UNIVERSITI TEKNOLOGI MARA

FACULTY OF BUSINESS AND MANAGEMENT

MGT657
STRATEGIC MANAGEMENT

CASE STUDY 1
(CHAPTER 6)

“WHAT AMERICAN FIRM HELPS THE MOST COMPANIES DO STRATEGIC

PLANNING?”

GROUP:
BA235 5B

PREPARED BY:
SITI SURAYA BINTI AZHAR

(2020476914)

PREPARED FOR:
DR. SYARIFAH MASTURA BINTI SYED ABU BAKAR

SUBMISSION DATE :

17 JANUARY 2023
Declaration form
 CASE STUDY 1

Chapter 6: What American Firm Helps the Most Companies Do Strategic Planning?

The answer to the question posed above might be the Boston Consulting Group (BCG)
headquartered in Boston, Massachusetts. A worldwide management-consulting firm founded
in 1963, BCG had revenues of $6.3 billion in 2017 and more than 16,000 employees. BCG’s
President and CEO is Rich Lesser. BCG was ranked third among Fortune’s “100 Best
Companies to Work For” in 2017 and was ranked first among Consulting Magazine’s 2016
“Best Firms to Work For.”

In formulating strategies, some firms use BCG’s Advantage Matrix to portray on the x-axis the
“size of a firm’s competitive advantage (Low versus High)” and on the y-axis “the number of
approaches a firm can use to achieve competitive advantage (Low versus High).” Based on
these two axes, strategic implications for firms located in one of four quadrants can be labelled,
according to BCG, as: Fragmented, Specialization, Volume, and Stalemate, as illustrated
below:

Do some online research to answer the following questions about BCG’s Advantage Matrix.

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Questions

1. In a sentence or two for each quadrant, how would you describe implications for
a firm based on their position in the Advantage Matrix? Do you like the four words
proposed for “quadrant implications?” Can you think of a better word or words?

The “Volume” quadrant is where the historic industry level experience effect
tends to hold. Companies in the Volume quadrant should strive to be the largest player
through a combination of capacity expansion, globalization, low pricing to gain market
share, and acquisition. These businesses devise tactics for increasing manufacturing
volume. They are frequently capital intensive. Furthermore, they are dominated by a
few large industrial players who benefit from economies of scale.

Large players will typically do poorly against leaner, smaller opponents in a

“Fragmented” quadrant. If huge corporations do compete in fragmented markets, they
must reduce overhead and operate leanly while seeking the benefits of scale whenever
available. Because the company concentrates in a specific function, the fragmented
quadrant highlights businesses with excellent profit potential. These industries provide
businesses with an exciting potential to benefit by differentiating themselves from their
competitors. However, the opportunity to profit from development is restricted.

The strategy in the “Specialized” quadrant should be to dominate a role and

then assess whether that position can be used as a platform to enter adjacent niche. The
specialized quadrant describes enterprises that benefit from the product's specialty.
Companies are looking for ways to expand. Within a specific but distinct market, there
is a link between size and profitability in specialized enterprises. These firms include
management consulting for specific concerns as well as enterprises involved in the
application or development of advanced technologies such as biomedical engineering.

“Stalemate” quadrants should normally be divested or managed for cash unless

they can be combined into oligopolies. The stalemate quadrant represents businesses
that have neither the chance for growth nor competitive advantages. Companies
minimize costs by relocating locations to save money when there is no change in the
industry.

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 Do you like the four words proposed for "quadrant implications?" Can you think
of a better word or words?

Fragmented would be the only thing I would change. “Fragmented”

symbolizes something broken, which is not at all what the term represents. I do change
it to “Unstable” because there are plenty of options to dig into the niche. “Unstable”
would be a category that does not fluctuate.

2. What do you think are the primary benefits of using the Advantage Matrix?

The primary benefits using the Advantage Matrix is relatively simple to

comprehend. The definitions of each quadrant specifically state their functions, making
the process less confusing. Next, it has been tried throughout time, so there is
verification that it works. As a result, there is no doubt when performing this Advantage
Matrix. Then, possibilities for risk reduction and improved business performance and
by that the Advantage Matrix can help you ensure that your firm is running well.

3. What are the primary limitations of using the Advantage Matrix in your view?

In my point of view, the primary limitation of using the Advantage Matrix is

technology rapidly transforms processes. Next, the economic stability changes and
finally, the results may be misleading, showing slow to no growth in smaller quadrants.

4. How could the Advantage Matrix be improved?

The combined use of a wide range of methods of analysis of the business

portfolio is recommended by corporate level managers, because they will understand
much better the entire market mix included in the custody account analysis, the strategic
position held by each strategic business unit within a market, the performance potential
of the portfolio, as well as the financial aspects related to the process of resource
allocation, for the portfolio.

It should also be noted that the methods of analysis of the company portfolio
are not tools that provide accurate answers, despite the appearances provided by the
stage of analysis in which the strategic business units are depicted graphically and with

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austerity. Nonetheless, their greatest strength is its simplicity, which underpins the need
for additional investigation.

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 Reference
Gupta, S. K. (2018, December 22). Want to Generate Greater Returns? | Use the BCG

Advantage Matrix | Explained with Examples. Business Strategy Hub.

https://bstrategyhub.com/want-to-generate-greater-returns-use-the-bcg-advantage-

matrix-explained-with-examples-2/

Strategic Management: A Competitive Advantage Approach, Concepts and Cases. (2019).

Pearson.com. https://www.pearson.com/en-us/subject-catalog/p/strategic-management-

a-competitive-advantage-approach-concepts-and-

cases/P200000005870/9780135637142

Whitehead, J. (2015). Advantage Matrix. Wiley Encyclopedia of Management, 1–2.

https://doi.org/10.1002/9781118785317.weom120060