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Portfolio Simulation
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The allocation of investment funds in multibusiness firms is considered in
this article as a complex strategic decision making process. We show that
a quantitative portfolio simulation model can be used effectively to
support this strategic decision making process. The portfolio simulation
model, which is formulated with a combined system dynamics and spiral
loop approach, further allows us to show severe limitations of qualitative
portfolio approaches, like the one of the Boston Consulting Group. The
simulation experiments demonstrate that it can be extremely dangerous for
diversified companies to follow the investment suggestions typically
drawn from the Boston Consulting Group portfolio matrix, if competitors
choose a course of action that is contradictory to normative situations. The
simulation runs additionally show, that a more flexible positioning
strategy can yield much better results than the fixed positioning strategy
typically used by the Boston Consulting Group.
Peter P. Merten - Personal Name
1000875060
NONE
Strategic Management
English
2013
1-50
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