strategy evaluation charts

8/14/2019 Strategy Evaluation Charts

1/48

1.0 Overview

ChartsThis set of charts depict The Enterprise's or The Offering's position with respectto a variety of important business and marketing concepts.

In each chart your position (and often the position of your competition) is shownas a square or a circle.

2.0 Environment

Changing factors in the environment such as emerging technologies,demographics, cultural trends, economic growth or depression and new or revised government regulations can have a significant impact on your marketingstrategy. This section provides an overview on the current state of theenvironment and its potential to be a positive or negative influence.

2.1

Risk Matrix

This matrix illustrates the relationship between the risk of environmental forcesaffecting a business area and the other factors affecting the prospects for developing and maintaining long-term profits. Environmental factors consideredinclude economic, cultural, technology, demographic, and governmental trends.While the prospect for profitability is based on factors including the bargainingpower of the buyers and suppliers, the threat of new entrants and/or substitutesand the competitive rivalry among the existing enterprises in the industry.

Your industry has been analyzed as having average prospects for profits whilehaving low to medium environmental risk.

Chart Plot Point Sources:

Profit PotentialEnvironmental Factors
http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E3http://www.strategyinsight.com/analysis/users/000000000/A_ENVIRON%5B0%5D%5E3http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E3http://www.strategyinsight.com/analysis/users/000000000/A_ENVIRON%5B0%5D%5E3


2/48

2.2

Environmental Factors

This chart presents the assessment of the environmental factors on your offering.The higher the rating, the more positive is the factor for your business. Youshould study the weak areas carefully and plan alternative actions to lessen their impact on your plans.

The most supportive factor is demographic trends, while the factor of mostconcern is technology trends.


TechnologyGovernment
http://www.strategyinsight.com/analysis/users/000000000/E_TECH%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_GOVERN%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_TECH%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_GOVERN%5B0%5D%5E4


3/48

EconomicsCultureDemographics

3.0 Industry

This section provides general information starting with a chart that portrays the"five forces model", originally defined by Michael Porter, followed by others that

are designed to reflect various market forces that will influence your marketingstrategy.

3.1

Attractiveness
http://www.strategyinsight.com/analysis/users/000000000/E_ECONOMIC%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_CULTURE%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_DEMOG%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_ECONOMIC%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_CULTURE%5B0%5D%5E4http://www.strategyinsight.com/analysis/users/000000000/E_DEMOG%5B0%5D%5E4


4/48

This is an assessment of the structure of your industry. A high rating indicates astrong possibility of achieving and maintaining long-term profits in the business.While a low rating indicates that the likelihood is very remote and the opportunityshould be examined with more scrutiny.

The most positive factor in your industry is the unlikelihood of new entrants, whilethe most negative factor is the threat of substitutes.


Threat of New EntrantsBargaining Power of SuppliersBargaining Power of BuyersRivalry among existing firmsThreat of Substitute Products/Services
http://www.strategyinsight.com/analysis/users/000000000/A_ENTRANTS%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_SUPPLIER%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_BUYER%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_COMPETITORS%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/I_SUBSTITUTE%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_ENTRANTS%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_SUPPLIER%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_BUYER%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/A_COMPETITORS%5B0%5D%5E6http://www.strategyinsight.com/analysis/users/000000000/I_SUBSTITUTE%5B0%5D%5E6


5/48

3.2

Advantages

Profitability is the result of an enterprise achieving a competitive advantage. Thenumber of ways that competitive advantage can be gained and the potential sizeof the advantage are different in each industry. This matrix illustrates therelationship between the number and size of advantages available to theenterprise. Each quadrant of the matrix has certain implications affectingstrategy.

Few ways to obtain advantages / Small advantagesYour industry lies in the STALEMATE quadrant. Enterprises in stalemateindustries, such as the paper and steel industries, possess small advantages and

have few ways to achieve them. The suggested strategy is to push for rigid costcontrol, squeeze cash, look for new opportunities through offering or marketdevelopment, and look for the opportunity to exit the industry with minimuminjury.


