Business Strategy Matrix

Description of the Model The General Electric Company, with the aid of the Boston Consulting Group and McKinsey and Company, pioneered the nine cell strategic business screen illustrated here. The circle on the matrix represents your enterprise. Both axes are divided into three segments, yielding nine cells. The nine cells are grouped into three zones: The Green Zone consists of the three cells in the upper left corner. If your enterprise falls in this zone you are in a favorable position with relatively attractive growth opportunities. This indicates a "green light" to invest in this product/service. The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A position in the yellow zone is viewed as having medium attractiveness. Management must therefore exercise caution when making additional investments in this product/service. The suggested strategy is to seek to maintain share rather than growing or reducing share. The Red Zone consists of the three cells in the lower right corner. A position in the red zone is not attractive. The suggested strategy is that management should begin to make plans to exit the industry.

Characterize Your Enterprise The vertical axis represents the industry attractiveness. The expert system will position your enterprise on the chart based upon your description of: bargaining power of the buyers bargaining power of the suppliers internal rivalry the threat of new entrants the threat of substitutes The horizontal axis represents the firm's competitive strength or ability to compete in the industry. It includes an analysis of: the value and quality of the offering market share staying power experience You can trace through the supporting analysis and its conclusions, adjusting your input until you are satisfied your description accurately characterizes your enterprise.

Analysis of Your Enterprise Position
High Attractiveness Strong Competitive Position The strategy advice for this cell is to invest for growth. Consider the following strategies: provide maximum investment diversify consolidate your position to focus your resources accept moderate near-term profits to build share	High Attractiveness Average Competitive Position The strategy advice for this cell is to invest for growth. Consider the following strategies: build selectively on strength define the implications of challenging for market leadership fill weaknesses to avoid vulnerability	High Attractiveness Weak Competitive Position The strategy advice for this cell is to opportunistically invest for earnings. However, if you can't strengthen your enterprise you should exit the market. Consider the following strategies: ride with the market growth seek niches or specialization seek an opportunity to increase strength through acquisition
Medium Attractiveness Strong Competitive Position The strategy advice for this cell is to selectively invest for growth. Consider the following strategies: invest heavily in selected segments, establish a ceiling for the market share you wish to achieve seek attractive new segments to apply strengths	Medium Attractiveness Average Competitive Position The strategy advice for this cell is to selectively invest for earnings. Consider the following strategies: segment the market to find a more attractive position make contingency plans to protect your vulnerable position	Medium Attractiveness Weak Competitive Position The strategy advice for this cell is to preserve for harvest. Consider the following strategies: act to preserve or boost cash flow as you exit the business seek an opportunistic sale seek a way to increase your strengths
Low Attractiveness Strong Competitive Position The strategy advice for this cell is to selectively invest for earnings. Consider the following strategies: defend strengths shift resources to attractive segments examine ways to revitalize the industry time your exit by monitoring for harvest or divestment timing	Low Attractiveness Average Competitive Position The strategy advice for this cell is to restructure, harvest or divest. Consider the following strategies: make only essential commitments prepare to divest shift resources to a more attractive segment	Low Attractiveness Weak Competitive Position The advice for this cell is to harvest or divest. You should exit the market or prune the product line.

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Ansoff's Matrix - Planning for Growth

This well known marketing tool was first published in the Harvard Business Review (1957) in an article called 'Strategies for Diversification'. It is used by marketers who have objectives for growth. Ansoff's matrix offers strategic choices to achieve the objectives. There are four main categories for selection.

Ansoff's Product/Market Matrix

Market Penetration

Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.

Market Development

Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

Product Development

This is a new product to be marketed to our existing customers. Here we develop and innovate new product offerings to replace existing ones. Such products are then marketed to our existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.

Diversification

This is where we market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where we have no previous industry nor market experience. For example a soup manufacturer invests in the rail business.
Ansoff's matrix is one of the most well know frameworks for deciding upon strategies for growth.

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