MODUL PERKULIAHAN
Distinctive Strategic
Management
SWOT Matrix
SPACE Matrix
BCG Matirix
I.E Matirx
Grand Strategy Matrix
Fakultas
Program Studi
Ekonomi & Bisnis
Magister
Manajemen
Tatap Muka
09
Kode MK
Disusun Oleh
35009
Dr. Baruna Hadibrata, SE., MM
Abstract
Kompetensi
This module illustrates SWOT Matrix
SPACE Matrix
BCG Matirix
I.E Matirx
Grand Strategy Matrix
Understanding
Strategic plan SWOT Matrix SPACE
Matrix BCG Matirix I.E Matirx
Grand Strategy Matrix
Pembahasan
SWOT Matrix
SWOT analysis, method, or model is a way to analyze competitive position of your company.
SWOT analysis uses so-called SWOT matrix to assess both internal and external aspects of
doing your business. The SWOT framework is a tool for auditing an organization and its
environment.
SWOT is the first stage of planning and helps decision makers to focus on key issues. SWOT
method is a key tool for company top officials to formulate strategic plans. Each letter in the
word SWOT represents one strong word: S = strengths, W = weaknesses, O = opportunities,
T = threats.
SWOT model analyzes factors that are internal to your business and also factors that affect
your company from outside. Strengths and weaknesses in the SWOT matrix are internal
factors. Opportunities and threats are external factors.
SWOT can be used in conjunction with other tools for strategic planning, such as the Porter's
Five-Forces analysis or the Balanced Scorecard framework. SWOT is a very popular tool in
marketing because it is quick, easy, and intuitive.
What is SWOT matrix?
The concept of determining strengths, weaknesses, threats, and opportunities is the
fundamental idea behind the SWOT model. To present the model in a more understandable
way, scholars came up with so-called SWOT matrix. SWOT matrix is only a graphical
representation of the SWOT framework.
Figure 1. Scheme How SWOT Works
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Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
The above is a schema of how SWOT works. You start at the top level and go down to
details. When this is filled with content, it gets the shape of a matrix, such as the example
below:
Figure 2. SWOT Analysis
SWOT matrix makes understanding the model easier.
Strengths and weaknesses are internal value creating (or destroying) factors such as assets,
skills, or resources a company has at its disposal relatively to its competitors. Below you can
find a few examples of what your strengths might be:

Unique product

Location of your business

Patents, know-how, trade secrets

Worker's unique skill set

Corporate culture, company image

Quality of your product

Access to financing

Operational efficiency
The following list shows a few examples of weaknesses:

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Location of your business
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
Lack of quality and customer service

Poor marketing and sales

Access to resources

Undifferentiated products or services

Opportunities and threats are external value creating (or destroying) factors a
company cannot control but emerge from either the competitive dynamics of the
industry or market or from demographic, economic, political, technical, social, legal,
or cultural factors.
An opportunity in the SWOT model could be for example:

A new emerging or developing market (niche product, place - new country, less
competition)

Merger, joint venture, or strategic alliance

Market trends

New technologies

Social changes (for example demographics)
And now the final one, threats. A threat could be:

