a e assigned o pu sue di e en s a egies, and ha di e en p oduc s/businesses ope a e a di e en ma ke s; di e en p oduc s/businesses a e in indus ies (including echnology dimensions) ha di e in esou ce combina ion o ce ain le el o pe o mance, e c. The mul i- ac o app oach b ings abou he p oblem o complexi y: Manage s o p oduc s/businesses ha mee he p e e ed biases o op managemen based on he s a egic co po a e mission a e likely o ha e p e e en ial ea men . Fo ins ance, any op managemen which is e alua ed on ea nings pe sha e is mo e likely o be ea nings-biased and he manage s o p oduc s/businesses ha a e s a egic in con ibu ing o co po a e ea nings a e likely o be ewa ded mo e a ou ably; mo e esou ces will be alloca ed o hem and he mobili y clus e s o p omo ion pu poses a e likely o be aceable h ough he p e e ed p oduc /businesses. Knowing wha ma e s o op managemen , SBU manage s would ailo hei s a egic eques s o he in e es o op managemen and no necessa ily o he in e es o hei uni s and he op imali y equi emen o he co po a ion's business po olio (Ca e , 1971 ). In addi ion o he abo e compli- ca ions, he e is a lo o subjec i i y in ol ed in any p ocess ha ing o do wi h he de e mina ion o pe o mance s anda d and pe o mance measu emen . The mul i- ac o app oach is mo e likely o enhance such subjec i i y han o educe i . Las ly, i can be s a ed ha he manage ial beha iou al ou come owing o ' ein o cemen dosses' consequen o he mul i- ac o app oach is likely o make i di icul o ans e manage s om one SBU o ano he . The igidi y in manage ial esou ces u iliza ion wi hin a conglome a e co po a ion leads o sub-op imal u iliza ion o such sca ce esou ces and is mo e likely o lead o a subop imal business po olio. O ganiza ional s igma s indi idual manage s' sel - concep s The a ional-no ma i e assump ion o implica ion o he p oduc s/business po olio s a egic planning and manage- men is ha all SBUs a e equally alued by he co po a ion and, he e o e, hei classi ica ion o 's a s', 'dogs', e c. is only o planning and posi ioning pu poses. I has al eady been a gued ha op co po a e managemen ha e hei biases which a e based on hei pe sonali ies, managemen s yles, unc ional and educa ional backg ound, e alua ion sys em exe cised upon hem, e c. I his is ue, an o ganiza ional s igma o being 24 a manage o a 's a '. A 'dog' s igma may be incompa ible wi h he sel -concep o g oup ice p esiden s and SBUs gene al manage s. The e is also bound o be job secu i y anxie y in he SBUs ha ha e been called upon o be ha es ed o di es ed. Fu he mo e, in s ongly unionized co po a ions such s a egies a e likely o be esis ed o o b ing abou a lo o labou ela ions p oblems. Unde hese condi ions SBU manage s and union leade s will engage in poli ical ac i i ies o ei he main ain p esen SBUs classi ica ions o o change hem depending on he ou - comes o doing so. In a-o ganiza ional powe ela ionships An o ganiza ion is a social sys em ypi ied by in e ela ed beha iou s o indi iduals who pe o m asks ha ha e been di e en ia ed in o se e al dis inc sub-sys ems. The concep o o ganiza ional powe is an impo an one in he in e - ela ionships o indi iduals and sub-uni s o ming he o al o ganiza ional sys em. Powe is a social beha iou al concep which is only ele an whe e di e en indi iduals, sub-uni s, social sys ems, e c. ha e some ela ionships such ha he beha iou al ou come o he de e minan o such beha iou is in luenced by such in e ela ionships. A social uni has powe on he o he social uni i i signi ican ly de e mines i s (o he uni ) beha iou (Hickson, Hinings, Lee, Schneck & Pennings, 1971 ). In business co po a ions, indi iduals, depa men s, di isions, s a egic business uni s, e c. wield di e en o ganiza ional powe 'uni s'. Hickson, e al. (1971) iden i ies h ee impo an in a-o ganiza ional powe dimensions: one uni a ec s he p obabili y o ano he beha ing in a pa icula manne . (ii) Domain. The numbe o uni s whose p obabili ies o beha ing in pa icula