Ways to Obtain AdvantagesSize of Advantage
http://www.strategyinsight.com/analysis/users/000000000/I_AD_WAYS%5B0%5D%5E7http://www.strategyinsight.com/analysis/users/000000000/I_AD_SIZE%5B0%5D%5E7http://www.strategyinsight.com/analysis/users/000000000/I_AD_WAYS%5B0%5D%5E7http://www.strategyinsight.com/analysis/users/000000000/I_AD_SIZE%5B0%5D%5E7


6/48

3.3

Market Forces

This matrix makes it possible to assess the long term viability of a market and itssubsequent value to the company.

Low Buyer Bargaining Power / High Probability of New Entrants and/or Substitutes

The probability of this market attracting new entrants or substituteproducts/services is high, probably because the power of the buyers is low. Onereason for this is that you may have made an attractive (to the customer)technological breakthrough which competitors will be quick to copy. In this case,either you make your profits now while the advantage is still present, or go for market share so you can enjoy low costs and hence be in a better position tofight off the challenges of new entrants.


7/48


Power of BuyersProbability of New Entrants/Substitutes

3.4

Profitability

Profit Impact of Market Studies (PIMS) research has shown that there is a clear relationship between profitability, market share, and offering quality. Here weconsider offering quality to include a number of factors, including: performance,durability, conformance to specifications, features, brand recognition, reliability, fitand finish and serviceability . If customers perceive the offering as being of higher quality, they are prepared to pay more for it. This matrix displays thisrelationship.
http://www.strategyinsight.com/analysis/users/000000000/A_BUYER%5B0%5D%5E8http://www.strategyinsight.com/analysis/users/000000000/A_ENTRANTS_SUBS%5B0%5D%5E8http://www.strategyinsight.com/analysis/users/000000000/A_BUYER%5B0%5D%5E8http://www.strategyinsight.com/analysis/users/000000000/A_ENTRANTS_SUBS%5B0%5D%5E8


8/48

Low Market Share / High Offering QualityYour offering is in the group that averages a 20 percent return on investment.Although you have a low market share, customers are willing to pay a higher price for the offering.


Market ShareProduct Quality

4.0 Competition

It is always important to know as much as you can about your competition. Thefollowing displays provide some general competitive analyses as well as specificcomparisons between your enterprise and the competitors.
http://www.strategyinsight.com/analysis/users/000000000/C_SHARE%5B0%5D%5E9http://www.strategyinsight.com/analysis/users/000000000/P_QUALITY%5B0%5D%5E9http://www.strategyinsight.com/analysis/users/000000000/C_SHARE%5B0%5D%5E9http://www.strategyinsight.com/analysis/users/000000000/P_QUALITY%5B0%5D%5E9


9/48

4.1

Aggressiveness

Competition can offer benefits as well as threats to your participation in theindustry. Competition may actually increase your competitive advantage byproviding such benefits as a cost umbrella. They can assist in marketdevelopment activities, and thereby increase the overall demand for your offering. Their actions may also deter new market entrants by crowdingdistribution channels thereby allowing you higher margins. Competitors can alsothreaten your position by attacking your offerings and your moves in the market.This chart presents your competitors as being threats or benefits to your efforts.

Low Capability / Low Propensity to AttackCompetitors in this quadrant are neither a threat nor a benefit. Their efforts do not

enhance the industry because of their limited capability. On the other hand, theydo not threaten your position.

Low Capability / High Propensity to AttackWhile lacking the capability to improve the industry structure, these competitorscan be highly disruptive to your activities. They may counter your moves and bea continual annoyance.

High Capability / Low Propensity to AttackThese competitors can be good to the industry structure. They are highlycapable, but are not prone to capricious acts which damage the industry and

your position. Their capability will clearly offer a challenge to your efforts and will"keep you honest".

High Capability / High Propensity to AttackThese are the competitors that are truly dangerous to your position. Theypossess both the capability to attack and often exhibit that behavior. You shouldattempt to position yourself away from these participants. Select other segments,distribution channels, pricing and packaging alternatives to create as muchdistance as possible.


Propensity to AttackCapability
http://www.strategyinsight.com/analysis/users/000000000/C_ATTACK%5B0%5D%5E11http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E11http://www.strategyinsight.com/analysis/users/000000000/C_ATTACK%5B0%5D%5E11http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E11


10/48

4.2

Capabilities

This chart displays the likelihood that if you are introducing an innovative newoffering into the marketplace, that you can defend the position of your offeringover some period of time. If the majority of your competitors fall into the quadranton the lower right, you should have less difficulty in defending against their offerings. You should have sufficient lead time to respond to their moves and

maintain a position of leadership.

