Organizational

Analysis
Ms.Vidhya Srinivas
Organizational Analysis
Corporate Appraisal
Appraisal of internal factors
Organizational competence
Appraising organizational competence and
resources

Organizational Appraisal
Internal Environment – Strength and weakness
in different functional areas
ORGANIZATIONAL CAPABILITY

-Capacity and ability to use distinctive

competencies to excel in a particular field

-Ability to use S & W to exploit O and face T in

the external environment

Organizational Resources
Physical
Human
 Relates to cost, availability – Defines S & W
Process of Organizational
analysis
Identify the key factors
Identify the importance of key factors
Assessing S & W of key factors
Preparing organizational capability profile
Relating organizational capability to strategy
Assessing strategic or key
factors in organizational
analysis
The basis of identification of strategic factors
for organizational analysis follows the
identification of various factors necessary to
achieve organizational objectives. The
approaches are:
Value chain analysis
Functional approach
Ansoff’s Grid approach
VIRO’s approach
Value Chain Analysis
Value Chain analysis was first
suggested by Michael Porter (1995)
as a way of presenting the
construction of value as related
to end customer.
It can:
ØIncrease your competitiveness
ØReduce your costs
ØImprove your market share

Ø
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities
Logistics
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities

Operations
Logistics
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities

Operations
Logistics

Logistics
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities

Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities

Procurement

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
ctivities
Technological Development
Procurement

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Support
Human Resource Management
ctivities
Technological Development
Procurement

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Firm Infrastructure

Support
Human Resource Management
ctivities
Technological Development
Procurement

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

Primary Activities
 Value Chain Analysis
Identifying Resources and Capabilities That Can Add Value

Firm Infrastructure
Human Resource Management M A
Support
ctivities
RG
Technological Development IN

Procurement

Service
Operations
Logistics

Logistics

Marketing
& Sales
Outbound
Inbound

IN
RG
MA
Primary Activities
Importance of Value chain
analysis
ðIdentify factors that determine costs of
different activities
ðUnderstand why a firm’s costs or a
sector’s costs differs from its competitors
ðUnderstand why large differences in
profitability exist within the same
industry
ðIdentify which activities are performed
efficiently or inefficiently
ðShow how costs in one activity influence
another
ðIdentify competitor’s cost positions
ðUnderstand the nature and source of
competitive advantage

The Three Tiers
T h e re a re th re e tie rs o f V a lu e C h a in A n a lysis

Internal Cost Analysis

ØA firm or a sector needs to understand its own
value chain in order to compare to its
competitors
Internal Differentiation Analysis
ØA firm or a sector then needs to identify the
processes that distinguish its products or
services from that of its competitors
ØVertical Linkage Analysis
Vertical Linkage Analysis
“ gaining and sustaining a competitive
advantage requires that a firm understand
the entire value delivery system, not just
the portion of the value chain in which it
participates. Suppliers and customers and
suppliers’ suppliers and customers’
customers have profit margins that are
important to identify in understanding a
firm’s cost/differentiation positioning,
because the end-use customers ultimately
pay for all the profit margins along the
entire value chain.”

Shank and Govindarajan (1993)

Ø
Functional Approach
Functional Approach of organizational analysis,
following factors are evaluated strength and
weakness:
Productions/operations
Marketing
Finance
Human Resources
General management
Production/operations
Allocation and use of resources
Rationalization of resource
Locational pattern
Production capacity and its uses
Cost structure
Cost volume profit relationship
Operation procedures
Raw materials availability
Inventory control system
R& D
Patent rights
Marketing
Competitive competence
Product mix
Product life cycle
Marketing research
Channel of distribution
Sales forces
Pricing
Promotional efforts
Finance
Capital cost
Capital structure
Financial planning
Tax benefits
Pattern of shareholding
Relationship with shareholders and financiers
Accounting procedures
Human Resources
Quality of personnel
Personnel turnover and absenteeism
Industrial Relations
General Management
Leadership
Top Management constitution and Philosophy
Organizational Image and Prestige
Organizational climate
Management Practices
Organizational Structure
Organizational external relationships

