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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-3
contains
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
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