On the other hand, if your competitors (especially the larger competitors) fall intothe quadrant on the upper left, you will have, at best, only a short-term lead.Consider creating a more defensible position by making a competitive move thatis either costly or time-consuming for competitors to copy.



11/48

SpeedRelative Cost of Response

4.3

Portfolio

The portfolio summary matrix can be extremely helpful in selecting a strategy.The horizontal axis represents the enterprise's competitive strength and the

vertical axis represents the industry's market growth potential.

Weak Competitive Position / Slow Market GrowthYour strategies should be designed to lessen your participation in this industry.Specific strategies to consider include: retrenchment, diversification, divestiture,and liquidation.
http://www.strategyinsight.com/analysis/users/000000000/C_RESPONSE%5B0%5D%5E12http://www.strategyinsight.com/analysis/users/000000000/C_RESP_COST%5B0%5D%5E12http://www.strategyinsight.com/analysis/users/000000000/C_RESPONSE%5B0%5D%5E12http://www.strategyinsight.com/analysis/users/000000000/C_RESP_COST%5B0%5D%5E12


12/48

Several types of strategies are mentioned above. Here are some brief explanations:1. Retrenchment or turnaround is primarily a response to corporate decline.The objective is to restructure the operations to halt decline and return toprofitability.

2. There are two major types of diversification : related and unrelated. Relateddiversification is branching out into a new activity that is linked to a company'sexisting activity by some common elements. Normally these linkages are basedon manufacturing, marketing, materials management, and technologicalcommonalities. Unrelated diversification moves into new areas that have noobvious commonalities with the company's existing activities.3. Divestiture is an action to exit the industry by selling the whole business.4. Liquidation is an action to exit the industry by selling the assets of thebusiness.5. A joint venture into a new area is a method of establishing an emergingwinner in an embryonic or growth industry without bearing all of the risks and

costs associated with the project.6. Mergers and acquisitions are principal vehicles by which a company mayenter a new market and expand the size of their operation.7. Vertical Integration means that a company is producing its own inputs(backward integration) or disposing of its own outputs (forward integration). For example, in a company based in the assembly stage, backward integrationinvolves moving into intermediate manufacturing and raw-material production.Forward integration involves movement into distribution and retail.


Market GrowthCompetitive Position
http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E13http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E13http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E13http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E13


13/48

4.4

Generic Strategies

Three generic business strategies can be described which encompass thepositioning of all companies within their industry. The Focus strategy can bedivided into two categories for cost and for differentiation, yielding the four quadrants displayed in this chart.

You have rated yourself as having a broad market scope and have chosen theadvantage of lower cost to position yourself competitively. This places you in thecost leadership quadrant.

These are the major characteristics of the quadrants.

Cost Leadership


14/48

Successfully implemented a cost leadership strategy can deliver acceptablebuyer satisfaction (it doesn't have to be #1) at lowest possible cost (notnecessarily the lowest priced). In time this should open a significant andsustainable cost gap over competitors. Achieving this requires superior management of all cost elements, satisfaction of most buyer needs and limitation

of competitive (often expensive) differentiation which can stifle internal creativity.But, it can be worth the effort by generating above-average profits with industry-average prices.

Differentiation

A differentiation strategy often focuses on one or more critical prospectrequirements, adding unique value in those areas and then aggressivelysustaining that uniqueness. Successfully implemented this strategy can allowpremium pricing which in turn generates high profits. To retain a competitive edgeyou must continually monitor the market requirements and the ability of you and

your competition to satisfy those requirements. Constant research anddevelopment will be required to allow ongoing premium pricing.

Focus Strategy

The successful focus strategy first isolates a specific industry segments anddevelops a strategy to serve them. This segment will have requirements that theindustry in general does not view as essential. Then, to be even more focused,the strategy should be directed to either cost leadership or differentiation withinthe selected market segment. A focus strategy has the advantage of allowingconcentration on requirements that are often poorly served by competitors

addressing the entire market. Because this market segment can expect your offering to better meet their needs they are usually willing to pay premium priceswhich will yield high profits.


