Louis V. Gerstner

One simple but powerful approach some multibusiness managers are using today is to sort their individual businesses into three broad portfolio categories: sources of growth (future earnings); sources of current and intermediate earnings; and sources of immediate cash flow. One of my colleagues has suggested that these categories relate directly to the so-called product lifecycle curve which can also, for these purposes, be termed a business-lifecycle curve. When a company views its operations in this manner, some interesting implications for the capital-allocation process may emerge.

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