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Incorporating disounted cash flow contours onto a bcg portfolio matrix using limit pricing
Author(s) -
Marshall Paul,
Tomkins Cyril
Publication year - 1988
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.4090090206
Subject(s) - portfolio , cash flow , order (exchange) , investment (military) , set (abstract data type) , resource (disambiguation) , matrix (chemical analysis) , advice (programming) , economics , limit (mathematics) , computer science , microeconomics , operations research , finance , mathematics , political science , computer network , mathematical analysis , materials science , politics , law , composite material , programming language
Little or no attempt has been made to integrate the tools of financial investment appraisal with that of corporate strategy, despite the centrality of both of these disciplines in corporate resource allocation. This paper offers one approach which sets out, through a computer model, to explore the location of DCF values on a strategic portfolio matrix. The modelling took the BCG matrix as the basis of its text together with BCG's own assumption. It was found that the resulting DCF contours suggests a different emphasis compared with BCG's investment advice based on the matrix. The authors do not pretend, however, that the model provided is an immediate, more rigorous, solution to practical strategic analysis. Nor do they argue that the BCG advice may not be appropriate under a wider set of assumptions. The model is offered as suggesting one direction in which work might be conducted in order to link financial investment appraisal with strategic analysis portfolios in order gradually to convert the very general advice usually offered by the use of such matrices to a more precise form.