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?

Last updated on Jun 1, 2020

The Grand Strategy Matrix

This is based on two evaluative dimensions competitive position and market growth. Appropriate strategies for an organization to consider listed in order of attractiveness in each quadrant of the matrix.

RAPID MARKET GROWTH

Companies located in quadrant I of the grand strategy matrix are in an excellent strategic position and continued concentration on current markets (penetration & development) and products (development) are appropriate strategies. When the quadrant I organization has excessive resources then integration may be an effective strategy. When the quadrant I organization is too heavily committed to a single product then concentric diversification may reduce the risks associated with a narrow product line Quadrant I firms can afford to take advantage of external opportunities in many areas.

Firms positioned in Quadrant II need to evaluate seriously their present approach to the market place. Although their industry is growing, they are unable to compete effectively. The most appropriate strategies are market penetration, market development, product development, horizontal integration, divestiture, and liquidation.

Quadrant III organizations compete in the slow-growth industry and have a weak competitive position. These firms must take some drastic changes quickly to avoid further loss and possible extinction. Internal retrenchment may be pursued first. An alternative strategy is to shift resources away from the current business into different areas. If all else fails best is divestiture or liquidation.

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 successfully pursue concentric, horizontal or conglomerate diversification. Another viable option for the quadrant IV firm is to form a joint venture.

The X-axis – the “competitive position” axis of the grand strategy matrix is analogous to the “competitive advantage” (CA) axis of the SPACE matrix. The 0 to 6 CA scale described earlier for the SPACE matrix could be used with the grand strategy matrix. Recall that 0 = strong competitive position and 6 = weak competitive position. A numerical value of 3 could represent an average competitive position on the grand strategy matrix, as it did on the SPACE matrix. The X intersection points on the grand strategy matrix could, therefore, be -3.

The Y-axis – The “market growth” axis of the grand strategy matrix is analogous to the “industry sales growth” axis on the BCG matrix the -20 to +20% scale described earlier for the BCG matrix could be used for the grand strategy matrix. Recall that +20% = rapid market growth and -20% – rapid market decline with 0% growth being the intersection point on the grand strategy matrix.

The Grand Strategy MatrixThe Grand Strategy Matrix is a popular strategic management tool designed tocreate alternative strategies for an organisation. The matrix determines thosealternative strategies by taking an organisation’s industry growth and competitiveposition into consideration (Francis, 2014).According to Jadoon (2016), the matrix is based on four elements: rapid marketgrowth, slow market growth, strong competitive position and weak competitiveposition. These four elements make up a four-quadrant strategy matrix. Eachquadrant contains specific grand strategies, and it is the hands of management thatan appropriate strategy is chosen.The four quadrants, namely, quadrants I, II, III and IV will be explained as follows:Quadrant IThe first quadrant of the Grand Strategy Matrix indicates that an organisation has avery strong competitive position and there is a rapid growth rate in the market(Jadoon, 2016). Organisations that are positioned in this quadrant have anexceptional strategic position and should aim to stay in this quadrant for as long aspossible. These organisations should concentrate on current markets and productsby adopting the set of market development, product development as well as marketpenetration strategies (Francis, 2014).The different strategies that are found in quadrant I include concentrated growth,market development, product development, forward vertical integration, backwardvertical integration, horizontal integration and concentric diversification (Ehlers &Lazenby, 2019, p.259).Organisations that are positioned in this quadrant should not move away from theircurrent competitive advantage. According to Francis (2014), if the organisation is tooheavily committed to a single product – the best strategy to follow would beconcentric diversification as it can be helpful in reducing the risk associated with thesingle product line.

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?

Which quadrant in the grand strategy matrix that firms positioned is need to evaluate their present approach to the marketplace seriously?

What are the parts or quadrants of grand strategy matrix?

What type of strategy in the grand strategy matrix is recommended for a firm that has rapid market growth and a strong competitive position?