magnus919_agent-skills/strategy-frameworks/references/resource-allocation.md

Resource Allocation

Use these prompts to compare uses of capital and organizational attention. The criteria, measures, and review approach should reflect the organization's objectives, financing, constraints, stakeholders, and uncertainty.

Capital Allocation

Potential uses include reinvestment, acquisitions, debt reduction, distributions, reserves, and options not listed here. Compare them through scenarios rather than a blanket ordering.

For each option, document:

• Strategic fit and the capabilities it supports or constrains.
• Expected outcomes, assumptions, and sensitivity to changed conditions.
• Cash needs, liquidity, financing terms, and opportunity cost.
• Risk exposure, reversibility, governance needs, and stakeholder effects.
• Alternatives considered and the evidence needed before commitment.

Financial measures such as return on invested capital, cost of capital, cash flow, and leverage may be relevant, but their use and interpretation depend on the decision and accounting context. Use financial-modeling for quantitative scenario construction.

Acquisition Evaluation

An acquisition can be assessed for market access, capabilities, product fit, talent, distribution, competitive effects, financial value, or another stated rationale. Synergy is one possible rationale, not a universal requirement.

Separate the strategic thesis from the valuation and integration assumptions. Ask:

1. What problem or opportunity does the transaction address, and what alternatives could address it?
2. Which claims about customers, capabilities, economics, regulation, and competitors require diligence?
3. Which valuation methods and scenarios fit the target's circumstances?
4. If benefits depend on integration, what specific changes, owners, costs, dependencies, and risks are assumed?
5. What integration approach fits the operating model: preserve, combine selectively, or integrate more deeply?
6. What evidence or changed conditions would alter the recommendation?

Plan pre-close and post-close work according to the deal's legal, operational, technical, cultural, and customer dependencies. The sequence and duration are deal-specific. Guard against confirmation bias with independent challenge, explicit assumptions, and documented counterarguments; do not attribute that risk to a particular role or personality type.

Portfolio Management and the Growth-Share Matrix

Attribution: the growth-share matrix is associated with the Boston Consulting Group and Bruce Henderson.

The matrix places a business or offering on relative market share and market growth axes. Common labels for the resulting quadrants are stars, cash cows, question marks, and dogs. It is descriptive: it helps organize a portfolio conversation and does not prescribe investment, harvesting, or divestment.

The two axes are limited proxies. They can omit profitability, cash needs, competitive dynamics, strategic interdependence, option value, regulation, management capacity, and the reliability of market data. Use supplementary analysis before a capital decision.

For each portfolio element, assess strategic role, competitive position, customer value, economics, dependencies, future scenarios, and feasible actions. Compare actions such as invest, maintain, partner, reposition, harvest, or exit based on those conditions rather than quadrant alone.

Allocation Decision Artifact

Document the allocation decision so the logic can be revisited after conditions change:

• Decision owner, scope, constraints, stakeholders, and alternatives considered.
• Strategic rationale and explicit connection to the organization's chosen direction.
• Financial scenarios and assumptions, with sensitivity analysis delegated to financial-modeling where appropriate.
• Customer, employee, operational, technical, legal, financing, and integration effects that are material to the option.
• Opportunity costs, dependencies, reversibility, and concentration risks.
• Evidence for the acquisition or portfolio thesis, including disconfirming evidence and independent challenge.
• Governance, accountable owners, decision points, and indicators that would support continuing, adapting, or exiting.

Keep framework classifications separate from the recommendation. A portfolio label, synergy hypothesis, or valuation model is one input to judgment, not the judgment itself.