New competition in the market, possibly with new products or services

Price wars

Economic conditions

Political changes

Competitor oligopoly or monopoly

Taxation

Availability of resources

Factors related to each aspect of the SWOT model depend very much of the nature
of your business. SWOT for a manufacturing company will be different from a SWOT
for an internet start-up.
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
Is SWOT analysis a hard science?
The answer is no. SWOT analysis can be very subjective. Someone can see a new firm
coming into the market as a threat because it takes away your current customers. Someone
else might see the same company as opportunity because that company might have
innovative ideas which your business can explore, and your business might even benefit
from possible takeover of that new competitor.
What is the difference between SWOT and TOWS?
TOWS analysis is very similar to the SWOT method. TOWS simply looks at the negative
factors first in order to turn them into positive factors.
How should I do the SWOT analysis?
There is a number of simple rules that you can go by when creating a SWOT matrix in SWOT
analysis.
Be realistic: Make sure you assess your situation objectively. It is better to be more
pessimistic about weaknesses and threats and lighter about strengths and opportunities.
Today versus future: When doing the SWOT analysis, distinguish between today's state of
your business and your expectation for the future. Mixing your expectation with the current
state will result in skewed outcome.
Simple: Keep your SWOT matrix short and simple. Avoid complexity and over analysis. If you
want to include many points to each quadrant of the SWOT matrix, it is a good idea to
weight them.
SPACE Matrix
The SPACE matrix is a management tool used to analyze a company. It is used to determine
what type of a strategy a company should undertake.
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Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
The Strategic Position & Action Evaluation matrix or short a SPACE matrix is a strategic
management tool that focuses on strategy formulation especially as related to the
competitive position of an organization.
The SPACE matrix can be used as a basis for other analyses, such as the SWOT analysis, BCG
matrix model, industry analysis, or assessing strategic alternatives (IE matrix).
To explain how the SPACE matrix works, it is best to reverse-engineer it. First, let's take a
look at what the outcome of a SPACE matrix analysis can be, take a look at the picture
below. The SPACE matrix is broken down to four quadrants where each quadrant suggests a
different type or a nature of a strategy:

Aggressive

Conservative

Defensive

Competitive
This is what a completed SPACE matrix looks like:
Figure 3. SPACE Matrix
This particular SPACE matrix tells us that our company should pursue an aggressive strategy.
Our company has a strong competitive position it the market with rapid growth. It needs to
use its internal strengths to develop a market penetration and market development
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Distinctive Strategic Management
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Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
strategy. This can include product development, integration with other companies,
acquisition of competitors, and so on.
Now, how do we get to the possible outcomes shown in the SPACE matrix? The SPACE
Matrix analysis functions upon two internal and two external strategic dimensions in order
to determine the organization's strategic posture in the industry. The SPACE matrix is based
on four areas of analysis.
Internal strategic dimensions:
Financial strength (FS)
Competitive advantage (CA)
External strategic dimensions:
Environmental stability (ES)
Industry strength (IS)
There are many SPACE matrix factors under the internal strategic dimension. These factors
analyze a business internal strategic position. The financial strength factors often come from
company accounting. These SPACE matrix factors can include for example return on
investment, leverage, turnover, liquidity, working capital, cash flow, and others. Competitive
advantage factors include for example the speed of innovation by the company, market
niche position, customer loyalty, product quality, market share, product life cycle, and
others.
Every business is also affected by the environment in which it operates. SPACE matrix
factors related to business external strategic dimension are for example overall economic
condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive
pressures, industry growth potential, and others. These factors can be well analyzed using
the Michael Porter's Five Forces model.
The SPACE matrix calculates the importance of each of these dimensions and places them
on a Cartesian graph with X and Y coordinates.
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
The following are a few model technical assumptions:
- By definition, the CA and IS values in the SPACE matrix are plotted on the X axis.
- CA values can range from -1 to -6.
- IS values can take +1 to +6.
- The FS and ES dimensions of the model are plotted on the Y axis.
- ES values can be between -1 and -6.
- FS values range from +1 to +6.
The SPACE matrix is constructed by plotting calculated values for the competitive advantage
(CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the
environmental stability (ES) and financial strength (FS) dimensions. The SPACE matrix can be
created using the following seven steps:
Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA),
industry strength (IS), environmental stability (ES), and financial strength (FS).
Step 2: Rate individual factors using rating system specific to each dimension. Rate
competitive advantage (CA) and environmental stability (ES) using rating scale from -6
(worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale
from +1 (worst) to +6 (best).
Step 3: Find the average scores for competitive advantage (CA), industry strength (IS),
environmental stability (ES), and financial strength (FS).
Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the appropriate
axis.
Step 5: Add the average score for the competitive advantage (CA) and industry strength (IS)
dimensions. This will be your final point on axis X on the SPACE matrix.
Step 6: Add the average score for the SPACE matrix environmental stability (ES) and financial
strength (FS) dimensions to find your final point on the axis Y.
Step 7: Find intersection of your X and Y points. Draw a line from the center of the SPACE
matrix to your point. This line reveals the type of strategy the company should pursue.
SPACE matrix example
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Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
The following table shows what values were used to create the SPACE matrix displayed
above.
Figure 4. Space Matrix Example
Each factor within each strategic dimension is rated using appropriate rating scale. Then
averages are calculated. Adding individual strategic dimension averages provides values that
are plotted on the axis X and Y.
BCG Matrix
The growth–share matrix (aka the product portfolio, BCG-matrix, Boston matrix, Boston
Consulting Group analysis, portfolio diagram) is a chart that was created by Bruce D.
Henderson for the Boston Consulting Group in 1970 to help corporations to analyze their
business units, that is, their product lines. This helps the company allocate resources and is
used as an analytical tool in brand marketing, product management, strategic management,
and portfolio analysis. Analysis of market performance by firms using its principles has
recently called its usefulness into question.
To use the chart, analysts plot a scatter graph to rank the business units (or products) on the
basis of their relative market shares and growth rates.
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id

