Describe the process of portfolio analysis. In what situations is this evaluation method useful?
Portfolio analysis is basically the process by which financial managers in a business examine the organization’s capacity to invest some of its capital assets into the stock market. Valuing the current position of the organization in the market, financial managers try to weigh the risks with that of the benefits of investing their assets in the stock market to be able to gain more from what the industry offers. To make sure that the decision made is able to benefit the organization as fast as necessary, here are some of the procedures that need to be undergone by the administrational body of an organization before even considering their capacity to invest in the stock market:
Identify the line of business
This process insists on the need to define what the business is about, what it is for and what specific condition of operations does it actually evolve under.
Group the line of businesses
This part of the process includes the need to put the organization’s allied connections into a group therefore creating a much clearer sense of what particular type of investment policies would actually best benefit from.
Compare Core Businesses with Mission Statement
What does the business want to incur, what specifically is it founded upon? Through knowing this information, the administration would be able to pick the right policy that fits their culture therefore making a great indication on how they are to take a program that would give them a sense of identity in the market and in the industry.
Define the produces and services provided by the business
The culture followed by the organization plays a great role in determining whether or not it is going to be able to contend both with competition and the desire to gain more security and profit from the stock market operations.
- Apply the program evaluation matrix
- Determine product fit
- Determine ease of finding and its implementation to the business
- Determine availability of alternative coverage
- Assess the competitive position of the product or serve*** points 5-9 are procedures that does involve the need to assess the internal elements that make up the entire business making it eligible for coming into an investment policy thus establishing its portfolio in the field of international operations
- Assess program fit
The final step simply involves the need for the program to be identified according to its fit with the overall standing of the organization. Once the fit has been established then the policy chosen to which the business is to be enrolled in could be reevaluated every now and again to make sure it provides the benefits that the business expects to gain from the investment.
This evaluation method specifically allows the financial administrators to seek the different elements that make up the business, both its strengths and its weaknesses therefore allowing them to measure what particular policies or programs would best fit their positional bearing in the market allowing them to be more cautious in picking the policy to enroll into. This way, the administrators are able to set the business’ status in a way that it is able to gain the best benefits from the international setting.