This document summarizes Pitney Bowes' portfolio analysis approach. It discusses the company's history and vision, objectives of portfolio management, and frameworks used to assess core and growth business segments. Key aspects of the analysis include defining portfolio "bubbles", assessing them based on profitability, strategic fit, and market attractiveness criteria, and determining future trajectories to inform strategic plans and budgets. The director learned that connecting strategy and budget requires persistence, focusing on fewer larger strategic opportunities, and thoroughly assessing risks of growth segments.

1. Portfolio Analysis at Pitney Bowes
Ben Yemini
Director, Corporate Strategy
September 29th, 2012
This document is for academic discussion purposes only. It is an incomplete record of the conversation. Data contained
herein has been disguised. This material does not contain any Pitney Bowes official statements of fact or intent.

2. Pitney Bowes History
1902: Arthur Pitney patents his postage-stamping machine
1920: Pitney's American Postage Meter Co. and Walter Bowes's Universal Stamping Machine Co.
merge to form Pitney Bowes
1957: Faces government anti-trust suit, forced to license technology to others
1979: Acquires Dictaphone Corp.
1982: Enters fax machine market
1995: Sells Dictaphone and Monarch subsidiaries
2001: Spins off fax and copier division as Imagistics International
2001-’08: Completes 92 acquisitions including mainly in Software and Services
2008-’10: USPS First Class Mail decline rate increases from -2%/yr. (2001-’08) to -7%yr. (2009-’10)
PB Revenue declines by $800M
EBIT margin declines from 24% to 16%
2009 -‘11: Strategic Transformation initiative
Portrait Software acquired in 2010
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3. Company Vision
We help SMB and Enterprise businesses optimize their communications, transactions &
interactions with their customers, prospects and partners to enable business growth.
Customers Prospects Partners
Communications Solutions for preparing, delivering and responding to
business communications
Process Optimizing internal business processes related to
Optimization connections
Transactions Solutions for executing and processing transactions
Customer Insight Customer and prospect profiling and response analysis
Every Connection is a New Opportunity TM
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4. Objectives of Portfolio Management
• Actively manage our portfolio to leverage our resources most
effectively and maximize value creation for our shareholders
• Key Considerations:
– How is our current portfolio positioned today?
– Given the market outlook, how do we expect our businesses to
perform in the future?
– How should resources (e.g. R&D, Sales & Marketing) be allocated?
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5. Portfolio Management Framework
ENHANCE PROFITABILITY INVEST TO GROW
1 • Maximize cash flow • Prioritize over businesses in other
• Invest in technology to improve quadrants for investments
productivity
• Exit sub-segments with poor prospects
2
Profitability
3
REDUCE COST & SCRUTINIZE GROW & IMPROVE PROFITABILITY
• Prioritize achieving acceptable • Allow growth investments only when
profitability scale drives profitability
4 • Divest/Exit, if underperformance persists • Move businesses up into “Invest to
Grow” or left to “Reduce Cost”
quadrants based on performance to
plan.
5
1 2 3 4 5
Strategic alignment and market attractiveness
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6. Approach to Portfolio Analysis
• Define the portfolio “bubbles”
– Identify Business Unit segments for our core business
– Identify growth segments
• Assess each core and growth bubble based on consistent relative criteria
– Profitability
– Strategic Fit
– Market Attractiveness
• Determine likely trajectory of bubble
• Provide assessment to GMs as input to their 3 year strategic plan and 1
year budget submission
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7. Portfolio Assessment Core Criteria
Profitability Criteria
• EBIT Margin
• Relative
Performance EBIT
Margin vs. Peers
%
Strategic Alignment Criteria Market Attractiveness Criteria
• Leverage Core Assets • Industry Growth
• Trans. & Innovation • Industry Profitability
• Growth Beyond Core • Addressable Market
• LOB Growth • Relative Market Share
• Sustain Profitability • Position vs. Market Forces
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8. Portfolio Assessment Growth Criteria
Profitability Criteria
• NPV (5 YR)
• EBIT Margin (YR 3)
• Cannibalization
Strategic Alignment Criteria Market Attractiveness Criteria
• Alignment with CCM • Industry Growth
• Alignment with BU Strategy • Industry Profitability
• Leverage of core assets • Addressable Market
• Executability • Market Establishment Risk
• Ability to be a disruptor • Susceptibility to Secular Change
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9. What I’ve Learned
• Connecting strategy and budget requires persistence
• Not ending up in the top right is okay
• Invest in fewer, bigger strategic bubbles
• Customer needs should govern bubble definition
• Overinvest in risk assessment for growth bubbles
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