Cash cows is where a company has high market share in a slow-growing industry.
These units typically generate cash in excess of the amount of cash needed to
maintain the business. They are regarded as staid and boring, in a "mature" market,
yet corporations value owning them due to their cash generating qualities. They are
to be "milked" continuously with as little investment as possible, since such
investment would be wasted in an industry with low growth.

Dogs, more charitably called pets, are units with low market share in a mature, slowgrowing industry. These units typically "break even", generating barely enough cash
to maintain the business's market share. Though owning a break-even unit provides
the social benefit of providing jobs and possible synergies that assist other business
units, from an accounting point of view such a unit is worthless, not generating cash
for the company. They depress a profitable company's return on assets ratio, used
by many investors to judge how well a company is being managed. Dogs, it is
thought, should be sold off.

Question marks (also known as problem children) are business operating in a high
market growth, but having a low market share. They are a starting point for most
businesses. 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, then after perhaps years of cash consumption,
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.

Stars are units with a high market share in a fast-growing industry. They are
graduated question marks with a market or niche leading trajectory, for example:
amongst market share front-runners in a high-growth sector, and/or having a
monopolistic or increasingly dominant USP with burgeoning/fortuitous proposition
drive(s) from: novelty (e.g. Last.FM upon CBS Interactive's due diligence),
fashion/promotion (e.g. newly prestigious celebrity branded fragrances), customer
loyalty (e.g. greenfield or military/gang enforcement backed, and/or innovative,
grey-market/illicit retail of addictive drugs, for instance the British East India
Company's, late-1700s opium-based Qianlong Emperor embargo-busting, Canton
System), goodwill (e.g. monopsonies) and/or gearing (e.g. oligopolies, for instance
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
Portland cement producers near boomtowns),[citation needed] etc. The hope is that
stars become next cash cows.
Stars require high funding to fight competitions and maintain a growth rate. When
industry growth slows, if they remain a niche leader or are amongst market leaders
they have been able to maintain their category leadership stars become cash cows,
else they become dogs due to low relative market share.
As a particular industry matures and its growth slows, all business units become either cash
cows or dogs. The natural cycle for most business units is that they start as question marks,
then turn into stars. Eventually the market stops growing thus the business unit becomes a
cash cow. At the end of the cycle the cash cow turns into a dog.
As BCG stated in 1970:
Only a diversified company with a balanced portfolio can use its strengths to truly capitalize
on its growth opportunities. The balanced portfolio has:

stars whose high share and high growth assure the future;

cash cows that supply funds for that future growth; and

question marks to be converted into stars with the added funds.
Figure 5. BCG Matrix
Relative market share. One of the dimensions used to evaluate business portfolio is relative
market share. Higher corporate’s market share results in higher cash returns. This is because
a firm that produces more, benefits from higher economies of scale and experience curve,
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
which results in higher profits. Nonetheless, it is worth to note that some firms may
experience the same benefits with lower production outputs and lower market share.
Market growth rate. High market growth rate means higher earnings and sometimes profits
but it also consumes lots of cash, which is used as investment to stimulate further growth.
Therefore, business units that operate in rapid growth industries are cash users and are
worth investing in only when they are expected to grow or maintain market share in the
future.
BCG matrix quadrants are simplified versions of the reality and cannot be applied blindly.
They can help as general investment guidelines but should not change strategic thinking.
Business should rely on management judgement, business unit strengths and weaknesses
and external environment factors to make more reasonable investment decisions.
Advantages and disadvantages
Benefits of the matrix:

