Applying the MABA analysis for business portfolio management

The MABA (Market Attractiveness, Business Attractiveness) Analysis is a strategic tool used for evaluating and managing a company’s portfolio of businesses or products. It helps organizations prioritize their investments by assessing both the attractiveness of the market and the strength of their business within that market.

This analysis is particularly useful for startups or companies with multiple product lines, allowing them to allocate resources effectively and focus on areas with the highest potential for growth and profitability.

Components of the MABA analysis

The MABA Analysis involves evaluating two main dimensions:

1. Market attractiveness: This dimension assesses the overall appeal of the market in which the business or product operates. Factors influencing market attractiveness include market size, growth rate, competitive intensity, customer demand, regulatory environment, and profitability potential.
2. Business attractiveness: This dimension evaluates the company’s position within the market. It considers factors such as market share, brand strength, cost structure, product differentiation, distribution channels, and technological capabilities.

Steps to apply the MABA analysis to your startup

1. Identify your portfolio elements Begin by listing all the products, services, or business units that make up your startup’s portfolio. This could include different product lines, service offerings, or even potential markets you are considering entering.
2. Determine criteria for market attractiveness Define the criteria that will help you assess the attractiveness of each market. Common criteria include:

• Market size and growth potential
• Competitive intensity
• Profit margins
• Customer demand
• Regulatory and economic factors For example, if your startup offers AI-based tools for various industries, you might consider market size, demand for AI solutions, and competition as key factors.

3. Evaluate business attractiveness Assess your startup’s position in each identified market by considering factors such as:

• Market share and brand recognition
• Cost structure and profitability
• Product or service differentiation
• Distribution and supply chain efficiency For instance, if one of your product lines has a strong brand presence and a cost advantage over competitors, it would score higher on business attractiveness.

4. Plot the results on a matrix Create a two-dimensional matrix with market attractiveness on the vertical axis and business attractiveness on the horizontal axis. Plot each business unit or product line on the matrix based on your assessments.

• High market attractiveness, high business attractiveness: Prioritize these for investment and growth.
• High market attractiveness, low business attractiveness: Consider improving your position through investment, partnerships, or innovation.
• Low market attractiveness, high business attractiveness: Evaluate whether to continue or divest, focusing on maintaining profitability.
• Low market attractiveness, low business attractiveness: These are candidates for divestment or reallocation of resources.

5. Develop strategic recommendations Based on the placement of each element in the matrix, develop strategies for managing your portfolio. For example, if a product line falls into the “high market attractiveness, low business attractiveness” quadrant, you might invest in marketing or innovation to strengthen your position.

Real-world examples of MABA analysis

1. General Electric: GE used a similar analysis in the 1980s to manage its diverse portfolio of businesses. By evaluating market and business attractiveness, GE was able to identify and focus on high-potential businesses like healthcare and aviation, while divesting from less attractive sectors like consumer electronics.
   
2. Procter & Gamble: P&G has used MABA analysis to assess its vast portfolio of consumer brands. By evaluating market trends and the strength of each brand, P&G has made strategic decisions to divest from less attractive markets (e.g., its exit from the food and beverage business) and focus on growing brands in high-potential categories like personal care.

Applying MABA analysis to your startup

For your startup, let’s say you’re managing a portfolio of AI-based tools targeting different industries like healthcare, finance, and retail. Here’s how you might apply MABA analysis:

1. List your products: AI diagnostic tools for healthcare, AI fraud detection for finance, AI personalized marketing for retail.
2. Assess market attractiveness:

• Healthcare: High (growing demand, high profitability)
• Finance: Medium (stable but highly competitive)
• Retail: Low (saturated market, lower margins)

3. Evaluate business attractiveness:

• Healthcare: Medium (strong technology, limited market share)
• Finance: High (strong partnerships, recognized brand)
• Retail: Low (new entry, limited differentiation)

4. Plot on the matrix:

• AI diagnostic tools: High market, medium business
• AI fraud detection: Medium market, high business
• AI personalized marketing: Low market, low business

5. Strategize:

• Focus on growing the healthcare product by investing in marketing and partnerships.
• Maintain and enhance the finance product with continuous innovation.
• Consider whether to improve or divest the retail product based on further market analysis.

By using MABA Analysis, you can make informed decisions about where to invest your resources and how to prioritize different parts of your business portfolio, ensuring sustainable growth and profitability.