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UNIT IV: Functional Level Strategies including R&D and IT Strategy - In-sourcing and outsourcing - operating and financial analysis - portfolio analysis (BCG & GE Matrix) – strategy implementation - programmes – budgets – procedures - role of organizational structure – culture and leadership - McKinsey 7S framework - concept of balanced scorecard for strategic implementation.
Functional Level Strategies (Department Level) Operational
Functional business strategy is an area of operational management based on a specific department or discipline within an organization, such as human resources, finance or marketing. To say that a business has a functional level strategy for product development, for instance, means that the company has developed a strategy for selling its goods and services to customers. Functional business strategy is part of an organization's wider strategic plan.
- Relates to a single functional operation and the activities involved therein. These decisions are often referred as tactics.
- It deals with relatively restricted plan providing objectives for specific action, allocation of resources among different operations within the functional area and coordination between them for the optimal contribution towards the achievement of business level and corporate level strategies.
- Marketing strategy is an example of a functional strategy Eg : A business unit following a competitive strategy of differentiation through high quality needs a manufacturing functional strategy that emphasizes expensive quality assurance process over cheaper, high-volume production. Eg : When Maggi Noodles expanded into India, it was marketed as a snack food and not as a main course meal. Since Indians prefer a heavy breakfast, they preferred to eat noodles in the evening as a fast to cook and ready to serve evening meal, especially to children. Any functional strategy will be successful if it is built around core competence and distinctive competence. When a firm does not have distinctive competence in any functional area, it is preferable to opt for outsourcing.
- Marketing Strategy Marketing strategy deals with pricing, selling and distributing a product. Using a market development strategy , a company or business unit can (1) Capture a larger share of an existing market for current products through market saturation and market penetration or (2) Develop new users and/or markets for current products e.g. P & G, Colgate – Palmolive Consumer product giants such as P&G, Colgate-Palmolive and Unilever are experts at using advertising and promotion to implement a market saturation/penetration strategy to gain the dominant market share in a product category. Nestle had to follow market development strategy by finding alternate uses of its product Milkmaid. Initially launched as a substitute for milk, the product was unable to grasp customer attention. The company extended its lifecycle by introducing the product as a dessert ingredient and today the product has a wide range of recipes.
Using the product development strategy , a company or unit can (1) Develop new products for existing markets or (2) Develop new products for new markets. e.g. Nestle generated new uses for its product by reformulating Milkmaid as a fruit yoghurt and fun-shakes ingredient. GCMMF – Amul products (Using a successful brand name to market other products is called line extension and is a good way to appeal to a company’s current customers). There are numerous other marketing strategies.
Using Advertising and promotion strategy , a company or business unit can use · Push Strategy – Spending a large amount of money on trade promotion in order to gain or hold shelf space in retail outlets. · Pull Strategy – spending a large amount of money on consumer advertising designed to build awareness so that shoppers will ask for the products. Many large food and consumer products companies in US and Canada follow a push strategy by spending a large amount of money on trade promotion in order to gain or hold shelf space in retail outlets.
Using Distribution strategy , a company or business unit can choose any method of distribution, namely · Using distributors and dealers to sell the products · Selling directly to the consumers
Using Pricing strategy , a company or business unit can choose, · Skim pricing means high price, when the product is novel and competitors are few or · Penetration pricing is aimed at gaining high market share with a low price. When pricing a new product, a company or business unit can follow one of two strategies. For new product pioneers, skim pricing offers the opportunity to “skim the cream” from the top of the demand curve with a high price while the product is novel and competitors are few. Penetration pricing, attempts to hasten market development and offers the pioneer the opportunity to use the experience curve to gain market share with a low price and then dominate the industry. The use of the Internet to market goods directly to consumers allows a company to use dynamic pricing, a particular in which prices vary frequently based upon demand, market segment and product availability.
- Four P ‘s: Product, Pricing, Place, Promotion Product concept a. consumer goods a.1 convenience goods a.2 shopping goods a.3 specialty goods b. insistence goods c. industrial goods(RM,SFG, Fabricated materials, Equipments, Operating Supplies)
One of the R&D choices is to be either a technological leader , pioneering an innovation, or a technological follower , imitating the products of competitors. Porter suggests that deciding to become a technological leader or a follower can be a way of achieving either overall low cost or differentiation.
