Research On L Company’s Business Portfolio Optimization Based On GE Matrix

The current market economy is changing,and enterprises are under the double pressure of the increasingly severe market competition environment and the gradual downward macro-economy,especially since the outbreak of the Covid-19 in early2020,all industries have been seriously affected by the huge changes,which undoubtedly put a heavy yoke on the development of enterprises.In order to enhance their comprehensive strength and expand the market share of their business,each enterprise must firmly control their investment direction in operation,comply with the national policy,follow the market development law,reasonably choose the business strategy according to the actual operation status of the operating unit,and maximize the use of its own advantages in the industry to achieve value added.L Company is a private enterprise with diversified operation integrating building construction,real estate development,building materials production and sales,property service and agricultural planting.Over the past twenty-five years,the company has started from undertaking small-scale building construction business,through upgrading its construction engineering professional contracting qualification level and expanding the scope of business,it has eventually achieved the development of multiple projects and business scope across multiple fields.However,with the real estate industry entering the mature stage,the competition between enterprises in the construction market and the real estate industry is becoming more and more fierce.In addition,under the control of relevant national policies on the market,the relatively conservative management concept and the current business combination strategy of L Company have been unable to provide guidance for the operation direction of each business segment of the Company for a long time.The effect of diversification strategy is not obvious,and its overall business development has fallen into a bottleneck.How to find the entry point and help L company out of the "bottleneck period" of development has become the main content of this paper.This paper is guided by the overall strategy of L Company and based on the GE matrix model to study the current business situation of the company,and explore the best optimization path of business portfolio.The article first describes the concept of business portfolio,the diversification strategy theory,business strategy theory and GE matrix theory,then introduces the overall operation of L Company and focuses on the actual situation of the company’s five business segments,it is found that the current problems of L Company’s business portfolio include: unreasonable industrial layout,lack of core competitiveness,unscientific resource allocation,and lack of foresight in business portfolio management strategy.At the same time,the reasons for the above problems are concluded,including: the human resources management system of L Company is not perfect,the financing channel is too narrow,the corporate governance structure needs to be further improved,and the risk management mechanism is not perfect.The Questionnaire method is used to establish the evaluation system of all business segments of L Company,meanwhile,the evaluation dimensions of all internal and external factors are weighted and scored to build the GE matrix model,and analyze the evaluation results of the GE matrix model of each business segment of L Company.Finally,according to the GE matrix strategic decision-making model,the specific distribution positions of L Company’s five business segments in the GE matrix are determined.Based on the company-level strategy of L Company-the diversification strategy with the construction business as the core,optimize the development path of business portfolio under the guidance of diversification.After research,the following conclusions are drawn: The construction business of L Company should choose to develop this business sector,focusing on the three businesses of housing construction,municipal utilities and foundation engineering,looking for market segments and realizing professional operation;the real estate development business sector should be prepared to withdraw from the business field in time to reduce the occupation of L company’s resources;the building materials business sector should maintain the current business scale,find market segments,achieve professional operation,and enhance the difference between its own products and similar concrete blocks;The optimization strategy of the property management business segment is to adopt the differentiation strategy.With the knowledge and permission of the customer,collect and integrate the owner’s information to establish an information base,dig deeper into the customer service demands,find the blank area of the property market,and compete for a small part of the market share of the company to seek new revenue growth points;The operating income and net interest rate of the horseradish planting business segment performed well,and the development prospect is foreseeable.Therefore,according to the real-time market situation of the horseradish market,increase the investment scale,expand the planting area of horseradish,improve the yield and quality of horseradish,and highlight its unique advantages to ensure the leading position of L Company in the horseradish market.At the same time,the article also puts forward corresponding measures for the path of optimizing the business portfolio of L Company.On the one hand,the research in this paper provides guidance for the development direction of L Company’s business portfolio,so that it can maximize its own industrial advantages,improve operating income,and ultimately achieve value appreciation.On the other hand,it also provides some valuable development ideas for other small and medium-sized private enterprises engaged in diversified business.