Product Portfolio Management: Current Challenges and Preconditions

Arto Tolonen, Hanna Kropsu-Vehkapera and Harri Haapasalo
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Arto Tolonen: University of Oulu, Finland
Hanna Kropsu-Vehkapera: University of Oulu, Finland
Harri Haapasalo: University of Oulu, Finland

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Abstract: Purpose: The main objective of this study is to clarify the current challenges relating to Product Portfolio Management (PPM). Also, any preconditions for active PPM in terms of concepts, processes, tools, KPIs and governance models are analyzed. Design/methodology/approach: Current state analysis of product portfolio management practices are based on both, a thorough literature review and several case companies. Case companies represent many business areas such as HW, SW, services and even combinations of them, solution providers. Findings: The role of PPM is not to be a follower of activities caused by customers, product development, sales, deliver and care organizations, and processes. The primary role of PPM should be active management of current product portfolio, over product life cycle, instead of merely focusing on new product development. Product portfolio management as a concept and process is not that well understood and in place like other business processes. Research limitations: The limitations of this study include analyzing a limited number of companies. Also, the experience of the analyzed companies varies from only few years to a relatively long history. Practical implications: The implications of this study include the potential preconditions of clarifying the role of product portfolio management. The findings can aid business managers in understanding the PPM as an entity that has a role in managing products and portfolios based on strategic and financial targets over product lifecycles. Originality/value: This study approaches PPM from a more comprehensive viewpoint than the traditional NPD focused PPM that is mainly covered by the existing literature. A company’s future portfolio is seen as a sum of the existing product portfolio and the products created via NPD. Existing product portfolio is also expanded by possible products introduced by joint ventures. This article questions whether PPM ought to be considered equally as a business process, similarly as product, sales, delivery and care processes.

Keywords: Active product portfolio management; Product Portfolio; Product management; Strategic Management and Key Performance Indicators (KPIs) (search for similar items in EconPapers)
Date: 2013
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