Research and Development Strategy and Competitive Advantage One example of an effective use of leader R&D functional strategy to achieve a differentiation competitive advantage is Nike. Nike spends more than most in the industry on R&D to differentiate the performance of its athletic shoes from that of its competitors. As a result, its products have become the favorite of serious athletes. A new approach to R&D is open innovation , in which a firm uses alliances and connections with corporate, government, academic labs, and even consumers to develop new products and processes. Indian companies are willing to invest big in R&D, Dr. Reddy’s, Biocon, Dabur, Panacea are few.
- Operations Strategy Operations strategy determines how and where a product or service is to be manufactured, the level of vertical integration in the production process, the deployment of physical resources, and relationships with suppliers. It should also deal with optimum level of technology the firm should use in its operations processes. The strategies are: · Advances manufacturing Technology (AMT) · Manufacturing strategy of a firm is affected by a product’s life cycle. A firm can opt for either production system (a)Job shop operations through connected line batch flow or (b)Flexible manufacturing systems and dedicated transfer lines/ · Continuous improvement strategy · Mass customization · Modular product designs Advanced Manufacturing Technology (AMT) is revolutionizing operations worldwide and should continue to have a major impact as companies strive to integrate diverse business activities by using computer assisted design and manufacturing (CAD/CAM) principles. The use of CAD/ CAM, flexible manufacturing systems, computer numerically controlled systems, automatically guided vehicles, robotics, manufacturing resource planning (MRP II), optimized production technology, and just-in time techniques contribute to increased flexibility, quick response time, and higher productivity. Such investments also act to increase the company’s fixed costs and could cause significant problems if the company is unable to achieve economies of scale. A company’s manufacturing strategy is often affected by a product’s life cycle. Increasing competitive intensity in many industries forced companies to switch from traditional mass production using dedicated transfer lines to a continuous improvement production strategy. The automobile industry adopted the strategy of modular manufacturing in which preassembled subassemblies are delivered as they are
needed (i.e just-in-time) to a company’s assembly line workers, who quickly assembles the model together into a finished product.
- Purchasing Strategy Purchasing strategy deals with obtaining the raw materials, parts, and supplies needed to perform the operations function. Purchasing strategy is important because materials and components purchased from suppliers comprise 50% of total manufacturing costs of manufacturing companies in. The basic purchasing choices are multiple, sole, parallel sourcing. · Multiple Sourcing – is superior to other purchasing approaches because (a)It forces suppliers to compete for the business of an important buyer, thus reducing purchasing costs and (b)If one supplier could not deliver, another usually could, thus guaranteeing that parts and supplied would always be on hand when needed. · Sole Sourcing – relies on only one supplier for a particular part. It is the only manageable way to obtain high superior quality. It can simplify the purchasing company’s production process by using JIT rather than keeping inventories. It reduces transaction costs and builds quality by having purchaser and supplier work together as partners rather than as adversaries. · Parallel Sourcing – Two suppliers are the sole suppliers of two different parts, but they are also backup suppliers for each other’s parts. If one vendor cannot supply all of its part on time, the other vendor would be able to make up the difference. The internet is being increasingly used both to find new sources of supply and to keep inventories replenished. For example, Hewlett-Packard introduced a web based procurement system to enable its 84, employees to buy office supplies from a standard set of suppliers. The new system enabled the company to save $60 to $ 100 million annually in purchasing costs.
- Logistics Strategy Logistics strategy deals with the flow of products into and out of the manufacturing process. In India, transportation accounts for almost 40% of the logistics cost. To stay competitive, companies need to cater to a strategy that allows the company to deliver right product at the right time, at the right place and to the right consumer. Three trends related to this are: centralization, outsourcing, and the use of internet. To gain logistical synergies across business units, corporations began centralizing logistics in the headquarters group. This centralized logistics group usually contains specialists with expertise in different transportation modes such as rail or trucking. Companies view logistics function as an important way to differentiate themselves from the competition, add value, and reduce costs. It is because of this logic that Wal-Mart’s fully owned logistics arm Gazeley is looking after Wal-Mart and Bharti’s retail venture. Many companies are using the internet to simplify their logistical system too Three trends are evident, namely: · Centralization – Refers to the centralized logistics group usually contains specialists with expertise in different transportation modes such as rail or trucking. · Outsourcing – of logistics reduces cost and improves delivery time.
- Drivers that favor this decision:
- Keep core competencies in-house.
- IS service or product that requires considerable security or confidentiality.