manne s a e a ec ed by one uni . (iii) Scope. This has o do wi h he ange o a uni beha iou ha is in luenced by ano he uni (s). Di e en uni s ge hei powe based in o ganiza ions like business co po a ions om: (i) Cen ali y. The deg ee o which he ac i i ies o a uni a e in e linked in o he o ganiza ion sys em. This has o do wi h he impac o a uni 's ac i i ies o he ou pu o he o ganiza ion as a whole. (ii) Subs i u abili y. This has o do wi h whe he o no he o ganiza ion can ob ain al e na i e pe o mance o ac i i ies pe o med by a pa icula sub-uni . (iii) Coping wi h unce ain y. I one sub-uni is esponsible o coping wi h en i onmen al unce ain y o he bene i o o he s, i s powe base will inc ease. The abo e powe bases ep esen s a egic powe esou ces which, when applicable o a pa icula o ganiza ional si ua ion, a e deployed by hei wielde s o induce o o coe ce, o o esis inducemen s o coe cion om o he uni s (MacMillan, 1978). The discussion abou in a-o ganiza ional powe is made wo hwhile because he concep o SBU po olio analysis and managemen ends o assume away he exis ence o powe con lic s wi hin di e si ied co po a ions. I is assumed ha business uni s classi ica ion is objec i ely a i ed a and ha s a egies ollowed a e op imal o he co po a ion as a whole. Typically i could be asked as o who is likely o be mo e powe ul be ween gene al manage s ( ice p esiden s) o 'cash cows' and 'dogs', 'dogs', and 's a s'. I one s a egic uni is a supplie o in e media e goods o o he uni s, i s powe (owing o i s cen ali y) in ela ion o ecipien s a egic uni s is mo e likely o be enhanced. I was also s a ed in his a icle S.-A . Tydsk . Bed y sl. 1985, 16(1) ha , in he e en o op managemen being e alua ed and ewa ded on ea nings pe sha e, s a egic uni s con ibu ing mo e owa ds he o e all co po a e ea nings will wield mo e powe because hey a e conside ed mo e c i ical by op managemen . The a gumen submi ed on his issue is ha , because o in a-o ganiza ional powe ela ionship, i is mo e likely han no o ha e sub-op imal esou ce alloca ions wi hin he p oduc /business po olio which would gene a e sub- op imal co po a e po olio ea nings. I his happens he e y pu pose o p oduc /business po olio analysis and managemen will be de ea ed o unde mined. Managemen s yles and co po a e cul u e The di e si ica ion o co po a ion, especially when achie ed h ough me ge s and acquisi ions, also en ails he en ance o he co po a e (base business) cul u e and s yle o manage- men by manage s wi h di e en managemen s yles and who a e imbued wi h di e en 'cul u es'. Typically, some op manage s o acqui ed businesses a e e ained o un he acqui ed businesses as s a egic uni s wi hin he co po a e business po olio. This is mo e so i he co po a ion ollowed a conglome a e di e si ica ion s a egy. The equi ed o implied managemen s yle which esul s om he classi ica ion o he acqui ed business wi hin he co po a e business po olio ha e, in a numbe o epo ed cases, been ound o be in con lic wi h he managemen s yle o manage s who managed he business as a sepa a e en i y be o e acquisi ion. Any a emp s o socialize hese manage s o he co po a e s yle o managemen and ole p esc ip ion (a ising om s a egic uni classi ica ion in he co po a e po olio) ha e been esis ed in a numbe o epo ed cases. Di e ences in managemen s yles and in e es s o manage s o acqui ed and acqui ing businesses ha e also been a sou ce o con lic be ween co po a e s a o he acqui ing i m and manage s o acqui ed s a egic business uni s. I can be in e ed, he e o e, ha gi en he p oblems o socializing e ained manage s o acqui ed businesses o he co po a e (acqui ing co po a ion) s yle o managemen and cul u e, he bene i s o p oduc /business po olio analysis and managemen migh ei he be delayed o ne e a ained. The in e en ionis demand o ex e nal cons i uences The h us o his a icle is o deal wi h he beha iou o in e nal cons i uences as i a ec s he a ionali y o s a egy making in di e si ied co po a ions. This