Competitive ScopeCompetitive Advantage
http://www.strategyinsight.com/analysis/users/000000000/C_SCOPE%5B0%5D%5E14http://www.strategyinsight.com/analysis/users/000000000/C_ADVANTAGE%5B0%5D%5E14http://www.strategyinsight.com/analysis/users/000000000/C_SCOPE%5B0%5D%5E14http://www.strategyinsight.com/analysis/users/000000000/C_ADVANTAGE%5B0%5D%5E14


15/48


16/48

markets because it is relationships and markets that make profits. The newoffering and new market approach involves the highest risk and is the typicalsituation for the entrepreneur.


MarketsOfferings

4.6

Evolution

This offering/market evolution matrix is a way to represent new businesses. Thehorizontal axis organizes competitive position into good, average, and poor categories. The vertical axis divides the stages of product/market evolution into ascale that represents the market life cycle.
http://www.strategyinsight.com/analysis/users/000000000/P_MFOCUS%5B0%5D%5E15http://www.strategyinsight.com/analysis/users/000000000/P_PFOCUS%5B0%5D%5E15http://www.strategyinsight.com/analysis/users/000000000/P_MFOCUS%5B0%5D%5E15http://www.strategyinsight.com/analysis/users/000000000/P_PFOCUS%5B0%5D%5E15


17/48


18/48

4.7

Policy

Low Market Attractiveness / Low Business StrengthsThink carefully what you are doing in this quadrant. The market is not particularlyattractive and your business strengths are below average here. Keep thissegment only if it supports a more profitable part of your business (for instance, if this segment completes a product line range) or if it absorbs some of theoverhead costs of a more profitable segment.Market attractiveness is measured by:Bargaining Power of the SuppliersThreat of SubstitutesThreat of New Entrants

Competitive RivalryBargaining Power of the Buyers

Business Strengths are measured by:Offering QualityOffering ValueRelative Market ShareReputationCustomer LoyaltyStaying Power Experience

Chart Plot Point Sources:Market AttractivenessCompetitive Strengths
http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E17http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E17http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E17http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E17


19/48

4.8

Risk

The concepts of closeness to the core business and market attractiveness canbe combined to analyze the risk of investing in new offerings. The proximity of thenew offering to the core business is measured by its proximity to current offeringsand current markets. Such factors as technology, familiarity with the materials,special finishes, and quality standards contribute to the proximity to current

products. Market attractiveness considers such factors as: bargaining power of the suppliers, threat of substitutes, threat of new entrants, competitive rivalry, andbargaining power of the buyers.

Close to Core Business / Low Market AttractivenessThe decision to proceed should be based on the evaluation of the marketpotential. The low attractiveness of the market may be a benefit since it will beless lucrative for competitors.


20/48


Market AttractivenessCloseness to Core Business

4.9

Advantage

This matrix examines the benefits of obtaining a competitive advantage throughcost leadership and/or differentiation.

High Differentiation / High Relative CostsEven though you cannot become a cost leader, you can continue to thrive bymaintaining significant differences from the offerings of your competition. You area speciality business.
http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E18http://www.strategyinsight.com/analysis/users/000000000/P_COREBUS%5B0%5D%5E18http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E18http://www.strategyinsight.com/analysis/users/000000000/P_COREBUS%5B0%5D%5E18


21/48


Degree of DifferentiationRelative Costs

4.10

Analysis

This matrix displays the results of comparing your competitors with yourself onthe basis of the quality of the offerings and the reputation they have establishedin the marketplace. The presence of a competitor in each quadrant can implydifferent tactics to compete effectively.

Better Offering / Better ReputationThese competitors are going to be trouble. Your options are:1. Continue to compete with them at a tremendous disadvantage.
http://www.strategyinsight.com/analysis/users/000000000/P_DIFFER%5B0%5D%5E19http://www.strategyinsight.com/analysis/users/000000000/C_ECONOMY%5B0%5D%5E19http://www.strategyinsight.com/analysis/users/000000000/P_DIFFER%5B0%5D%5E19http://www.strategyinsight.com/analysis/users/000000000/C_ECONOMY%5B0%5D%5E19


22/48

2. Differentiate your offering from theirs in some way.-or- 3. Improve your image and reputation.

Worse offering / Better ReputationThe competitors in this quadrant have an offering that is not as good as yours,

but they have a better overall reputation. You have the option of either sellingmuch harder, emphasizing your benefits, or using more PR and advertising topublicize your quality and successes.