- Time available in-house to complete IS projects.
- (^) In-house IT personnel.
- Challenges to Insourcing :
- Getting needed IT resources from management.
- Finding a reliable competent outsource provider
OUTSOURCING : is purchasing from someone else a product or service that had been previously provided internally. It is becoming an increasingly important part of strategic decision making and an important way to increase efficiency and often quickly. Firms competing in global industries must in particular search worldwide for the most appropriate suppliers. Business-process outsourcing (BPO ) involves companies hiring other companies to take over various parts of their functional operations, such as human resources, information systems, payroll, accounting, customer service, and even marketing. Companies choose to outsource their functional operations for several reasons: (a) it is less expensive, (b) it allows the firm to focus on its core businesses, and (c) it enables the firm to provide better services. Other advantages of outsourcing are that the strategy (a) allows the firm to align itself with “best-in-world” suppliers who focus on performing the special task, (b) provides the firm flexibility should customer needs shift unexpectedly, and (c) allows the firm to concentrate on other internal value chain activities critical to sustaining competitive advantage. BPO is a means for achieving strategies that are similar to partnering and joint venturing. Eg : Daimler Chrysler outsourced its designing of car accessory to Plexion Technologies in Bangalore. Toyota has outsourced its transmission components designing to BFL. The key to outsourcing is to purchase from outside only those activities that are not key to the company’s distinctive competencies. Otherwise, the company may give up the very capabilities that made it successful in the first place – thus providing itself on the road to eventual decline. In determining functional strategy, the strategist must. · Identify the company’s or business unit’s core competencies · Ensure that the competencies are continually being strengthened and ·Manage the competencies in such a way that best preserves the competitive advantage they create.
- Drivers include :
- Cost reduction achieved through economies of scale (outsourcer may be able to negotiate lower prices on hardware and software)
- Help a company transition to new technologies through access to larger IT talent pools.
- Bringing in outside expertise can help management focus more attention on core activities rather than on IT issues.
- Outsourcing companies know how to hire, manage, and retain IT staff.
- Greater capacity on demand.
- Overcome inertia to consolidate data centers
Outsourcing generally aims to achieve one or more of the following benefits:
- Cost savings: access lower wages in foreign countries.
- Focus on core business: Focus resources on developing the core business rather than being distracted by other functions.
- Cost restructuring: Outsourcing changes the balance of fixed costs to variable costs by moving the firm more to variable costs. Outsourcing also makes variable costs more predictable.
- improve quality: improve quality by contracting out various business functions to specialists.
- Knowledge: gain access to intellectual property and wider experience and knowledge.
- Contract: gain access to services within a legally binding contract with financial penalties and legal redress. This is not the case with services performed internally.
- Operational expertise: gain access to operational best practice that would be too difficult or time consuming to develop in-house.
- Access to talent: gain access to a larger talent pool and a sustainable source of skills, especially science and engineering.
- Catalyst for change: Use an outsourcing agreement as a catalyst for major change that cannot be achieved alone.
- enhance capacity for innovation: Use external knowledge to supplement limited in-house capacity for product innovation.
- reduce time to market: accelerate development or production of a product through additional capability brought by the supplier.
- Risk management: Manage risk by partnering with an outside firm.
- tax benefit: capitalize on tax incentives to locate manufacturing plants to avoid high taxes in various countries. Fig: Proposed Outsourcing Matrix
Activity’s Total Value-Added to Firm’s Products and Services
Low High
Low High
Taper Vertical Integration: Produce Some Internally
Full Vertical Integration: Produce All Internally
Outsource Completely: Buy on Open Market
Outsource Completely: Purchase with Long-Term Contracts
Activity’s Potential for Competitive Advantage
Like product life cycle- Life Cycles are found in markets, businesses and industries. Life cycle is a conceptual model that suggests that products, markets, businesses and industries evolve through sequential stages of introduction, growth, maturity and decline.
The main advantage of life cycle is that it can be used to diagnose a portfolio- (of products, businesses or industries)- in order to establish the stage at which each of them exists.
For instance- Expansion may be feasible for introductory and growth stage. A combination of strategies like selective, harvesting, retrenchment..etc may be adopted for declining businesses.
