What is the Grand Strategy Matrix?
Definition:
The Grand Strategy Matrix is a tool used in strategic management to help a company choose the best course of action to achieve its goals and objectives. The matrix is a grid that is divided into four quadrants, each representing a different type of strategy.
Explanation:
The Grand Strategy Matrix has become a popular tool for formulating feasible strategies, along with the SWOT Analysis, SPACE Matrix, BCG Matrix, and IE Matrix. Grand strategy matrix is the instrument for creating alternative and different strategies for the organization. All companies and divisions can be positioned in one of the Grand Strategy Matrix’s four strategy quadrants. The Grand Strategy Matrix is based on two dimensions: competitive position and market growth. Data needed for positioning SBUs in the matrix is derived from the portfolio analysis. This matrix offers feasible strategies for a company to consider which are listed in sequential order of attractiveness in each quadrant of the matrix.
Quadrant I (Strong Competitive Position and Rapid Market Growth) – Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent strategic position. The first quadrant refers to the firms or divisions with strong competitive base and operating in fast moving growth markets. Such firms or divisions are better to adopt and pursue strategies such as market development, market penetration, product development etc. The idea behind is to focus and make the current competitive base stronger. In case such firms possess readily available resources they can move on to integration strategies but should never be at the cost of diverting attention from current strong competitive base.
Quadrant II (Weak Competitive Position 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. The suitable strategies for such firms are to develop the products, markets, and to penetrate into the markets. 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. To achieve the competitive advantage or becoming market leader Quadrant II firms can go into horizontal integration subject to availability of resources. However if these firms foresee a tough competitive environment and faster market growth than the growth of the firm, the better option is to go into divestiture of some divisions or liquidation altogether and change the business.
Quadrant III (Weak Competitive Position and Slow Market Growth) – The firms fall in this quadrant compete in slow-growth industries and have weak competitive positions. These firms must make s
2. Content
• Grand Strategy Matrix
• Explanation of Quadrants
• Strategies in the Grand Strategy Matrix
• What are the advantages of the Grand Strategy
Matrix
• limitations
3. Grand Strategy Matrix
• The Grand Strategy Matrix has become a popular tool for formulating feasible
strategies, along with the SWOT Analysis, SPACE Matrix, BCG Matrix, and IE
Matrix. Grand strategy matrix is the instrument for creating alternative and
different strategies for the organization. All companies and divisions can be
positioned in one of the Grand Strategy Matrix’s four strategy quadrants. The
Grand Strategy Matrix is based on two dimensions: competitive position and
market growth. Data needed for positioning SBUs in the matrix is derived from
the portfolio analysis. This matrix offers feasible strategies for a company to
consider which are listed in sequential order of attractiveness in each quadrant of
the matrix.
4. Definition
The Grand Strategy Matrix is a tool used in strategic management to help a
company choose the best course of action to achieve its goals and objectives. The
matrix is a grid that is divided into four quadrants, each representing a different
type of strategy.
5.
6. Quadrant I (Strong Competitive
Position and Rapid Market Growth)
• Firms located in Quadrant I of the Grand Strategy Matrix are in an excellent
strategic position.
• The first quadrant refers to the firms or divisions with strong competitive base and
operating in fast moving growth markets.
• Such firms or divisions are better to adopt and pursue strategies such as market
development, market penetration, product development etc.
• The idea behind is to focus and make the current competitive base stronger. In
case such firms possess readily available resources they can move on to
integration strategies but should never be at the cost of diverting attention from
current strong competitive base.
7. Quadrant II (Weak Competitive
Position 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.
• The suitable strategies for such firms are to develop the products, markets, and to
penetrate into the markets. 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. To achieve the competitive advantage or becoming
market leader Quadrant II firms can go into horizontal integration subject to availability of
resources.
• However if these firms foresee a tough competitive environment and faster market
growth than the growth of the firm, the better option is to go into divestiture of some
divisions or liquidation altogether and change the business.
8. Quadrant III (Weak Competitive
Position and Slow Market Growth)
• The firms fall in this III 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.
9. Quadrant IV (Strong Competitive
Position and Slow Market Growth)
• Finally, Quadrant IV businesses have a strong competitive position but are in a
slow-growth industry. Such firms are better to go into related or unrelated
integration in order to create a vast market for products and services.
• These firms also 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.
10. Generally, strategies listed in the first
quadrant of Grand Strategy Matrix are
intended to maintain a firm’s competitive
edge and boost rapid growth.
while the other three quadrants
represent appropriate actions to take to
reach the best position, which is the first
quadrant. Increasing market share,
expanding to new markets and creating
new products are common strategies.
12. Advantages
The Grand Strategy Matrix has a number of advantages:
• It’s simple to use and understand
• It has a comprehensive list of strategic options
• It can stimulate discussion and help frame decisions
• It can be applied to any industry or marketplace
• What are the limitations of the Grand Strategy Matrix?
13. Limitations
There are some limitations such as:
• It only provides options rather than success criteria around them
• You need to use it with other tools
• The matrix is simplistic so loses some nuance
• Your business may operate in multiple quadrants if you have many products or
services