Better Offering / Worse ReputationCompetitors in this quadrant can be dangerous. Their better offering can betrouble for you if they are able to enhance their reputation.

Worse Offering / Worse ReputationThe competitors in this quadrant are no problem. Unless they are able to makesome significant change, they are not a threat.


Their ReputationValue of their Offering
http://www.strategyinsight.com/analysis/users/000000000/C_REPUTATION%5B0%5D%5E20http://www.strategyinsight.com/analysis/users/000000000/P_VALUE%5B0%5D%5E20http://www.strategyinsight.com/analysis/users/000000000/C_REPUTATION%5B0%5D%5E20http://www.strategyinsight.com/analysis/users/000000000/P_VALUE%5B0%5D%5E20


23/48

5.0 Market Characteristics

The following charts help you to understand some of the factors that influencethe prospect's buying process as they consider your offering. Use this informationto tailor your marketing strategy for specific market segments.

5.1

Life Cycle / Loyalty

This chart illustrates the value of customer loyalty in markets with different levelsof market.

Low Market Growth / High Customer LoyaltySome customers are very loyal to their suppliers. If you have developed their


24/48

trust and support, even in a low-growth market, take care not to do anything tolose that loyalty. The market is probably mature, so do not overspend in thisenvironment.


Market GrowthCustomer Loyalty

5.2

Tendency to Buy

Buying decisions are influenced by many factors. Two of the most importantfactors are the nature of the offering itself and the extent to which the customer knows and trusts the supplier. This chart illustrates the relationship betweenthese factors as it relates to you and your competitors.
http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E22http://www.strategyinsight.com/analysis/users/000000000/C_LOYALTY%5B0%5D%5E22http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E22http://www.strategyinsight.com/analysis/users/000000000/C_LOYALTY%5B0%5D%5E22


25/48

Unknown Company / Unique OfferingProspects are suspicious about dealing with companies which are unknown evenif they have superior offerings. Your success depends on the impact that salesand advertising make on your image. You must focus your efforts in these areasof marketing to be successful.


Prospect's Knowledge of EnterpriseOffering Characteristics

5.3

Consumer

This matrix examines two factors which influence the prospect's decision making
http://www.strategyinsight.com/analysis/users/000000000/C_KNOW%5B0%5D%5E23http://www.strategyinsight.com/analysis/users/000000000/P_DIFFER%5B0%5D%5E23http://www.strategyinsight.com/analysis/users/000000000/C_KNOW%5B0%5D%5E23http://www.strategyinsight.com/analysis/users/000000000/P_DIFFER%5B0%5D%5E23


26/48

process. The position has implications to the actions that should be taken inadvertising, point of sale materials, and even sales training.

Significant Differences / Purchase not ImportantEven though there may be significant differences in the brands being offered, the

prospect does not perceive the purchase decision as important. Therefore, littleeffort will be spent in comparing brands and the decision process will berelatively rapid.


Perceived Brand DifferencesImportance of Purchase

5.4

Industry
http://www.strategyinsight.com/analysis/users/000000000/I_DIFFER%5B0%5D%5E24http://www.strategyinsight.com/analysis/users/000000000/B_IMPORTANT%5B0%5D%5E24http://www.strategyinsight.com/analysis/users/000000000/I_DIFFER%5B0%5D%5E24http://www.strategyinsight.com/analysis/users/000000000/B_IMPORTANT%5B0%5D%5E24


27/48

In industrial markets two of the important criteria controlling the decision cycleare the complexity of the offering and the risk associated with the purchasedecision. This chart examines the relationships between these variables andindicates the implications to you as the seller.

High Complexity / Low RiskWhen an offering, like yours, is complex and requires considerable effort tounderstand, but there is limited business risk associated with the use of theoffering, a functional specialist generally makes the decision. This is the personwho is most conversant with the technology employed in the offering. Salesactivities should be focused on the technical side and be prepared to point outthe differential advantages of your offering.