 Ansoff’s Grid Approach
Organizational Degree of Personnel OrganizationaManagerial
Factors Facilities Skills l capabilities capabilities
General
Management
Finance
R&D
Production
Marketing
V R IO
Organizational Environmental
Analysis Analysis

Strengths Opportunities

Weaknesses Threats

VRIO Porter forces

model
VRIO
Value, Rarity, Imitability, & Organization
Value: Do its resources & capabilities enable
the firm to respond to environmental threats
& opportunities?
Rarity: Do competing firms already possess
valuable resources & capabilities?
VRIO
Imitability: Do firms without resources &
capabilities face a disadvantage in obtaining
them?
Organization: Does the firm’s organization
permit it to exploit its resources &
capabilities?
V R IO a p p ro a ch
Consider a resource or capability

No
Valuable Possible
? weakness

Yes

No No
Can org.
Rare? exploit? Weakness

Yes
Yes

Competitive
To next slide parity t e gic
a e
Str pons
s
Re hg. ion
C at
z
ani
From previous slide

V R IO
Yes
No
Imitable Can org. Missed
? exploit? opportunit
y
Yes
No
Strength
Short-run g ic
advantage a t e e
Can org. Str pons
s
exploit? Re hg. ion
C at
g a niz
Yes or
No Strength
Long-run Exploit
advantage in
design of
Missed comp.
opportunit strategy
y Strategic Response:
Chg. organization
VRIO
Additional issue
inherent circularity: can’t know if resource or
capability is valuable unless have some idea
of use—that is, strategy.
but need VRIO to help formulate strategy
Methods of Organizational
Analysis
Financial Analysis Method : ROI, rate of cash
generation, Margins, status of working capital
management, credit policy, liquidity position,
growth record in terms of sales and assets,
net cost of acquiring of funds for the
company
Key factor Rating Method
Functional Area Profile and Resource-
Deployment Matrix
 Functional Area Profile (Hofer
& Schendel)
FUNCTIONA Resource 3 years 2 years 1 year Current
L AREA Deployment and ago ago ago year
focus of efforts
R&D + % outlay
Engineering Focus of efforts
Manufacturin % outlay
g Focus of efforts
Marketing % outlay
Focus of efforts
Finance % outlay
Focus of efforts
Management % outlay
Focus of efforts
Organizational Capability
Profile
After the organizational analysis is over the
results are structured in the form of
organizational Capability Profile(OCP)
It is a summarized statement which provides
an overview of strength and Weakness in key
result areas likely to affect future operations
of the organization.
It can be presented both qualitatively and
quantitatively.
Concept of Core
Competence
 A competence is the product of organizational learning and
experience and represents real proficiency in performing an
internal activity
 A core competence is a well-performed internal activity
central (not peripheral or incidental) to a company’s
competitiveness and profitability
 A competence becomes a core competence when the well-
performed activity is central to a company’s
competitiveness and profitability
 Often, a core competence results from collaboration among
different parts of a company
 Typically, core competencies reside in a company’s people,
not in assets on a balance sheet
 A core competence gives a company a potentially valuable
competitive capability and represents a definite
competitive asset
Examples: Core
Competencies
Expertise in integrating multiple technologies
to create families of new products
Know-how in creating operating systems for
cost efficient supply chain management
Speeding new/next-generation products to
market
Better after-sale service capability
Skills in manufacturing a high quality product
System to fill customer orders accurately and
swiftly
Distinctive Competence
A distinctive competence is a competitively
significant activity that a company performs
better than its competitors
A distinctive competence
Represents a competitively valuable capability
rivals do not have
Presents attractive potential for being a
cornerstone of strategy
Can provide a competitive edge in the
marketplace —because it represents a
competitively superior resource strength

Examples: Distinctive
Competencies
Sharp Corporation
Expertise in flat-panel display technology
Toyota and Honda
Low-cost, high-quality manufacturing
capability and short design-to-market cycles
Intel
Ability to design and manufacture ever more
powerful microprocessors for PCs
Wal-Mart
Low-cost distribution and use of state-of-the-
art retail technology

