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MGT603 - Strategic Management - Lecture Handout 29

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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

All quadrant contain all possible strategies

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.

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

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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