app oach should no be cons ued o mean ha he demands om ex e nal con- s i uencies a e ela i ely unimpo an . In some cases ex e nal demands ac ually dic a e easible s a egies o co po a ions. This is he case e en in he celeb a ed p i a e-en e p ise economies. The me e size and hence isibili y o di e si ied conglome a es leads o a si ua ion whe eby he di e en uni s o he o ganiza ion in e ace wi h di e en ia ed sub-en i on- men s whose s akes a e a ec ed posi i ely o nega i ely by he co po a ion's goals, s a egies, policies, and ope a ions. MacMillan ( 1978) ca ego ize in e es g oups ou side he o ganiza ion in o symbion s and commensals. The o me ep esen s hose elemen s o he en i onmen on which he o ganiza ion is dependen o i s inpu s; and, he symbion s in um depend upon he o ganiza ion o ake hei ou pu s. The la e ca ego y ep esen s hose elemen s in he en i on- men ha a e ying o a ac he o ganiza ion's symbion s. While his ca ego iza ion se es a e y good pu pose as a sho hand, he e is a need o ampli y he concep o inpu s and ou pu s as desc ibed in he o ganiza ion/symbion s ela ionships. Inpu s inco po a e mo e han jus aw ma e ials, S. A . J. Bus. Mgm . 1985, 16(1) human esou ces, in es men s unds, e c. Accep ance, ole a ion, and suppo o an o ganiza ion's goals, s a egies, and ope a ions by symbion s a e impo an inpu s ha co po a ions equi e. This is e en mo e impo an wi h big isible co po a ions as exempli ied by conglome a es. Simila ly, he ou pu s (which he o ganiza ion has o ake in o accoun in i s s a egy-making p ocesses) o he symbion s include hei goals, policies, s a egies, and ope a ions. They also include symbion s' pe cei ed accep able no ms o beha iou o socie al ins i u ions. The i e u able and con lic ing demands o powe ul symbion s may cons i u e p ima y cons ain s on a co po a ion. Goals se and s a egies o mula ed by he a ec ed co po a ion a e mo e o a comp omise o ep esen sequen ial a en ion o con lic ing demands. They a e by no means op imal. The co po a ion will end o gene alize i s policy commi men s so ha di e en symbion s 'can see some scope o achie ing hei speci ic pu poses' (MacMillan, 1978). In desc ibing an adap i e mode o s a egy making Hen y Min zbe g (1973) cap u es he p oblem o di e si ied co po a ions ying o mee mul iple and con lic ing demands o symbion s and in e nal coali ions. Min zbe g's desc ip ion is ha : 'The adap i e o ganisa ion is caugh in a complex web o poli ical o ces. Unions, manage s, owne s, lobby g oups, go e nmen agencies, and so on, each wi h hei own needs, seek o in luence decisions. The e is no one cen al sou ce o powe , no one simple goal. The goals o he o ganisa ion is cha ac e ised by ba gaining among hese g oups, wi h each winning some issues and losing o he s. Hence, he o ganisa ion a ends o a whole a ay o goals sequen ially, igno ing he inconsis encies among hem. The o ganisa ion canno make decisions o "maximise" any one goal such as p o i o g ow h; a he i mus seek solu ions o i s p oblems ha a e good enough, ha sa is y he cons ain s'. F om his s udies, James Quinn (1980), p o ides easons why execu i es may p e e no o announce speci ic goals as assumed in no ma i e s a egy-making p ocesses. The op execu i es in e iewed main ained ha he communica ion o speci ic goals leads o: (i) Undesi ed cen aliza ion, since i has he e ec o elling subo dina es ha ce ain issues a e dosed and ' ha hei hough s abou al e na i es a e i ele an '. (ii) Focus o opposi ion, o i may p o ide an o he wise agmen ed opposi ion wi h ocal poin s o ally a ound. (iii) Rigidi y, because he execu i e ego accompanying publicly announced goals make i di icul o change hem. (i ) Secu i y, conside a ion conce ning ela ion o he company wi h i s compe i o s. Quinn (1980) also ound ha e ec i e manage s in la ge o ganiza ions consciously and simul aneously y o in eg a e in o ma ion -analysis, powe -poli ical, and o ganiza ional - psychological 'p ocesses in o hei ac ions