4. Industry Analysis and Competition Analysis Porter’s Approach to Industry Analysis 5. STRATPORT Model STRAPORT (Strategic Portfolio) model is developed to assist managers in allocating resources across strategic opportunities. In the model, the firm is characterized as developing cash resources from internal operations and external financial sources. These cash resources are allocated to businesses that represent strategic opportunities. The time horizon considered in the model is divided into two periods- 1. Planning and 2. Post planning period The resources allocated affect the performance of the business unit during planning, whereas the post planning period is used to evaluate the long term impact of the allocations. 6. Economic Value Added (EVA) Economic value added is a popular concept in finance today. The key is that the cost of equity capital should be used in calculating return on capital. It forces companies to be aware of all resources that are used in serving each product-market. EVA= (Operating profit-Taxes)- (Debt capital rate X D/(D+E) + Equity Capital cost. D= Debt E= Equity **7. Comprehensive Analysis:-
- Comparative Analysis**
Portfolio analysis (BCG & GE Matrix)
▲ CORPORATE PORTFOLIO ANALYSIS In portfolio analysis, top management views its products lines and business units from a portfolio of investment. ■ Portfolio analysis has been devised to help associations to bridge the gap between strategy formulation and strategy implementation. ■ Portfolio analysis is a systematic way to analyze the products and services that make up an association's business portfolio. ■ Portfolio analysis helps you decide which of these products and services should be emphasized and which should be phased out, based on objective criteria.
■ Portfolio analysis should be regarded as a disciplined and organized way of thinking about asset allocation. It is only a subjective tool, however, and is not a substitute for the ultimate professional judgment of the responsible decision-makers. ■ It is mainly used for competitive analysis and corporate strategic planning in multi-product and multi- business firms. Portfolio analysis is an analytical tool which views a corporation as a basket or portfolio of products or business units to be managed for the best possible returns. When an organization has a number of products in its portfolio, it is quite likely that they will be in different stages of development. Some will be relatively new and some much older. Many organizations will not wish to risk having all their products at the same stage of development. It is useful to have some products with limited growth but producing profits steadily, and some products with real growth potential but may still be in the introductory stage. Indeed, the products that are earning steadily may be used to fund the development of those that will provide the growth and profits in the future. So the key strategy is to produce a balanced portfolio of products, some with low risk but dull growth and some with high risk but great potential for growth and profits. This is what we call as portfolio analysis.
- It simply means a range of investments held by a company.
- Eg: marketing mix
- It uses Display Matrices The aim of portfolio analysis is
- To analyze its current business portfolio and decide which businesses should receive more or less investment.
- To develop growth strategies, for adding new businesses to the portfolio
- To decide which business should not longer be retained Balancing the portfolio – Balancing the portfolio means that the different products or businesses in the portfolio have to be balanced with respect to four basic aspects – · Profitability · Cash flow · Growth · Risk Using a portfolio model to make strategic decision involves ✓ Identifying a set of strategic alternative to be considered ✓ Classifying each alternative for long-term performance potential and ✓ (^) Classifying each alternative based on this assessment and allocating sufficient resources based on the classification Three of the most popular portfolio techniques are (Methods of portfolio planning)
- The Boston Consulting Group (BCG) Matrix / BCG growth share matrix
- GE multifactor model/ GE business screen
- Hofer’s product/market evolution matrix In each method, the first step is to identify the various Strategic Business Units ("SBU's") in a company portfolio. An SBU is a unit of the company that has a separate mission and objectives
Analysis of the BCG matrix – the matrix reflects the contribution of the products or business units to its cash flow. Based on this analysis, the products or business units are classified as – i) Stars ii) Cash cows iii) Question marks iv) Dogs
■ I- Question Mark (Market growth is high and Market share is low)
Products and their respective strategies fall into one of four quadrants. The typical starting point for a new business is as a question mark. Question Mark (sometimes called “problem children” or “wildcats”) are new products with potential for success, but they need a lot of cash for development. If such a product is to gain enough market shares to become a market leader and thus a star, money must be taken from more mature products and spent on question mark. This is a “fish or cut bait” decision in which management must decide if the business is worth the investment needed. Tata to come up with new Tata Nano cars
- Question marks are cash users in the organization.
- Early in their life, they contribute no revenues and require expenditures for market research, test marketing, and advertising to build consumer awareness.
- Most businesses start as question marks as the company tries to enter a high growth market in which there is already a market-share.
♦ The general features of question marks are : · Their cash needs are high · But their cash generation is low ·Organization must decide whether to strengthen them or sell them The firm may adopt growth strategy for question marks. Various activities may be undertaken to transform question marks into stars.