Concept of Competitive
Advantage
“Competitive advantage exists when there is a
match between the distinctive competencies
of the firm and the factors critical for the
success within its industry that permits the
firm to outperform the competitors”
Dynamics of National Competitive Advantage
Factor Conditions – human, knowledge,
physical, capital, and infrastructure.
Demand Conditions
Relate d and supporting Industries
Firm Strategy, Structure and Rivalry
The main types of Competitive
Advantage

Cost
Cost advantage
advantage
l ar
i t st
S i mo d urc c o
plro w e
Competitive
Competitive at
advantage
advantage Hi
fo gh
r er
un pr
iq ic
ue e
pr
od
u c Differentiation advantage
tDifferentiation advantage
Types of competitive
advantage
Number of approaches to competitive advantages

Size FEW MANY

of
adva
ntag
es LARGE Volume (very few Specialized (low
advt but the cost and product
volume is large, diff FMCG)
SMALL Stalemated
price or (Sugar Fragmented(can’t
industy)
premiumness eg. get through large
Mercedes & Rolls chuck of market
Royce) share, Hotels)
Approaches for Competitive
Advantage
Generic Competitive strategy
Strategic Intent
Benchmarking
Synergistic Approach
Critical Success Factor Approach
Generic Competitive strategies by
Porter
Types of competitive advantage

Low cost Differentiation

Industry - wide
Cost leadership Differentiation
Market

Niche Focus with Focus with

low cost differentiation
Identifying Industry CSF’s
Industry CSF’s


Organization’s CSF’s (McKinsey’s 7-S

framework)
Structure
Systems
Style
Staff
Skills
Strategy
Shared Values
Grand Strategies
Stability –Incremental growth, profit strategy,
sustainable growth strategy, stability as a
pause strategy.
Growth –
 Concentric expansion(market penetration,
Market development, product development),
 Vertical Integration(backward & forward),
 Diversification : Concentric
diversification(Technology – related, Market
related), Conglomerate diversification
 External : Mergers and Acquisition or takeover,
Joint venture, strategic alliance.
Grand Strategies
Retrenchment -
Turnaround
Divestment
Liquidation
Combination (business restructuring)

 Concept of Strategic
Choice
“Strategic choice is the decision which selects from
among the alternative grand strategies which will
meet the enterprise’ objectives. The choice involves
consideration of selection factors, evaluation of
alternatives against these criteria, and actual
choice”
Strategic Choice Process Objective factors

n strategic alternatives
Evaluation
Considering decision factors Strategy choice

Subjective factors
Strategic alternatives
Focus on assessing the Gap and its analysis
EVALUATION OF STRATEGIC ALTERNATIVES
Portfolio analysis
 BCG growth Matrix
 GE nine cell planning grid
 Product Market Evaluation Matrix
 Directional Policy Matrix
 PIMS Model
 SPACE analysis (strategic position and action
evaluation
 Bowman’s clock
 A D Arthur D Little Matrix


The Boston Matrix
A means of analysing the product portfolio
and informing decision making about
possible marketing strategies
Developed by the Boston Consulting Group – a
business strategy and marketing
consultancy in 1968
Links growth rate, market share and cash flow

BCG Matrix
This technique is particularly useful for multi-
divisional or multiproduct companies. The
divisions or products compromise the
organisations “business portfolio”. The
composition of the portfolio can be critical to
the growth and success of the company.
The BCG matrix considers two variables,
namely..
MARKET GROWTH RATE
RELATIVE MARKET SHARE
The market growth rate is shown on the
vertical (y) axis and is expressed as a %.
The horizontal (x) axis shows relative market
share. The share is calculated by reference to
the largest competitor in the market.


