Page 185 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 9: Strategic Analysis and Choice

The basic purpose of industry analysis is to assess the strengths and weaknesses of a firm Notes
relative to its competitors in the industry.
Portfolio analysis is an analytical tool which views a corporation as a basket or portfolio
of products or business units to be managed for the best possible returns, and help a
corporate to build a multi-business strategy.

Various matrices are used under this approach.
Though the portfolio approaches have limitations, but all these limitations can be overcome
through effective strategy development and meticulous planning.

While the core competence concept appealed powerfully to companies disillusioned with
diversification, it did not offer any practical guidelines for developing corporate-level
strategy.
Contingency plans are organised and coordinated set of steps to be taken if an emergency
or disaster (fire, hurricane, injury, robbery, etc.) strikes.

9.7 Keywords

BCG Matrix: Most popular and the simplest matrix to describe a corporation’s portfolio of
businesses or products.

Display Matrices: Frameworks in which products or business units are displayed as a series of
investments from which top management expects a profitable return.
Market Growth Rate: The percentage of market growth, that is, the percentage by which sales of
a particular product or business unit have increased.
Portfolio strategy approach: A method of analysing an organisation’s mix of business in terms
of both individual and collective contributions to strategic goals.

Relative Market Share: The ratio of the market share of the concerned product or business unit
in the industry divided by the share of the market leader.
Strategic Choice: Selection of a strategy that will best meet the firm’s objectives.

9.8 Self Assessment

Fill in the blanks:
1. The balancing of the portfolio implies that though individual businesses grow, mature
and decline, yet the company continues to ..................

2. The GE matrix has been developed to overcome the obvious limitations of .................
3. In GE Matrix, the horizontal axis represents ................. and the vertical axis represents
.................

4. GE matrix is also called ................. strategy matrix.
5. Directional Policy Matrix (DPM) was developed by .................
6. Arthur D Little Company's matrix links the stages of the product life cycle with the
.................
7. On the vertical axis in Arthur D Little Company's matrix, businesses are classified with
respect to their business strength as ................., ................., ................., ................. or .................

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