The common currency of portfolio decisions is the business case. Without a business case, comparison becomes a contest of persuasion. The value of a business case lies not in its absolute accuracy, but in the fact that it has been generated using the same methodology for all items .
Scope
Revenue projection: A multi-year revenue forecast based on volume, price, and market share assumptions.
Cost structure: Development cost, unit production cost, sales and distribution cost, service and warranty cost, portfolio retention cost.
Financial indicators: Net present value, internal rate of return, payback period, break-even volume.
Risk adjustment: Weighting of expected value against probabilities of technical and commercial success.
Cannibalization and complementarity effect: The net impact of the new product on the existing portfolio. This item is often overlooked in business cases, leading to systematically overly optimistic results.
Planned-actual comparison: Comparing actual post-launch results with a business case study. Without this feedback, forecasting capabilities will never improve.
In the real business world
In Türkiye's environment of high inflation and currency volatility, basing multi-year business case analyses on a single scenario is a serious mistake. A sound approach is to define at least three scenarios—optimistic, realistic, and pessimistic—and make the decision based on the magnitude of the difference between these scenarios.
Furthermore, the business case must reside in the same system as the accounting data. A business case kept in a separate table will stop being updated after the first quarter.
Benefit to the customer
Investment decisions become comparable.
The difference between what is expected and what actually happens is measured, and the quality of predictions improves over time.
Damaged products are detected early.
The impact of exchange rate and cost changes on portfolio profitability is immediately apparent.