ASHRIDGE PORTFOLIO MATRIX/ PARENTING FIT MATRIX:

Ashridge Portfolio Matrix was developed by Michael Goold and Andrew Campbell. It is used to
evaluate the attractiveness of potential acquisition target or existing business to the parent. This
matrix has two variable according to which the attractiveness of business is to b judged.

Some businesses acts as 'parental developer' acquires other businesses with a view to add to it by
using their resources and capabilities.

Ashridge portfolio matrix is used to evaluate the attractiveness of potential acquisition target or
existing business to the parent. This matrix has two variable according to which the attractiveness of
businesses is to be judged. One is Benefit and the other is feel.

BENEFITS:

It is the value business can add to potential business by utilizing their resources and competencies.
Business may have many resources and capabilities, but only those resources and capabilities are
counted towards benefits which the potential business needs to grow.

In other words, benefits are the opportunities to help. More the business can help, more it can add
value.

FEEL:

Feel is the similarity between Parent and the potential business. Similarities can be determined by
industry, organization structure, culture and law. There can be many other elements need to be
considered. Feel is about critical success factors (CSF) related to the elements stated above. If the
business understands how to make potential businesses successful as it know its CSF, it can use its
resources and capabilities more effectively.

The combination of Benefits and Feels gives the following types of business acquisition targets are:

1. Alien businesses-
These are the business outside the business industry considering the proposed takeover or
merger, so business has no knowledge of internal and external factors that affect the busine
ss operating in that industry, which is necessary to make it successful. It can be said that it
has low feel and low benefits.
2. Value trap business-
These are the company outside the business sector which considers a plan for acquisition or
merger. It can be said to a low feel. The parent has opportunities to add value by improving
it because the company has capital and the ability to help the future acquisition target lacks
the skills required for its success. It can be said that it has high benefits.
3. Ballast businesses-
These are the business within the business sector considering a proposal for takeover or
merger. It can be said that the feel is high. There are no opportunities for the parent to add
value by helping them because the potential target for acquisition has the skills necessary
for their success. It can be said that it has low benefits.
4. Heartland business-
These are the business within the company's sector that considers a plan for acquisition or
merger. This can be said to have a high feel. The parent has opportunities to add value by
helping him because potential business lacks the skills needed to succeed. It can be said that
it has high benefits.
Let’s analyse PepsiCo with this matrix,

- Healthy juices
Benefit: high, since it has significant growth and gains in R&D, production, marketing and
distribution capabilities.
Feel: High, since it possesses all the core competencies due to operation in the related
industry.
So, we can say that healthy juices fall under HEARTLAND BUSINESSES.
- Energy drinks
Benefit: Same as healthy juices i.e. high since they also have significant growth and gains in
R&D, production, marketing and distribution.
Feel: Low, since part of PepsiCo’s diversification is focused compared to its core and critical
factors.
So, we can say that energy drinks fall under ALIEN BUSINESSES.
- Crisps
- Benefit: High or medium with significant growth in marketing and distribution capabilities.
Feel: low, as only one important part of PepsiCo’s diversification strategy is focused
compared to its core factors.
So, we can say that Crisps fall under ALIEN BUSINESSES.
- Sports drinks
Benefit: High, since it has significant growth and gains in R&D, production, marketing and
distribution capabilities.
Feel: High, Core part of PepsiCo group level strategy is focused on.
So, we can say that sports drinks full under HEARTLAND BUSINESSES.