When a company has a weak strategic position and rapid market growth what strategy is most suitable?

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Strategic Management ­ MGT603

VU

Lesson 29

GRAND STRATEGY MATRIX

Learning objective

Grand strategy matrix is a last matrix of matching strategy formulation framework. It same as important

as BCG, IE and other matrices. This chapter enables you to understand the preparation of GS matrix.

This chapter also enables you to understand the last stage (decision stage) of strategy formulation frame

work and also explain that how it is prepared

Grand Strategy Matrix

This is also an important matrix of strategy formulation frame work. Grand strategy matrix it is popular

tool for formulating alternative strategies. In this matrix all organization divides into four quadrants.

Any organization should be placed in any one of four quadrants. Appropriate strategies for an

organization to consider are listed in sequential order of attractiveness in each quadrant of the matrix.

It is based two major dimensions

1. Market growth

2. Competitive position

All quadrant contain all possible strategies

RAPID MARKET GROWTH

Quadrant I

Quadrant II

Market development

Market development

Market penetration

Market penetration

Product development

Product development

Forward integration

Horizontal integration

Backward integration

Divestiture

Horizontal integration

Liquidation

Concentric diversification

WEAK

STRONG

COMPETITIVE

COMPETITIVE

POSITION

POSITION

Quadrant IV

Quadrant III

Concentric diversification

Retrenchment

Horizontal diversification

Concentric diversification

Conglomerate diversification

Horizontal diversification

Joint ventures

Conglomerate diversification

Liquidation

SLOW MARKET GROWTH

Qurdant-1 contains that company's strong having competitive situation and rapid market growth.

Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent strategic position. These

firms must focus on current market and appropriate to follow market penetration, market development

and products development are appropriate strategies.

107

Strategic Management ­ MGT603

VU

Qurdant-2 contains that company's having weak competitive situation and rapid market growth. Firms

positioned in Quadrant II need to evaluate their present approach to the marketplace seriously.

Although their industry is growing, they are unable to compete effectively, and they need to determine

why the firm's current approach is ineffectual and how the company can best change to improve its

competitiveness. Because Quadrant II firms are in a rapid-market-growth industry, an intensive strategy

(as opposed to integrative or diversification) is usually the first option that should be considered.

Qurdant-3contains that company's weak competitive situation and slow market growth. The firms fall

in this quadrant compete in slow-growth industries and have weak competitive positions. These firms

must make some drastic changes quickly to avoid further demise and possible liquidation. Extensive

cost and asset reduction (retrenchment) should be pursued first. An alternative strategy is to shift

resources away from the current business into different areas. If all else fails, the final options for

Quadrant III businesses are divestiture or liquidation.

Qurdant-4 contains that company's strong competitive situation and slow market growth. Finally,

Quadrant IV businesses have a strong competitive position but are in a slow-growth industry. These

firms have the strength to launch diversified programs into more promising growth areas. Quadrant IV

firms have characteristically high cash flow levels and limited internal growth needs and often can

pursue concentric, horizontal, or conglomerate diversification successfully. Quadrant IV firms also may

pursue joint ventures

As above figure there are four quadrants in grand matrix that further contain various set strategies.

Quardrant-1

Market development

Market penetration

Product development

Forward integration

Backward integration

Horizontal integration

Concentric diversification

Quardrant-2

Market development

Market penetration

Product development

Horizontal integration

Divestiture

Liquidation

Quardrant-3

Retrenchment

Concentric diversification

Horizontal diversification

Conglomerate diversification

Liquidation

Quardrant-4

Concentric diversification

Horizontal diversification

Conglomerate diversification

Joint ventures

108

Strategic Management ­ MGT603

VU

Conclusion

Every firm fall any one four quadrants and if the firm fall in quadrant-1 it must follow the list of

strategies given in it. As further if the firm falls in quarrant-2 must adopt the strategies given in

quadrant-2 and so on

109

Table of Contents:

