Case Detail

Case Summary

Danaka Corporation: Growth Portfolio Management

Case Number: 5-306-511, Year Published: 2007

HBS Number: KEL300

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Authors: Mark Jeffery; Robert A Cooper; Debarshi Sengupta

Key Concepts

Revenue Growth, Enterprise Portfolio Management, Business Units, R&D Management, Strategy Alignment, Innovation Management, Portfolio Management

Abstract

A major barrier for growth of large multi-business unit firms is the inability to resource the critical initiatives to win—both in terms of dollars and people. The underpinning of the challenge involves the conflict between resourcing current cash-generating legacy businesses vs. new initiatives which may not, in the short term, produce positive financial results. Most companies do not have a formal portfolio process to deal with this fundamental issue. Danaka is a fictional company based on real business experiences. The company has strong growth markets as well as markets that are commoditizing. Unfortunately, the latter represent a sizeable portion of the company's business. A framework is given that establishes a matrix to analyze the Danaka businesses using their critical financial criteria—cash generation and top-line growth. Projects are divided into four categories based on how they fit into the matrix, and resource allocations are then analyzed. Students discover that the current allocation does not enable Danaka to meet its aggressive growth goals. The case incorporates an interactive spreadsheet model in which students can dynamically change the various resource allocations and see the impact on future top-line growth. The essence of the case is how to manage the resource allocation for a multi-business unit firm when present allocations will not meet future growth goals. The case is used in the Kellogg three day executive program Driving Organic Top-Line Growth and in the Kellogg MBA class TECH922 Managing Portfolios and Projects.

Learning Objectives

The key learning of this case is that when business leaders set financial goals, they must understand how they are expending their resources. More often than not, significant changes must occur that could be wrenching to the organization. The key learning objectives are: (1) realize the importance of performing a portfolio analysis; (2) discuss the issues involved in making the changes; and (3) understand how to put the decision process in place.

Number of Pages: 16

Extended Case Information

Teaching Areas: Management, Strategy

Teaching Note Available: Yes

Geographic: Global

Industry: Chemicals, Pharmaceuticals

Organization Name: Danaka

Organization Department: Corporate Management

Organization Size: Large

Decision Maker Position: COO

Decision Maker Gender: Male

Year of Case: 2006