Business Assessment Array is used for the analysis of a business portfolio. It is very important for a business to be successful. The task of analyzing everything is given to a business analyst in an organization. The assessment of a business is done using the McKinsey Matrix, which is a model used to perform analysis on all the units of a business corporation. The collection of these units, which together make up an organization, is known as Business Portfolio. The units are called Strategic Business Units.
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An SBU may be a small part of a large organization or an individual company. The main aims for the portfolio analysis are:
- Analyze which SBUs need investment by doing an analysis of current business portfolio.
- If new products are to be added to the portfolio, then strategies need to be developed for this.
- A decision on which business products to hold, and which ones to finish off, is to be made
Following are the main steps related to Business Assessment:
- Planning is of great importance. Basic needs must be analyzed first of all.
- The policies of the organization must be defined properly.
- The definition and the design of the processes are important.
- The rules for the technical systems, along with the requirements, must also be interpreted well.
The six steps involved in the implementation of McKinsey Matrix are:
- Choose drivers for every dimension.
- All the drivers need to be assigned some weight.
- The SBU’s related to each driver should be scored.
- Each SBU’s weight needs to be multiplied with its time and score.
- The resulting graph is now to be viewed and interpreted.
- Finally a review analysis is done.
One of the limitations of McKinsey Matrix is that the interaction of SBUs with other SBUs is not given any importance. Also, the core competencies are ignored.