Complexity of OfferingCommercial Risk
http://www.strategyinsight.com/analysis/users/000000000/P_COMPLEXITY%5B0%5D%5E25http://www.strategyinsight.com/analysis/users/000000000/B_RISK%5B0%5D%5E25http://www.strategyinsight.com/analysis/users/000000000/P_COMPLEXITY%5B0%5D%5E25http://www.strategyinsight.com/analysis/users/000000000/B_RISK%5B0%5D%5E25


28/48

5.5

Segmentation

Market segmentation is a critical factor of all successful marketing activities. Thebasis of segmentation can be critical to the way you focus your resources.Sometimes segmentation variables will be different if you focus on the marketthan when you focus on usage of your offering. Segmentation variables can alsobe affected by the differences between industrial and consumer markets. Thischart may give you some ideas about how you and your competitors maysegment your markets.

Consumer Market / Offering FocusConsider segmenting on the basis of:

* consumption patterns* features and benefits* innovation theory


Type of MarketMain Focus
http://www.strategyinsight.com/analysis/users/000000000/C_TYPE%5B0%5D%5E26http://www.strategyinsight.com/analysis/users/000000000/C_FOCUS%5B0%5D%5E26http://www.strategyinsight.com/analysis/users/000000000/C_TYPE%5B0%5D%5E26http://www.strategyinsight.com/analysis/users/000000000/C_FOCUS%5B0%5D%5E26


29/48

6.0 Product / Service

This section offers a number of perspectives from which to view the relationshipbetween your offering and the marketplace. After reviewing all of them you will bebetter informed on how you can position your offering with respect to thecompetition and the market's expectations.

6.1

BCG Matrix

This is the Boston Consulting Group Matrix. There are several points to note:a) The horizontal axis represents the market share relative to the industry leader.The leader will always be displayed on the far left of the chart.b) The vertical axis represents the market growth rate for the industry.


30/48

c) The cash flow situation is different in each quadrant, which leads to thefollowing classifications:

* Stars: High-growth, high-share businesses that are likely to generate enoughcash to be self-sustaining.

* Cash cows: Low-growth, high-share businesses that generate excess cashthat can be used to support other business units (especially question marks) andR & D efforts.* Question marks: High-growth, low-share businesses that normally require a lotof cash to maintain or increase their share. Management must often either investadditional cash to convert these business units into stars or divest themselves of the offering.* Dogs: Low-growth, low-share businesses that are often cash traps.

Low Growth / Low ShareYour enterprise lies in the dogs cell of the matrix. Consider the following when

determining your enterprise's strategies:a. Investment opportunities must be scanned very carefully. Unless they promiseto turn the operation and/or industry around, they should not be made without a

justification of proper return on investment.b. Investments in business segments with a brighter future should be consideredbefore those with a presumed limited future.c. Could be a candidate to be abandoned or spun off.d. High-risk projects should be avoided.e. Focus must be on the short-term as opposed to the long-term.


Market Growth RateRelative Market Share
http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E28http://www.strategyinsight.com/analysis/users/000000000/C_SHARE%5B0%5D%5E28http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E28http://www.strategyinsight.com/analysis/users/000000000/C_SHARE%5B0%5D%5E28


31/48

6.2

GE 3X3

Medium Attractiveness / Average Competitive PositionYour enterprise lies in one of the yellow cells of the matrix. The strategy advicefor this cell is to selectively invest for earnings. Consider the following strategies:* segment the market to find a more attractive position* make contingency plans to protect your vulnerable position


Industry AttractivenessBusiness Strength
http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E29http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E29http://www.strategyinsight.com/analysis/users/000000000/A_INDUSTRY%5B0%5D%5E29http://www.strategyinsight.com/analysis/users/000000000/C_CAPABILITY%5B0%5D%5E29


32/48

6.3

Margin

This model uses target return on investment and profit margin of the offering asits axis. The advice on your condition follows.

Satisfactory Margin / Satisfactory ReturnConsider these strategies:

1. Market Entrenchment:* Protect your market share by overall cost leadership and/or differentiation.* Re-position the offering in the marketplace to appeal to a different audience.2. Market Expansion:* Use a multinational strategy to expand to an international market.* Use a full line strategy to expand the product/service line.