Easy to perform;

Helps to understand the strategic positions of business portfolio;

It’s a good starting point for further more thorough analysis.
Growth-share analysis has been heavily criticized for its oversimplification and lack of useful
application. Following are the main limitations of the analysis:

Business can only be classified to four quadrants. It can be confusing to classify an
SBU that falls right in the middle.

It does not define what ‘market’ is. Businesses can be classified as cash cows, while
they are actually dogs, or vice versa.

Does not include other external factors that may change the situation completely.

Market share and industry growth are not the only factors of profitability. Besides,
high market share does not necessarily mean high profits.

It denies that synergies between different units exist. Dogs can be as important as
cash cows to businesses if it helps to achieve competitive advantage for the rest of
the company.
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
Although BCG analysis has lost its importance due to many limitations, it can still be a useful
tool if performed by following these steps:

Step 1. Choose the unit

Step 2. Define the market

Step 3. Calculate relative market share

Step 4. Find out market growth rate

Step 5. Draw the circles on a matrix
Step 1. Choose the unit. BCG matrix can be used to analyze SBUs, separate brands, products
or a firm as a unit itself. Which unit will be chosen will have an impact on the whole analysis.
Therefore, it is essential to define the unit for which you’ll do the analysis.
Step 2. Define the market. Defining the market is one of the most important things to do in
this analysis. This is because incorrectly defined market may lead to poor classification. For
example, if we would do the analysis for the Daimler’s Mercedes-Benz car brand in the
passenger vehicle market it would end up as a dog (it holds less than 20% relative market
share), but it would be a cash cow in the luxury car market. It is important to clearly define
the market to better understand firm’s portfolio position.
Step 3. Calculate relative market share. Relative market share can be calculated in terms of
revenues or market share. It is calculated by dividing your own brand’s market share
(revenues) by the market share (or revenues) of your largest competitor in that industry. For
example, if your competitor’s market share in refrigerator’s industry was 25% and your
firm’s brand market share was 10% in the same year, your relative market share would be
only 0.4. Relative market share is given on x-axis. It’s top left corner is set at 1, midpoint at
0.5 and top right corner at 0 (see the example below for this).
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Distinctive Strategic Management
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Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
Figure 6. BCG Formula
Step 4. Find out market growth rate. The industry growth rate can be found in industry
reports, which are usually available online for free. It can also be calculated by looking at
average revenue growth of the leading industry firms. Market growth rate is measured in
percentage terms. The midpoint of the y-axis is usually set at 10% growth rate, but this can
vary. Some industries grow for years but at average rate of 1 or 2% per year. Therefore,
when doing the analysis you should find out what growth rate is seen as significant
(midpoint) to separate cash cows from stars and question marks from dogs.
Step 5. Draw the circles on a matrix. After calculating all the measures, you should be able to
plot your brands on the matrix. You should do this by drawing a circle for each brand. The
size of the circle should correspond to the proportion of business revenue generated by that
brand.
 Examples
Table 1
Corporate ‘A’ BCG
Brand Revenues
% of corporate
Largest rival’s market
Your brand’s market
revenues
share
share
Relative
Market
market
growth
share
rate
“1”
$500,000
54%
25%
25%
1
3%
“2”
$350,000
38%
30%
5%
0.17
12%
“3”
$50,000
6%
45%
30%
0.67
13%
“4”
$20,000
2%
10%
1%
0.1
15%
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Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
Figure 7. Example of Corporate A BCG Matrix
This example was created to show how to deal with a relative market share higher than
100% and with negative market growth.
Table 2.
Corporate ‘B’ BCG matrix
Brand
2016
Revenues
% of corporate
Largest rival’s
Your brand’s
revenues
market share
market share
Relative
Market
market
growth
share
rate
"1"
$500,000
55%
15%
60%
1
3%
"2"
$350,000
31%
30%
5%
0.17
-15%
"3"
$50,000
10%
45%
30%
0.67
-4%
"4"
$20,000
4%
10%
1%
0.1
8%
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
Figure 8. Example of Corporate A BCG Matrix
Internal-External (IE) Matrix
The Internal-External (IE) matrix is another strategic management tool used to analyze
working conditions and strategic position of a business. The Internal External Matrix or short
IE matrix is based on an analysis of internal and external business factors which are
combined into one suggestive model.
The IE matrix is a continuation of the EFE matrix and IFE matrix models.
How does the Internal-External IE matrix work?
The IE matrix belongs to the group of strategic portfolio management tools. In a similar
manner like the BCG matrix, the IE matrix positions an organization into a nine cell matrix.
The IE matrix is based on the following two criteria:

