24th of November, 2014
Assignment ‘Le Petit Chef’
Cooper, Edgett and Kleinschmidt (2011) have identified three important aspects for portfolio management: strategic alignment, balance and value maximization. Bad portfolio management can yield in failure of new product development (Kester, Griffin, Hultink & Lauche, 2011). This is currently the case at Le Petit Chef, as I will explain below.
Le Petit Chef doesn’t use strategic methods to make portfolio decisions, but applies financial methods, as is shown in exhibit 13 and 15. Cooper and colleagues (2011) have found that financial methods lead to the worst portfolio results, when compared to other methods.
Besides the lack of well-endowed portfolio decision methods, the portfolio of Le Petit Chef is also lacking balance. Currently there are too many projects for the available amount of resources. Moreover, as shown in exhibit 13 and 15, the majority of products is focussed on incremental innovations.
On top of that, not all projects add value to Le Petit Chef, as is shown by the huge amount of minor innovative product launches in exhibit 9. Therefore, Le Petit Chef should incorporate clear Go/Kill decisions, which prevents the firm to continue with projects that have little value. How should Le Petit Chef improve its portfolio management?
Because strategic alignment is shown to be one of the most important factors for successful portfolio management, Brigitte Gagné should firstly take the strategic goals of Le Petit Chef in consideration when making portfolio decisions. As described in the case, the strategy of Le Petit Chef is a differentiation strategy, caused by the implementation of technological innovations and high performance. The first criterion for a project to be accepted in the portfolio of Le Petit Chef, should be if the is in congruence with the strategy. Furthermore, Brigitte Gagné should focus on balance and value, because these two aspects are of great importance for portfolio...
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