1. NATURE OF STRATEGIC MANAGEMENT:Interpretation, Strategy evaluation
2. KEY TERMS IN STRATEGIC MANAGEMENT:Adapting to change, Mission Statements
3. INTERNAL FACTORS & LONG TERM GOALS:Strategies, Annual Objectives
4. BENEFITS OF STRATEGIC MANAGEMENT:Non- financial Benefits, Nature of global competition
5. COMPREHENSIVE STRATEGIC MODEL:Mission statement, Narrow Mission:
6. CHARACTERISTICS OF A MISSION STATEMENT:A Declaration of Attitude
7. EXTERNAL ASSESSMENT:The Nature of an External Audit, Economic Forces
8. KEY EXTERNAL FACTORS:Economic Forces, Trends for the 2000�s USA
9. EXTERNAL ASSESSMENT (KEY EXTERNAL FACTORS):Political, Governmental, and Legal Forces
10. TECHNOLOGICAL FORCES:Technology-based issues
11. INDUSTRY ANALYSIS:Global challenge, The Competitive Profile Matrix (CPM)
12. IFE MATRIX:The Internal Factor Evaluation (IFE) Matrix, Internal Audit
13. FUNCTIONS OF MANAGEMENT:Planning, Organizing, Motivating, Staffing
14. FUNCTIONS OF MANAGEMENT:Customer Analysis, Product and Service Planning, Pricing
15. INTERNAL ASSESSMENT (FINANCE/ACCOUNTING):Basic Types of Financial Ratios
16. ANALYTICAL TOOLS:Research and Development, The functional support role
17. THE INTERNAL FACTOR EVALUATION (IFE) MATRIX:Explanation
18. TYPES OF STRATEGIES:The Nature of Long-Term Objectives, Integration Strategies
19. TYPES OF STRATEGIES:Horizontal Integration, Michael Porter�s Generic Strategies
20. TYPES OF STRATEGIES:Intensive Strategies, Market Development, Product Development
21. TYPES OF STRATEGIES:Diversification Strategies, Conglomerate Diversification
22. TYPES OF STRATEGIES:Guidelines for Divestiture, Guidelines for Liquidation
23. STRATEGY-FORMULATION FRAMEWORK:A Comprehensive Strategy-Formulation Framework
24. THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) MATRIX:WT Strategies
25. THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
26. THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
27. BOSTON CONSULTING GROUP (BCG) MATRIX:Cash cows, Question marks
28. BOSTON CONSULTING GROUP (BCG) MATRIX:Steps for the development of IE matrix
29. GRAND STRATEGY MATRIX:RAPID MARKET GROWTH, SLOW MARKET GROWTH
30. GRAND STRATEGY MATRIX:Preparation of matrix, Key External Factors
31. THE NATURE OF STRATEGY IMPLEMENTATION:Management Perspectives, The SMART criteria
32. RESOURCE ALLOCATION
33. ORGANIZATIONAL STRUCTURE:Divisional Structure, The Matrix Structure
34. RESTRUCTURING:Characteristics, Results, Reengineering
35. PRODUCTION/OPERATIONS CONCERNS WHEN IMPLEMENTING STRATEGIES:Philosophy
36. MARKET SEGMENTATION:Demographic Segmentation, Behavioralistic Segmentation
37. MARKET SEGMENTATION:Product Decisions, Distribution (Place) Decisions, Product Positioning
38. FINANCE/ACCOUNTING ISSUES:DEBIT, USES OF PRO FORMA STATEMENTS
39. RESEARCH AND DEVELOPMENT ISSUES
40. STRATEGY REVIEW, EVALUATION AND CONTROL:Evaluation, The threat of new entrants
41. PORTER SUPPLY CHAIN MODEL:The activities of the Value Chain, Support activities
42. STRATEGY EVALUATION:Consistency, The process of evaluating Strategies
43. REVIEWING BASES OF STRATEGY:Measuring Organizational Performance
44. MEASURING ORGANIZATIONAL PERFORMANCE
45. CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM:Contingency Planning