Score from the EFE matrix -- this score is plotted on the y-axis

Score from the IFE matrix -- plotted on the x-axis
The IE matrix works in a way that you plot the total weighted score from the EFE matrix on
the y axis and draw a horizontal line across the plane. Then you take the score calculated in
the IFE matrix, plot it on the x axis, and draw a vertical line across the plane. The point
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
where your horizontal line meets your vertical line is the determinant of your strategy. This
point shows the strategy that your company should follow.
On the x axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak
internal position. A score of 2.0 to 2.99 is considered average. A score of 3.0 to 4.0 is strong.
On the y axis, an EFE total weighted score of 1.0 to 1.99 is considered low. A score of 2.0 to
2.99 is medium. A score of 3.0 to 4.0 is high.
 IE matrix example
Let us take a look at an example. We calculated IFE matrix for an anonymous company on
the IFE matrix page. The total weighted score calculated on this page is 2.79 which points at
a company with an above-average internal strength.
We also calculated the EFE matrix for the same company on the EFE matrix page. The total
weighted score calculated for the EFE matrix is 2.46 which suggests a slightly less than
average ability to respond to external factors.
Now we plot these values on axes in the IE matrix.
Figure 9. IE Matrix
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Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
This IE matrix tells us that our company should hold and maintain its position. The company
should pursue strategies focused on increasing market penetration and product
development (more about this below).
IE matrix tell us
The horizontal and vertical lines meet in one of the nine cells in the IE matrix. You should
follow a strategy depending on in which cell those lines intersect.
The IE matrix can be divided into three major regions that have different strategy
implications.
Cells I, II, and III suggest the grow and build strategy. This means intensive and aggressive
tactical strategies. Your strategies should focus on market penetration, market
development, and product development. From the operational perspective, a backward
integration, forward integration, and horizontal integration should also be considered.
Cells IV, V, and VI suggest the hold and maintain strategy. In this case, your tactical
strategies should focus on market penetration and product development.
Cells VII, VIII, and IX are characterized with the harvest or exit strategy. If costs for
rejuvenating the business are low, then it should be attempted to revitalize the business. In
other cases, aggressive cost management is a way to play the end game.
Grand Strategy Matrix
Grand Strategy Matrix has emerged into a powerful tool in devising alternative strategies.
This matrix is basically based on four important elements:
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
Rapid Market Growth