- Penetration pricing strategy
- Effective sales promotion and other elements of promotion – mix
- Dealers incentives
- Enhancing customer relationship Note: Market Penetration • Market Development • Product Development • Divestiture
■ II-Stars (Market growth is high and Market share is high) ■ Stars are market leaders that are typically at the peak of their product life cycle and are able to generate enough cash to maintain their high share of the market and usually contribute to the company’s profit. HP’s printer business has been called HP’s “crown jewel” because of its 41% market share in printers and its control of the replacement cartridge market.
- Represent the organization’s best long-run opportunities for growth and profitability. If the correct decision is made and the product selected achieves a high market share, it becomes a BCG matrix star. Stars generate large cash flows for the business, but also require large infusions of money to sustain their growth. Stars are often the targets of large expenditures for advertising and research and development to improve the product and to enable it to establish a dominant position in the industry.
- Forward, backward and horizontal integration; market penetration; market development; and product development are appropriate strategies for these divisions to consider.
- SBU‘s located in this cell are attractive as they are located in a robust industry and these business units are highly competitive in the industry. If successful, a star will become a cash cow when the industry matures.
♦ The general features of stars are - · High growth rate means they need heavy investment · High market share means they have economies of scale and generate large amount of cash · But they need more cash than they generate
■ III-Cash Cows (Market growth rate is low and market share is low)
Cash Cows typically bring in far more money than is needed to maintain their market share. In this declining stage of their life cycle, these products are “milked” for cash that will be invested in new question marks. Panasonic’s video cassette recorders (VCRs) moved to this category when sales declined and DVD player/recorders replaced them.
- called cash cows because they generate cash in excess of their needs, they are often milked Cash cows are business units that have high market share in a low-growth market. These are often products in the maturity stage of the product life cycle. They are usually well- established products with wide consumer acceptance, so sales revenues are usually high. The strategy for such products is to invest little money into maintaining the product and divert the large profits generated into products with more long-term earnings potential.
cows, and cash cows become stars (in a clockwise motion). In some organizations, no cyclical motion is apparent. Over time, organizations should strive to achieve a portfolio of division that is stars. ▲ Advantages – · It is easy to use · It is quantifiable · It draws attention to the cash flows · It draws attention to the investment needs
▲ Limitations of BCG Matrix The BCG Matrix produces a framework for allocating resources among different business units and makes it possible to compare many business units at a glance. But BCG Matrix is not free from limitations, such as-
- BCG matrix classifies businesses as low and high, but generally businesses can be medium also. Thus, the true nature of business may not be reflected.
- Market is not clearly defined in this model.
- High market share does not always leads to high profits. There are high costs also involved with high market share.
- Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability.
- At times, dogs may help other businesses in gaining competitive advantage. They can earn even more than cash cows sometimes.
- This four-celled approach is considered as to be too simplistic.
F 0 B 7The use of highs and lows to form four categories is too simplistic. F 0 B 7The link between market share and profitability is questionable. Low-share businesses can also be profitable. F 0 B 7Growth rate is only one aspect of industry attractiveness. F 0 B 7Product lines or business units are considered only in relation to one competitor: the market leader. Small competitors with fast-growing market shares are ignored. F 0 B 7Market share is only one aspect of overall competitive position.
GE multifactor model/ GE business screen
The directional policy (GE–McKinsey) matrix
GE Matrix or McKinsey Matrix is a strategic tool for portfolio analysis. It is similar to the BCG Matrix and actually the GE / McKinsey Matrix is an extension of the BCG Matrix - multifactor portfolio analysis tool. The McKinsey/GE Matrix overcomes a number of the disadvantages of the BCG Box. Firstly, market attractiveness replaces market growth as the dimension of industry attractiveness, and includes a broader range of factors other than just the market growth rate. Secondly, competitive strength replaces market share as the dimension by which the competitive position of each SBU is assessed. The GE / McKinsey Matrix is divided into nine cells - nine alternatives for positioning of any SBU or product offering. Based on the strength of the business and its market attractiveness each SBU
will have a different position in the matrix. Further, the market size and the current sales will distinguish each SBU. Based on clear understanding of all of these factors decision makers are able to develop effective strategies.
