Monday, February 21, 2011

Grand Strategy Matrix



Based on four important elements of rapid market growth, slow market growth, strong competitive position, and weak competitive position, Grand Strategy Matrix has been emerged into a dominant tool in formulating cross-functional strategies. To simplify the job of identification and selection of best fitting strategy the elements of the Grand Strategy Matrix actually form a four quadrant Matrix where relevant organizations in the analysis are positioned. Instead of different organizations a firm with many divisions can plot its divisions across Grand Strategy Matrix for the sake of devising best suited strategy for each division.

The efficiency of the management greatly depends upon adoption of and pursuing the strategies consistent with the market and competitive position of the firm. For devising appropriate strategy management is required to reveal the firm’s competitive position and market place through a scientific analysis of its current position. Grand Strategy Matrix is there to simplify the job.

How to construct a Grand Strategy Matrix

In fact Grand Strategy Matrix represents two evaluative dimensions referred to as market growth and competitive position. Horizontal line shows market growth labeling rapid market growth at the upper front and slow market growth at the lower front whereas vertical line shows competitive position labeling strong competitive position at the right end and weak competitive position at the left end. Such a mechanism of Grand Strategy Matrix emerges into a four quadrant matrix where right strategies are enlisted in accordance with the characteristics or attributes of each quadrant firms.

A Model of Grand Strategy Matrix


RAPID MARKET GROWTH




Firm Attributes:
competitive position (weak)
        Market Growth (rapid)

·          Market development
·          Market penetration
·          Product development
·          Horizontal integration
·          Divestiture
·          Liquidation



Quadrant two



Firm Attributes:
competitive position (strong)
        Market Growth (rapid)

·          Market development
·          Market penetration
·          Product development
·          Forward integration
·          Backward integration
·          Horizontal integration
·          Related diversification

Quadrant one































WEAK
COMPETITIVE
POSITION
STRONG
COMPETITIVE
POSITION


Firm Attributes:
competitive position (weak)
        Market Growth (slow)

·          Retrenchment
·          Related diversification
·          Unrelated diversification
·          Divestiture
·          Liquidation


Quadrant three




Firm Attributes:
competitive position (strong)
        Market Growth (slow)

·          Related diversification
·          Unrelated diversification
·          Joint ventures




Quadrant four









































SLOW MARKET GROWTH




The above model of Grand Strategy Matrix represents four quadrants.

First quadrant

The first quadrant refers to the firms or divisions with strong competitive base and operating in fast moving growth markets. Such firms or divisions are better to adopt and pursue strategies such as market development, market penetration, product development etc. The idea behind is to focus and make the current competitive base stronger. In case such firms possess readily available resources they can move on to integration strategies but should never be at the cost of diverting attention from current strong competitive base.

Second quadrant

Quadrant two firms are attributed with weak competitive advantage but operating in fast growing market. The suitable strategies for such firms are to develop the products, markets, and to penetrate into the markets. To achieve the competitive advantage or becoming market leader quadrant two firms can go into horizontal integration subject to availability of resources. However if these firms foresee a tough competitive environment and faster market growth than the growth of the firm, the better option is to go into divestiture of some divisions or liquidation altogether and change the business.

Third quadrant

Firms falling under quadrant three are characterized with weak competitive position and slow growth market. Such firms need a major overhaul and more ideally should go into liquidation, retrenchment, and divestiture. Changing the business is a better option.

Fourth quadrant

Although competitive position of quadrant four firms is strong but can not ensure larger revenues due to slow moving markets. Such firms are better to go into related or unrelated integration in order to create a vast market for products and services. In some cases joint venture with other firms can bestow such firms with significant benefits.

1 comment:

  1. The world is so competitve, aggressive, consumive, selfish and during the time we spend here we must be all but that. See the link below for more info.


    #competitive
    www.ufgop.org

    ReplyDelete