Part II – Grand Strategy Matrix The Company is Disney Follow guidelines provided in Chapter 6 of the David text to learn how to create a Grand Strategy Matrix. Specifically refer to Figure 6-13.Use

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F ig u re 6 -1 3 Th e G ra n d Stra te g y M atrix

T he G ra nd S tra te g y M atrix

In addit io n to th e S W OT Matrix , S PA CE M atrix , B CG M atrix , a nd IE M atrix , t h e G ra nd S tr a te gy M atr ix is

a popula r to ol f o r f o rm ula tin g alt e rn ativ e stra te g ie s. A ll o rg aniz a tio ns ca n be p osit io ned in one o f th e

G ra nd S tra te g y M atrix ’s fo ur s tra te g y q uadra nts . A ﬁrm ’s d iv is io ns lik ew is e co uld be p osit io ned . A s

illu stra te d in Fig ure 6 -1 3 , t h e G ra nd S tra te g y M atrix is b ased on tw o eva lu ativ e d im en sio ns: ( 1 )

co m petit iv e p osit io n on th e x-a xis a nd (2 ) m ark et (in dustry ) g ro w th on th e y-a xis . A ny in dustry w hose

a nnual g ro w th in sa le s exceed s 5 perc en t c o uld be co nsid ere d to have ra pid gro w th . A ppro pria te

s tra te g ie s fo r a n org aniz a tio n to co nsid er a re lis te d in seq uen tia l o rd er o f a ttra ctiv en ess in ea ch quadra nt

of th e G ra nd S tra te g y M atrix .

Sourc e: B ase d on R ola n d C hris te n se n , N orm an B erg , a n d M alc o lm Salt e r, P oli c y F orm ula tio n an d A dm in is tr a tio n ( H om ew ood, I L :

R ic h ard D . I r w in , 1 976), 1 6-1 8.

F ig ure 6 -1 3 Full A lt e rn ativ e T ext

F ir m s lo ca te d in Qu adra nt I o f th e G ra nd S tra te g y M atrix a re in an excelle n t s tra te g ic p osit io n. F or th ese

co m panie s, c o ntin ued co ncen tra tio n on cu rre n t m ark ets (m ark et p en etra tio n and m ark et d evelo pm en t)

a nd pro ducts (p ro duct d evelo pm en t) is a n appro pria te stra te g y. It is u nw is e fo r a Qu adra nt I ﬁ rm to sh if t

n ota bly fro m it s esta blis h ed co m petit iv e a dva nta ges, y et a ll ﬁ rm s seek co ntin ual im pro vem en t. T hus,

w hen a Qu adra nt I o rg aniz a tio n has excessiv e re so urc es, t h en backw ard , f o rw ard , o r h oriz o nta l

C onstru ct a nd apply th e G ra nd S tra te gy M atrix . LO 6.7

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i n te g ra tio n m ay b e co nsid ere d . W hen a Qu adra nt I ﬁ rm is to o hea vily co m mit te d to a sin gle p ro duct, t h en

re la te d div ers iﬁ ca tio n m ay re d uce th e ris ks a sso cia te d w it h a narro w pro duct lin e. Qu adra nt I ﬁ rm s ca n

affo rd to ta ke a dva nta ge o f e xte rn al o pportu nit ie s in severa l a re a s. T hey ca n ta ke ris ks a ggre ssiv ely

w hen necessa ry .

F ir m s p osit io ned in Qu adra nt II n eed to eva lu ate th eir p re sen t a ppro ach to th e m ark etp la ce serio usly .

A lt h ough th eir in dustry is g ro w in g, t h ey a re u nable to co m pete effe ctiv ely ; t h ey n eed to dete rm in e w hy th e

ﬁrm ’s cu rre n t a ppro ach is in effe ctiv e a nd how th e co m pany ca n best c h ange to im pro ve it s

c o m petit iv en ess. B eca use Qu adra nt II o rg aniz a tio ns a re in a ra pid m ark et g ro w th in dustry , a n in te n siv e

stra te g y (a s o pposed to in te g ra tiv e o r d iv ers iﬁ ca tio n) is u su ally th e ﬁ rs t o ptio n th at s h ould be co nsid ere d .

H ow ever, i f th e ﬁ rm is la ckin g a dis tin ctiv e co m pete n ce o r c o m petit iv e a dva nta ge, t h en horiz o nta l

in te g ra tio n is o fte n a desir a ble alt e rn ativ e. A s a la st re so rt, d iv estit u re o r liq uid atio n sh ould be co nsid ere d .

D iv estit u re ca n pro vid e fu nds n eed ed to acq uir e o th er b usin esses o r b uy b ack sh are s o f s to ck.

Qu adra nt III o rg aniz a tio ns co m pete in slo w -g ro w th in dustrie s a nd have w ea k co m petit iv e p osit io ns.

T hese ﬁ rm s m ust m ake d ra stic ch anges q uic kly to avo id fu rth er d eclin e a nd possib le liq uid atio n.

Exte n siv e co st a nd asset re d uctio n (re tre n ch m en t) s h ould be p urs u ed ﬁrs t. A n alt e rn ativ e stra te g y is to

s h if t re so urc es a w ay fro m th e cu rre n t b usin ess in to dif fe re n t a re a s (d iv ers if y ). If a ll e ls e fa ils , t h e ﬁ nal

optio ns fo r Qu adra nt III b usin esses a re d iv estit u re o r liq uid atio n.

Fin ally , Qu adra nt IV busin esses h ave a stro ng co m petit iv e p osit io n but a re in a slo w -g ro w th in dustry .

T hese ﬁ rm s h ave th e stre n gth to la unch div ers iﬁ ed pro gra m s in to m ore p ro m is in g gro w th are a s:

Qu adra nt IV busin esses h ave ch ara cte ris tic a lly h ig h ca sh -ﬂ ow le vels a nd lim it e d in te rn al g ro w th need s

and ofte n ca n purs u e re la te d or u nre la te d div ers iﬁ ca tio n su ccessfu lly . Qu adra nt IV ﬁrm s a ls o m ay p urs u e

jo in t v en tu re s.

E ven w it h th e G ra nd S tra te g y M atrix , b e certa in th at y o u alw ays, w hen ever p ossib le , s ta te yo ur a lt e rn ativ e

stra te g ie s in sp eciﬁ c te rm s to th e exte n t p ossib le . F or e xa m ple , a vo id usin g te rm s su ch as d iv estit u re .

R ath er, s p ecif y th e exa ct d iv is io n to be so ld . A ls o , b e su re to use th e fre e E xcel s tu den t te m pla te a t

w ww.s tra te g yclu b.c o m th at f a cilit a te s co nstru ctio n of a ll s tra te g ic p la nnin g m atric es.

If u sin g th e stra te g ic p la nnin g te m pla te a t w ww.s tra te g yclu b.c o m to perf o rm GRAN D analy sis , y o u m ay

use th e 1 to 9 sca le o ffe re d on th e te m pla te , w here 1 = th e w ea kest c o m petit iv e p osit io n and als o th e

slo w est in dustry g ro w th ra te , a nd 9 = th e stro ngest c o m petit iv e p osit io n and th e fa ste st in dustry g ro w th

ra te . A ls o , t h e te m pla te en able s u p to six p oin ts (c o ord in ate s) to be p lo tte d in a G ra nd S tra te g y M atrix ,

a nalo gous to va rio us d iv is io ns o f a ﬁrm , o r riv a l ﬁ rm s, o r 1781556 - P ea rs o n E duca tio n L im it e d ©