Posted by mbalectures | Posted in Strategic Management | 30,029 views | Posted on 04-12-2010 |
Grand Strategy Matrix is very useful instrument for creating different and alternative strategies for an organization. Grand matrix has four quadrants; each quadrant contains different sets of strategies and the entire firms along with their respective divisions must fall in one of the quadrant. This matrix has two dimensions (competitive position and market growth). Suitable set of strategies for each quadrant are given below:
Companies positioned in this quadrant have very strong strategic position. These firms focus on their established competitive advantage (CA) and take advantage of it as long as it allows them. These companies must concentrate on the existing market by adopting the set of product development, market development and market penetration strategies. Organizations that fall in quadrant 1 have focus on a single product and can go for related diversification strategy to minimize the risk related to limited product line. If these organizations have higher resources they can go for horizontal, backward and forward set of strategies. These firms can take risks being an aggressive and can afford to obtain advantage of opportunities in numerous ways.
Firms laying in this quadrant have the rapid growing industry but can not fight competently. They must evaluate their existing approach in the market place, need to know why they are ineffective in the market and must come up with a strategy to improve their strategic position. Due to the growth of the industry, firms in this quadrant use intensive strategy as a first strategic option. If companies do not have competitive advantage, horizontal integration is more advantageous option. Last but not the least strategic option is the liquidation which provides fund needed for other Strategic Business Unit (SBU) or to acquire other businesses.
All those firms which fall in this quadrant have slow growth market and have relatively weak position. Firms have to make noticeable modifications to sustain their position. Retrenchment strategy has priority in this quadrant followed by diversification to transfer resource to another growing business. Last strategic option available for the firms positioned in this quadrant is liquidation or divestiture of the business.
Companies competing in this quadrant have slow growth industry but have a strong competitive position. These firms can diversify into different untapped businesses by utilizing their existing resource. These firms face restricted internal growth and have high cash flow intensity which allows them to practice related and unrelated diversifications effectively. Finally these firms can go for joint ventures to fulfill their internal growth needs.
Grand Strategy Matrix Example
In this figure each quadrant shows the different strategic options available for the firms which are positioned in different quadrants.