Slow Market Growth

Strong Competitive Position

Weak Competitive Position
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Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
These elements form a four quadrant matrix in which all organizations can be positioned in
such a way that identification and selection of appropriate strategy becomes an easy task.
Moreover, this matrix helps in adopting the best strategy based on the current growth and
competitive state of the firm. A large scale firm segregated into many divisions can also plot
its divisions in this four quadrant Grand Strategy Matrix for formulating the best strategy for
each division.
The key area of management is to suitably select the strategy cohesive with the firms’
market and competitive position. The Grand Strategy Matrix makes it an easy going job. It
helps in scientific analysis of firms‘current position and selection of best strategy in
accordance with the revealed competitive position and market place.
Broadly speaking four elements of the Grand Strategy Matrix can be described as two
evaluative dimensions namely market growth and competitive position. In each quadrant of
the matrix the apt strategies are enlisted in sequential order for each organization or
division keeping in view the attractiveness in each quadrant of the matrix.
Quadrant I
The quadrant one of the Grand Strategy Matrix is meant for those firms which are in a
strong competitive position and flourishing with rapid market growth. Firms located in this
quadrant are in excellent strategic position and they need to concentrate on current
markets and products. Concentration on current markets reveals the adoption of strategies
such as market penetration and market development and likewise concentration on current
products calls for adoption of product development strategy. These firms or divisions should
continue to ponder upon current competitive advantage and must avoid from loosing the
focus from the competitive advantage gained over the time.
n case quadrant one firms have excessive resources, than, it would be wise to adopt the
expansion program and indulge in backward, forward, or horizontal integration. But and a
careful thought process needs to be done before assuming such integrations so that any
meditation from the current competitive advantage can be avoided. The quadrant one firm
also requires identifying the risk associated mainly if it is committed to a single product line.
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Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
The best strategy to espouse in this case is related diversification because it can be helpful
in reducing the risk associated with the slender product line.
One of the main advantages to the quadrant one firms is that they can afford to exploit the
external opportunities and magnify the wealth in numerous areas of dealings.
Quadrant II
Firms and divisions falling in quadrant two of the Grand Strategy Matrix are characterized
with a weak competitive position in fast growing market. The present market position of
these firms must click in the minds of the management and they need to weigh up the firms’
present market place critically. The opportunity lagging here is that such firms are operating
in a growing industry but the problem area is that they are competing ineffectively. An indepth analysis is necessary to identify the gray areas of incompetence and the reasons
behind such ineffectiveness. Moreover, adoption of counteractive measures is also
indispensable so that ability to compete effectively is strengthen and firm can find its space
in the more competitive environment.
Since quadrant two firms are in a rapid market growth industry, therefore, an intensive
strategy, more appropriately, can be classified as the first option to adopt. The dilemma in
espousing the intensive strategy arises when the firms is lacking distinctive competence or
competitive advantage. In this scenario the most enviable substitute is horizontal
integration.
In case the quadrant II firm does not find any suitable strategy to adopt than divestiture of
some divisions can be considered as another option. Such an arrangement may avail the
desired funding to buy back the shares or to invest in the current venture in other divisions
to strengthen the competitive position. Moreover, as last resort, liquidation should be
considered so that another business can be acquired.
Quadrant III
The quadrant three firms are operating in a slow growth industry with a weak competitive
position. These firms are prone to further decline which may result possibly in liquidation.
To avoid such situations quadrant three firms needs introduce drastic changes in almost all
the areas of managing the company. The management has to change its philosophy and
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should necessarily adopt new approaches of governing the firm. The management should be
willing to incur some extensive costs in the overall revamp of the organization.
Strategically retrenchment (assets reduction) would be the best option to be considered
first. Secondly diversifying the overall business through shifting the resources should be
evaluated as another choice (related or unrelated diversification). The final option is again
divesture or liquidation.
Quadrant IV
The firms falling in quadrant IV are characterized as having a strong competitive position but
are operating in a slow growth industry. These firms have to quest for the promising growth
areas and to exploit the opportunities in the growing markets as they possess the strengths
to instigate diversified programs in growing industries.
Ideally quadrant four firms have limited requirements of funds for internal growth whereas
they enjoy the high cash flows due to the competitive position they are characterized for.
Therefore, these firms can often hunt for related or unrelated diversification fruitfully. Due
to availability of excessive funds quadrant IV firms can also pursue joint ventures.
Figure 10. Example of Grand Strategy Matrix
2016
21
Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
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Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id
2016
24
Distinctive Strategic Management
Dr. Baruna Hadibrata,SE.,MM
Pusat Bahan Ajar dan eLearning
http://www.mercubuana.ac.id