Modern Strategic Analysis

Aleksandr Kozlov
27/09/2016

of an enterprise and the adoption of courses of action

and the allocation of resource necessary for carrying out these goals‟ Alfred Chandler
„Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value‟ Michael Porter
Sources: A.D. Chandler, Strategy and Structure: Chapters in the History of American Enterprise, MIT Press, 1963, p. 13
M.E. Porter, „What is strategy?‟, Harvard Business Review, 1996, November–December, p. 60

the objective of achieving business success in the long term.

a company to be successful in its multimarket activities in

the long term.
The process of corporate strategy formulation includes setting priorities for development of company’s business units operating in a different markets and decision making about investment, keeping the status quo or withdrawal

Corporate strategy

portfolio of businesses which will achieve the goals of the

corporation and satisfy its stakeholders.

Corporate strategy

Consulting Group matrix
General Electric matrix

(Market share)
Business Growth rate
High
Low
?

of cash needed to maintain the business.
Typically belonging to

a "mature" market, and every corporation would be thrilled to own as many as possible.
They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth.

accounting point of view such a unit is worthless, not

generating cash for the company.
They depress a profitable company's return of assets ratio.
They should be sold off.

Question marks have a potential to gain market share and

become stars, and eventually cash cows when market growth slows.
If question marks do not succeed in becoming a market leader, they will degenerate into dogs when market growth declines.
Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.

leader in a high growth sector. .
Require high funding

to fight competitions and maintain a growth rate.
When growth slows, if they have been able to maintain their category leadership stars become cash cows, else they become dogs due to low relative market share.

matrix
Business attractiveness
Business strength
strong
medium
weak
low
Medium
high
medium
low
medium
medium high
medium high
medium low
medium low
high
medium

The business is strong and the market is attractive. The

company should allocate resources in this business and focus on growing the business and increase market share

Decision makers should make judgment on how to further deal

with these SBUs. Some of them may consume to much resources and are not promising while others may need additional resources and better strategy for growth.

Businesses in this segment are weak and their market is

not attractive. Decision makers should consider either repositioning these SBUs into a different market segment, develop better cost-effective offering, or get rid of these SBUs

business strength & uniqueness
Parent company can't use core competencies across

multiple SBUs
Biased criteria can be used for strengths and uniqueness
Difficult to find a location for an SBU on the grid