33/48

Target Profit MarginTarget Return

6.4

Change

This matrix explores the implications of different degrees of change in bothofferings and markets.

Inconspicuous SubstitutionThe new offering enters quietly because there is no change in marketing. This isappropriate in instances where changes are made in manufacturing materialsand/or technology.

http://www.strategyinsight.com/analysis/users/000000000/P_MARGIN%5B0%5D%5E30http://www.strategyinsight.com/analysis/users/000000000/P_RETURN%5B0%5D%5E30http://www.strategyinsight.com/analysis/users/000000000/P_MARGIN%5B0%5D%5E30http://www.strategyinsight.com/analysis/users/000000000/P_RETURN%5B0%5D%5E30


34/48

Market ChangeOffering Change

6.5

Growth

This chart shows the relationship between product/service development and therate of market growth. Its purpose is to emphasize the importance of continuous

new development activity in high growth markets and to indicate the need tocontrol it in declining markets.

Low Market Growth / High Development ActivityIn a mature or declining market you should focus your development activities onminor improvements, but should not spend heavily. Spending here is suspectparticularly if a new technology is about to take over.
http://www.strategyinsight.com/analysis/users/000000000/P_MFOCUS%5B0%5D%5E31http://www.strategyinsight.com/analysis/users/000000000/P_PFOCUS%5B0%5D%5E31http://www.strategyinsight.com/analysis/users/000000000/P_MFOCUS%5B0%5D%5E31http://www.strategyinsight.com/analysis/users/000000000/P_PFOCUS%5B0%5D%5E31


35/48


Market GrowthDevelopment Activity

6.6

Types

Products and services can be differentiated by their features and functions or bytheir image. Having either differential advantage is better than being "me-too".The best advantage is achieved by combining both.

Differentiated Offering / Differentiated ImageYour offering is exclusive. Both the content and the image have beendifferentiated to create an offering that is not easily matched by the competition.
http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E32http://www.strategyinsight.com/analysis/users/000000000/C_R_AND_D%5B0%5D%5E32http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E32http://www.strategyinsight.com/analysis/users/000000000/C_R_AND_D%5B0%5D%5E32


36/48


Offering ContentImage

6.7

Position

The Position Evaluation Graph compares the attributes of your offering with thebest of your competition. To score high on this graph you must exceed allcompetitors in each category. This evaluation will force you to consider thestrength of each of the competitive offerings and how you must position your offering to face them.

Your position has been evaluated and the following observations can be made:
http://www.strategyinsight.com/analysis/users/000000000/P_DIFFER%5B0%5D%5E33http://www.strategyinsight.com/analysis/users/000000000/C_IMAGE%5B0%5D%5E33http://www.strategyinsight.com/analysis/users/000000000/P_DIFFER%5B0%5D%5E33http://www.strategyinsight.com/analysis/users/000000000/C_IMAGE%5B0%5D%5E33


37/48

In examining the relative cost, availability, and fit & finish, of all offerings your offering is not the best in all categories. In general these are the factors that mostcontrol market share, as strong offerings tend to enjoy high volumes.

In evaluating your fit & finish, performance, features, name recognition, durability

and service your offering is found to be above average. You are not the best in allcategories. The strongest offerings in these categories are the quality leaders.


Relative CostAvailabilityFit & FinishPerformanceFeaturesName Recognition

DurabilityService
http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/C_AVAIL%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_FIT%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_PERFORMANCE%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_FEATURES%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_NAME_RECOG%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_DURABILITY%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_SERVICABILITY%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/C_AVAIL%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_FIT%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_PERFORMANCE%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_FEATURES%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_NAME_RECOG%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_DURABILITY%5B0%5D%5E34http://www.strategyinsight.com/analysis/users/000000000/P_SERVICABILITY%5B0%5D%5E34


38/48


39/48

7.2

Features

This is a two-dimensional grid that focuses on the choice between reducing costsor building in more value to the customer. Each of the four quadrants hasdifferent implications in terms of suggested strategy.

High Price Sensitivity / Large Perceived Differences

A transitional strategy is suggested for offerings facing high price sensitivity andlarge perceived differences. Emphasize the quality of your offering, but be readyto respond to competitor's offering improvements that attract customers.