a a ious c ucial s a es o s a egy de elopmen '. The conclusion o be d awn om he discussion so a is ai ly ob ious. When he in e nal cons i uences o coali ions a e combined wi h ex e nal symbion s and he ac ions o com- mensals, he a ional-no ma i e app oach in SBU po olio s a egic managemen ep esen s an ideal o an app oxima ion o wha ac ually happens. Implica ions o op managemen The main objec i e o his pape was o show how s uc u es, p ocesses and sys ems as o ganiza ional a ibu es a ec s a egy o mula ion and implemen a ion in di e si ied co po a ions. These a ibu es, aken oge he wi h demands 25 om ex e nal coali ions, lead o poli ical beha iou o ole occupan s. A his poin ew implica ions o such beha iou o op manage s will be men ioned, essen ially in passing. I is impo an ha op manage s ha e o be ully cognizan o he ac ha o ganiza ional goals, s a egies, and policies a e di e en ially p e e ed o anked by di e en membe s o he coali ion(s) o cons i uences. These pe cep ions lead o poli ical p ocesses. Such poli ical p ocesses a e 'spon aneous, na u al, and necessa y phenomenon in he o ganisa ion' (MacMillan, 1978). They ep esen he dynamics needed by co po a ions o enhance hei in e nal capabili ies as hey espond o ex e nal en i onmen al demands. Poli ical ac ions and p ocesses do no ep esen ana chy bu he dynamisms ha a e c ucial o he su i al o any co po a ion. In hei oles as s a egy a chi ec s, o ganiza ion builde s and leade s, op manage s should be expe s o a leas su icien ly ale abou he poli ical con ex wi hin which indi idual subo dina e manage s play hei iducia y oles as ep esen a i es o di e en hie a chies o coali ions. Top manage s should be adep in s uc u ing o es uc u - ing he si ua ion as well as incumben s' pe cep ions as o which issues should ecei e wha p io i ies. This is o say ha , since coali ions de elop a ound ce ain issues, he ole o op managemen is o s uc u e o es uc u e he condi ions wi hin which issues a e de eloped and o in luence he pe cep ion o ole occupan s as o which issues dese e p io i y con- side a ions. Ha ing done so, he nex mo e is o channel poli ical p ocesses in he di ec ion ha sui s he o ganiza ion's in e es . To manage a balance among cons aining and inconsis en demands op manage s should u ilize he ools o comp omise gene aliza ion o goals, and policy commi men s o sequen ially a end o mo e complex and less conc e e issues. In dealing wi h ex e nal symbion s and commensals i is impo an o de e mine be o ehand possible coun e -s a egies om such qua e s. To p edic such possible coun e -s a egies, op managemen should possess in o ma ion abou alues and s uc u es o dominan coali ions wi hin he symbion s and commensals o ganiza ions. I is impo an o de e mine he cu en and po en ial policy commi men s o he symbion s and com- mensals; he al e na i es a ailable o hem; and he esou ces a hei disposals. Wi h such in o ma ion op managemen can de e mine wi hin he law, ideology and e hics o he coun y, wha op ions a e a ailable. These op ions would ange om accom- moda ion Uoin commi men , co-op a ion, and coalescence) o manipula ion (coe cion, inducemen , obliga ion, and pe suasion) (MacMillan, 1978). Conclusion In his a icle an a emp has been made o show ha he logic and he expec ed op imal SBU po olios a e ha d o achie e p incipally because o o ganiza ional a ibu es (s uc u e, powe di e en ia ion, con lic ing in e es s, ewa ds, and in o ma ion sys ems, e c.) which in luence poli ical beha iou o ole incumben s. Goals, s a egies, and policies inally a i ed a a e ei he gene alized o a e no mo e han com- p omises. Owing o con lic ing demands om in e nal and ex e nal coali ions and he limi ed amoun o in o ma ion, manage s can only sa is ice a he han maximize. The a ain- men o op imal business po olios is ei he ha dly a ainable o is a lee ing p ocess -once a ained i canno be main ained as yes e day's lose s y o de elop new poli ical s a egies aimed a e e sing pas losses.