Grand Strategy Matrix has emerged into a powerful tool in devising alternative strategies. This matrix is basically based on four important elements:
• Rapid Market Growth
• Slow Market Growth
• Strong Competitive Position
• Weak Competitive Position
These elements form a four quadrant matrix in which all organizations can be positioned in such a way that identification and selection of appropriate strategy becomes an easy task. Moreover, this matrix helps
in adopting the best strategy based on the current growth and competitive state of the firm. A large scale firm segregated into many divisions can also plot its divisions in this four quadrant Grand Strategy Matrix for formulating the best strategy for each division.
The key area of management is to suitably select the strategy cohesive with the firms’ market and competitive position. The Grand Strategy Matrix makes it an easy going job. It helps in scientific analysis of firms‘current
position and selection of best strategy in accordance with the revealed competitive position and market place.
Broadly speaking four elements of the Grand Strategy Matrix can be described as two evaluative dimensions namely market growth and competitive position. In each quadrant of the matrix the apt strategies are enlisted in sequential order for each organization or division keeping in view the attractiveness in each quadrant of the matrix.
Quadrant I
The quadrant one of
the Grand Strategy Matrix is meant for those firms which are in a strong competitive position and flourishing with rapid market growth. Firms located in this quadrant are in excellent strategic position and they need to concentrate on current markets and products. Concentration on current markets reveals the adoption of strategies such as market penetration and market development and likewise concentration on current products calls for adoption of product development strategy. These firms or
divisions should continue to ponder upon current competitive advantage and must avoid from loosing the focus from the competitive advantage gained over the time.
[large]In case quadrant one firms have excessive resources, than, it would be wise to adopt the expansion program and indulge in backward, forward, or horizontal integration. But and a careful thought process needs to be done before assuming such integrations so that any meditation from the current competitive advantage can be
avoided. The quadrant one firm also requires identifying the risk associated mainly if it is committed to a single product line. The best strategy to espouse in this case is related diversification because it can be helpful in reducing the risk associated with the slender product line.
One of the main advantages to the quadrant one firms is that they can afford to exploit the external opportunities and magnify the wealth in numerous areas of dealings.
Quadrant II
Firms and
divisions falling in quadrant two of the Grand Strategy Matrix are characterized with a weak competitive position in fast growing market. The present market position of these firms must click in the minds of the management and they need to weigh up the firms’ present market place critically. The opportunity lagging here is that such firms are operating in a growing industry but the problem area is that they are competing ineffectively. An in-depth analysis is necessary to identify the gray areas
of incompetence and the reasons behind such ineffectiveness. Moreover, adoption of counteractive measures is also indispensable so that ability to compete effectively is strengthen and firm can find its space in the more competitive environment.
[linkunit]Since quadrant two firms are in a rapid market growth industry, therefore, an intensive strategy, more appropriately, can be classified as the first option to adopt. The dilemma in espousing the intensive strategy arises when the firms is
lacking distinctive competence or competitive advantage. In this scenario the most enviable substitute is horizontal integration.
In case the quadrant II firm does not find any suitable strategy to adopt than divestiture of some divisions can be considered as another option. Such an arrangement may avail the desired funding to buy back the shares or to invest in the current venture in other divisions to strengthen the competitive position. Moreover, as last resort, liquidation should be
considered so that another business can be acquired.
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| 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 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.
Quadrant II Market development Market penetration Product development Horizontal integration Divestiture Liquidation Quadrant I Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric diversification Quadrant III
Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation Quadrant IV Concentric diversification Horizontal diversification Conglomerate diversification Joint ventures STRONG COMPETITIVE POSITION WEAK COMPETITIVE POSITION SLOW MARKET GROWTH RAPID MARKET GROWTH 108 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 109 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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What is grand strategy matrix in strategic management?
The Grand Strategy Matrix is a tool to chart the position of a product or company within a market, much like the ADL Matrix, and select certain strategies, similar to the Strategy Clock or Generic Strategies.
In which quadrant of the grand strategy matrix would we find those firms that have the strength to launch diversified programs into more promising growth areas?
These firms have the strength to launch diversified programs into more promising growth areas: Quadrant IV businesses have characteristically high cash-flow levels and limited internal growth needs and often can pursue related or unrelated diversification successfully.
What are the parts or quadrants of grand strategy matrix?
Grand Strategy Matrix: 4 Quadrants.
Quadrant 1 – Strong competitive position & Fast market growth. ... .
Quadrant 2 – Weak competitive position & Fast market growth. ... .
Quadrant 3 – Weak competitive position & Slow market growth. ... .
Quadrant 4 – Strong competitive position & Slow market growth..
In which quadrant of the grand strategy matrix would we find those firms that must make some drastic changes quickly to avoid further decline and possible liquidation?
Quadrant III organizations compete in slow-growth industries and have weak competitive positions. These firms must make some drastic changes quickly to avoid further decline and possible liquidation.