D.P.M. METHOD - A PERFORMANCE ANALYSIS INSTRUMENT OF A STRATEGIC BUSINESS UNIT

Abstract

Considering the uncertain economic conditions, the market dynamics, the fundamental changes in the attitudes and aspirations of the consumers along with the strong growth of the political role and interventions in the economy, currently characterizing both Romania and other countries of the world, it can be said that the need for strategic planning was never so acute as now. The strategic planning process is an ongoing organizational activity by which managers can make decisions about their present and future position. A number of analytical portfolio tools exist to aid managers in the formulation of the strategy. The use of these tools within the broader context of the overall strategic planning process allows managers to determine the obstacles and opportunities existing in the company’s environment and to define and pursue appropriate strategies for growth and profitability. The present paper aims to highlight from a theoretical standpoint the D.P.M. method, its strategic consequences, advantages and disadvantages. After conducting this analysis I have found that restricting the business portfolio analysis to the D.P.M. matrix is not a very wise decision. The D.P.M. matrix among with other marketing tools of business portfolio analysis have some advantages and disadvantages and is trying to provide, at a time, a specific diagnosis of a company’s business portfolio. Therefore, the recommendation for the Romanian managers consists in a combined use of a wide range of tools and techniques for business portfolio analysis. This leads to a better understanding of the whole mix of product markets, included in portfolio analysis, the strategic position held by each business within a market, the performance potential of business portfolio and the financial aspects related to the resource allocation process for the businesses within the portfolio. It should also be noted that the tools and techniques specific to business portfolio analysis do not give accurate answers, despite the appearances created by the analysis stage, where the businesses are plotted rigorously. However, their main virtue is simplicity, as these highlight the managers’ need for further investigations