Price SensitivityPerceived Differences
http://www.strategyinsight.com/analysis/users/000000000/B_PRICE_SENS%5B0%5D%5E37http://www.strategyinsight.com/analysis/users/000000000/I_DIFFER%5B0%5D%5E37http://www.strategyinsight.com/analysis/users/000000000/B_PRICE_SENS%5B0%5D%5E37http://www.strategyinsight.com/analysis/users/000000000/I_DIFFER%5B0%5D%5E37


40/48

7.3

Life Cycle

This matrix describes the different pricing strategies that are used as an offeringgoes through its life cycle.

Low Market Growth / High Relative PriceIn an embryonic market where you are dealing with a new offering this position

may be justified. Recognize that you may be creating a price umbrella for anynew entrants to the market. This "skimming" strategy is valid only if you have along technological lead. Consider whether a lower price would lead to quicker market penetration and lower your overall costs.

In a mature or declining market a high-price policy may be appropriate. Usecaution that you do not give up future profits by milking the offering today. This


41/48

action may allow your competitors to increase their market share and be in abetter position for the future.


Market GrowthPrice

7.4

Retail Price

Many factors must be considered when establishing a price. This matrixillustrates the relationship between two significant factors. The horizontal axisrepresents the awareness the consumer has for the price of your offering andthat of its competition. The vertical axis represents the relative price of theofferings.
http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E38http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E38http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E38http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E38


42/48

High Relative Price / High Price AwarenessProspects are very aware of price differences in this quadrant. If you are going tocharge a high price, you must have some justification. Some additional addedvalue must be provided.


Actual Charged PriceConsumer Price Awareness

7.5

Strategy

This matrix explores some factors that can influence pricing decisions. The chartemploys the premise that customers are almost always prepared to pay higher prices for offerings if they receive higher value benefits.
http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E39http://www.strategyinsight.com/analysis/users/000000000/B_PRICE_AWARE%5B0%5D%5E39http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E39http://www.strategyinsight.com/analysis/users/000000000/B_PRICE_AWARE%5B0%5D%5E39


43/48


44/48

High Relative Price / High Differentiation ImageThis is called the "branded offerings" quadrant. It is the best quadrant of all. Youshould support this position as long as possible with appropriate spending onR&D and/or promotion.


Price DifferentiationOffering/Image Differentiation

8.0 Promotion

The following charts may help you to determine the extent of promotional activitythat is appropriate for your offering and the kinds of promotional materials youwill use.
http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E41http://www.strategyinsight.com/analysis/users/000000000/C_IMAGE%5B0%5D%5E41http://www.strategyinsight.com/analysis/users/000000000/P_PRICE%5B0%5D%5E41http://www.strategyinsight.com/analysis/users/000000000/C_IMAGE%5B0%5D%5E41


45/48

8.1

Life Cycle

Different kinds of promotional efforts should be applied at different stages of themarket development and growth. This chart displays those different phases.

Low Market Growth / High Promotional ActivityYour market is either static or growing slowly. Your promotional spending is high.This spending is justified for a new offering launch. You will need heavy spendingon advertising in order to make the market aware of your offering.

If you are not introducing a new offering, too much promotional spending can bea waste of money. In this case, you should spend just enough to retain your market share.


Market GrowthPromotional Activity
http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E43http://www.strategyinsight.com/analysis/users/000000000/C_PROMOTION%5B0%5D%5E43http://www.strategyinsight.com/analysis/users/000000000/I_GROWTH%5B0%5D%5E43http://www.strategyinsight.com/analysis/users/000000000/C_PROMOTION%5B0%5D%5E43


46/48

8.2

Advertising

This matrix examines the use advertising versus personal selling in influencingthe behavior of industrial market customers.

High Uncertainty / Low ComplexityWhile your offering is relatively simple, the commercial uncertainty surrounding

the purchase is high. Your best option in this case is to use personal face-to-faceselling to persuade the customer. The sales contact time can be brief. You maythen use advertising, publicity, mailings, or other indirect communications toprovide reassurance and support.

High Uncertainty / High ComplexityIn environments of high offering complexity and high levels of uncertainty, you


47/48


48/48

Generated Tuesday, January 14, 2007 @ 2:06:55 PM

strategy evaluation charts

Documents