Essay On Grand Strategy
Industry Analysis Tools
It is vital to understand potential, position, direction, and aim of the business clearly for staying ahead in the competitive market. The researchers have put a lot of effort in finding the right set of tools for analyzing the performance of industry. PEST Analysis (Political, Economic, Social, and Technological), SWOT (Strengths, Weaknesses, Opportunities, and Threats), and Porter’s Five Forces Model are some renowned examples of industrial analysis tools. This essay will highlight the five common standards and measures for critically analyzing the position, performance, and competitive advantage of any industry of the globe. Specifically, these includes GRAND Matrix, SPACE, BCG, IE and QSMP.
The GRAND matrix is used in formulating an organization’s main strategies as well as alternative strategies depending on their competitive position and market growth . It is designed to help companies strategize while still having options should the main strategy fall short of the expectations. This technique is governed by two important forces—market growth and competitive positioning. This is represented by four quadrants. Under each quadrant are proposed strategies that an organization can chose from. The first quadrant has the following options: market development, market penetration, product development, forward integration, backward integration, horizontal integration and related diversification. The second quadrant offers the following options: market development, market penetration, product development, divestiture and liquidation. The third quadrant recommends the following options for strategizing: retrenchment, related diversification, unrelated diversification, divestiture and liquidation. Lastly, the fourth quadrant has the following options: related diversification, unrelated diversification and joint ventures. The recommendations depend on how strong or weak the organization is measured in terms of competitive positioning and how the market growth progresses.
SPACE stands for Strategic Position and Action Evaluation. Similar to the Grand Matrix, the Space Matrix also utilizes a graph represented by four quadrants. Two dimensions are embodied in the SPACE matrix—(a) internal dimension, (b) external dimension . The internal dimension considers the financial strength and the competitive advantage of the organization. On the other hand, the external dimension considers the (a) industrial strength and the (b) environmental stability. The x-axis plots the competitive advantage and the industry strength, while under the y-axis are the financial strength and environmental stability. Depending on the results of the assessment, an organization is recommended to adapt the strategy proposed in under the assigned quadrant. Each quadrant has a respective strategy option from which organizations can choose from. Quadrant 1 should adapt an aggressive strategy. Quadrant 2 suggests a conservative approach in strategizing. Organizations should adapt a defensive approach if it falls under the third quadrant. Finally, if the organization falls under the fourth quadrant it should choose a competitive approach.
The BCG Matrix is also known as Boston Consulting Group matrix. The goal of a BCG Matrix is to aid companies in making decisions related to allocating its resources. A BCG Matrix is used particularly for (a) brand marketing, (b) product management, (c) strategic management, and (d) portfolio analysis . Like the GRAND and SPACE matrix, the BCG matrix also uses a graph. However, in this case the organization being analyzed along with its key competitors are plotted under the graph of four quadrants—(a) cash, (b) cow, (c) question mark and (d) star. Each of the four quadrants says something related to growth rates and market share. The cash cow represents organizations that have high market share but are moving in a relatively slow-growing industry. The dog represents organizations that have low market share and are under a slow-growing industry. Question marks and stars represent organizations in a fast-growing industry. However, organizations under the question mark quadrant represents companies with low-market share, while organizations under the star quadrants are those having high-market share.
Organizations are affected by internal and external forces. These forces are evaluated and analyzed to form the I.E. matrix. However, instead of four quadrants like the BCG, SPACE and GRANT matrix, the I.E. matrix has a total of nine matrices. Like any other industry analysis tools, the IE Matrix offers recommendations that helps organization develop a business strategy depending on the forces reviewed under the standard . Quadrants 1, 2 and 4 recommends the grow and build approach. Quadrants 3, 5 and 7 recommends the hold and maintain approach. While quadrants 6, 8 and 9 maintains a harvest and divest approach.
The QSMP Strategy is also known as Quantitative Strategic Planning Matrix. It is a tool used to develop alternative strategies taking into consideration the identified factors under the SWOT analysis. Each segment is evaluated based on how they are prioritized and according to its total attractive score (TAS). However, using the QSPM has limitations and benefits. One if its limitations is the reliability of results considering that the person making the assessment is the one to personally assign the assign the values for each factors . However, it can be beneficial because of the framework that it provides.
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