This matrix consists of nine cells (3X3) based on two key variables: i) Business strength ii) Industry attractiveness The horizontal axis represents business strength and the vertical axis represent industry attractiveness ▲ The business strength is measured by considering such factors as: · Relative market share · Profit margins · Ability to compete on price and quality · Knowledge of customer and market · Competitive strengths and weaknesses · Technological capacity · Caliber of management ·Size of the business, Growth ·Relative share, Customer loyalty ·Distribution, Technology ·Marketing skills, Patents ▲ Industry attractiveness is measured considering such factors as : · Market size and growth rate · Industry profit margin · Competitive intensity · Economies of scale, Price level, profitability · Technology · Social, environmental, legal and human aspects
The nine cells in the matrix can be grouped into three major segment
Zone – A, B and E - the Strategic signal is - INVEST OR EXPAND Zone- C, F, H & I - the Strategic signal is - SELECT OR ERAN Zone – G & J - the Strategic signal is - HARVEST OR DIVEST
Selective Investment Y
Invest/grow
G
Invest/grow G
Industry attractivenes s
LOW
MEDIUM
HIGH
To plot product lines or business units on the GE Business Screen, follow these four steps:
- Select criteria to rate the industry for each product line or business unit. Assess overall industry attractiveness for each product line or business unit on a scale from 1 (very unattractive) to 5 (very attractive).
- Select the key factors needed for success in each product line or business unit. Assess business strength/competitive position for each product line or business unit on a scale of 1 (very weak) to 5 (very strong).
- Plot each product lines or business unit’s current position on a matrix as that depicted on the figure.
- Plot the firm’s future portfolio, assuming that present corporate and business strategies remain unchanged. Is there a performance gap between projected and desired portfolios? If so, this gap should serve as a stimulus to seriously review the company’s current mission, objectives, strategies and policies.
- It used 9 cells instead of 4 cells of BCG
- It considers many variables and does not lead to simplistic conclusions
- High/medium/low and strong/average/low classification enables a finer distinction among business portfolio
- It uses multiple factors to assess industry attractiveness and business strength, which allow users to select criteria appropriate to their situation
- It can get quite complicated and cumbersome with the increase in businesses
- Though industry attractiveness and business strength appear to be objective, they are in reality subjective judgments that may vary from one person to another
- It cannot effectively depict the position of new business units in developing industry
- It only provides broad strategic prescriptions rather than specifics of business policy
- Comparison GE versus BCG - Thus products or business units in the green zone are almost equivalent to stars or Cash cows, yellow zone are like question marks and red zone are similar to dogs in the BCG matrix.
BCG Matrix GE Matrix
- BCG matrix consists of four cells
- The business unit is rated against relative market share and industry growth rate
- The matrix uses single measure to assess growth and market share
- The matrix uses two types of classification i.e. high and low
- Has many limitations
- GE matrix consists of nine cells
- The business unit is rated against business strength and industry attractiveness
- The matrix used multiple measures to assess business strength and industry attractiveness
- The matrix uses three types of classification i.e high/medium/low and strong/average/weak
- Overcomes many limitations of BCG and is an improvement over it
▲ ADVANTAGES AND LIMITATIONS OF PORTFOLIO ANALYSIS
Portfolio analysis is commonly used in strategy formulation because it offers certain advantages :
- It encourages top management to evaluate each of the corporation’s businesses individually and to set objectives and allocate resources for each.
- It stimulates the use of externally oriented data to supplement management’s judgment.
- It raises the issue of cash-flow availability for use in expansion and growth.
- Its graphic depiction facilitates communication. Portfolio analysis does, however, have some very real limitations that have caused some companies to reduce their use of this approach:
- (^) Defining product/market segments is difficult.
- It suggests the use of standard strategies that can miss opportunities or be impractical.
- It provides an illusion of scientific rigor when in reality positions are based on subjective judgments.
- Its value-laden terms such as cash cow and dog can lead to self-fulfilling prophecies.
- It is not always clear what makes an industry attractive or where a product is in its life cycle.
THE GRAND STRATEGY MATRIX
In addition to the SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the Grand Strategy Matrix has become a popular tool for formulating alternative strategies. All organizations can be positioned in one of the grand Strategy Matrix’s four strategy quadrants. A firm’s divisions likewise could be positioned. The grand Strategy Matrix is based on two evaluative dimensions: competitive position and market (industry) growth. Any industry whose annual growth in sales exceeds 5 percent could be considered to have rapid growth
