The Grand Strategy Matrix

Together with the SWOT Analysis, SPACE Matrix, BCG Matrix, and IE Matrix, the Grand Strategy Matrix has grown in popularity as a tool for creating workable plans. The grand strategy matrix is a tool for developing alternative and distinct organizational plans. Each of the four strategy quadrants of the Grand Strategy Matrix can accommodate a company or division. The competitive position and market growth aspects form the foundation of the grand strategy matrix. The portfolio analysis provides the information required for SBU positioning in the matrix. This matrix provides viable options for a corporation to think about, which are listed in the matrix’s four quadrants in sequential order of desirability.

Quadrant 1:

Businesses in the Grand Strategy Matrix’s Quadrant I (Strong Competitive Position and Fast Market Expansion) are in a great strategic position. The companies or divisions functioning in quickly evolving growth markets and with a strong competitive basis are referred to as being in the first quadrant. It is better for such businesses or divisions to embrace and pursue strategies like product creation, market penetration, and market development. The goal is to narrow the focus and strengthen the existing competitive base. If such businesses have ready access to resources, they can move on to integration plans, but never at the expense of neglecting their already robust competitive environment.

Quadrant 2:

Businesses in Quadrant II should carefully assess their current marketing strategy. They need to figure out why the company’s existing strategy is ineffective and how the company may adapt to increase its competitiveness because they are unable to compete effectively in spite of the fact that their industry is expanding. Such businesses would do well to develop their products, markets, and market penetration. An intense approach (rather than an integrative or a diversification strategy) is typically the first choice that should be taken into consideration because Quadrant II enterprises are in a sector with rapid market expansion. Depending on the availability of resources, Quadrant II enterprises may engage in horizontal integration to gain a competitive edge or become market leaders.

Quadrant 3:

These companies, who compete in slow-growing industries, are in weaker competitive situations. To prevent further decline and potential collapse, these businesses must swiftly implement some significant reforms. Retrenchment efforts should focus on drastically cutting costs and assets first. Moving resources away from the existing business and into other areas is a different tactic. The only remaining alternatives for enterprises in Quadrant III are liquidation or divestiture.

Quadrant 4:

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.

In general, the strategies in the first quadrant of the Grand Strategy Matrix are meant to keep a firm’s competitive edge and foster quick growth, while the strategies in the other three quadrants reflect proper steps to follow in order to get to the best position, which is the first quadrant. Common strategies include expanding into new areas, developing new products, and increasing market share.