The BCG growth/share matrix is divided into

four cells or quadrants, each of which
represent a particular type of business.
Divisions or products are represented by
circles. The size of the circle reflects the
relative significance of the division/product to
group sales. A development of the matrix is
to reflect the relative profit contribution of
each division and this is shown as a pie
segment within the circle.
Classifies Products into four simple categories:
Stars – products in markets experiencing high
growth rates with a high or increasing share
of the market Potential for high revenue
growth.
Cash Cows:
High market share
Low growth markets – maturity stage of PLC
Low cost support
High cash revenue – positive cash flows

 Dogs:
 Products in a low growth market
 Have low or declining market share
 (decline stage of PLC)
Is your product
 Associated with negative cash flow
starting to
 May require large sums of money to support
embarrass your
 company?


 Problem Child/Question Marks:

- Products having a low market share in a
 high growth market
- Need money spent to develop them
- May produce negative cash flow
- Potential for the future? Problem children
 – worth spending
good money on?
Market Share
Market is the % of the total market that is
being serviced by the company, measured
either is revenue terms or unit volume terms.
Relative Market Share =
 Business unit sale this year
 Leading rival sales this year
The higher your market share the higher is your

market control
Market Growth Rate
Market growth rate is used as a measure of
market attractiveness
MGR = Individual sales this yr – Individual sales
last yr
 Individual sales last year
 Four Main Strategies of the BCG
Model

Increase market share

Hold market share
Harvest
Divest
 BCG Growth - Share Matrix :
Quadrant Characteristics
30% Star
Earnings: high stable, growing
Cash flow: neutral
Strategy: hold or invest for
growth
Market
Growth
Cash Cow
Earnings: high stable
Cash flow: high stable
Strategy: hold or add market
-10% share
Question Mark
Earnings: low, unstable,
growing
Cash flow: negative
Strategy: increase market share
or harvest/divest
Dog
Earnings: low, unstable
Cash flow: neutral or negative
Strategy: harvest/divest

10 1.0 .1
Relative Market Share
Using the Model: Symbols
Product A
Product A Previous
Total Market Market
Market Share Size
and
Position

Product B Market
B Smaller but firm
has greater share
Implications
 Dogs  Question Mark/Problem
 Are they worth Children
persevering with?  What are the chances of
 How much are they these products
costing? securing a hold
 Could they be revived in in the market?
some way?  How much will it cost to
 How much would it cost promote them to a
to continue stronger position?
to support such  Is it worth it?
products? 
 How much would it cost
 Strategic options for
to remove question marks include..
from the market?
 Market penetration

 Market development
 Strategic options would  Product development
include..
 Retrenchment (if it is
 Which are all intensive
believed that it could strategies or divestment
be revitalised) 

 Liquidation 
 Implications
Stars: Cash Cows:
 Huge potential
 May have been
expensive to develop
 Worth spending money
to promote
 Consider the extent of
their product life cycle
in decision making

Strategic options for stars
include
 Integration – forward,  Strategic options include..
backward and
horizontal
 Market penetration
 Market development
 Product development
 Joint ventures
 Cheap to promote
 Generate large amounts
of cash –
use for further R&D?
 Costs of developing and
promoting
have largely gone
 Need to monitor their
performance –
the long term?
 At the maturity stage of
the PLC?

 Product development
 Concentric diversification
 Retrenchment (or even
divestment)*
Methodology for Building
BCG Matrix
The Boston Consulting Group suggests the following
step-by-step procedure to develop the business
portfolio matrix and identify the appropriate strategies
for different businesses.
Classify various activities of the company into different
business segments or Strategic Business Units (SBUs).
For each business segment determine the growth rate
of the market. This is later plotted on a linear scale.
Compile the assets employed for each business
segment and determine the relative size of the
business within the company.
Estimate the relative market shares for the different
business segments. This is generally plotted on a
logarithmic scale.
Plot the position of each business on a matrix of
Exercise BCG Matrix
Mercedes Car Group

Model Sales Relative Market

Market Share Growth %
A Class 1260 0.33 6.8%

B Class 2902 1.03 3.2%

M Class 591 .78 15.8%

Vito 344 .38 25.8%

 Limitations
Definition (qualitative and quantitative) of the market is
sometimes difficult.
It assumes that market share and profitability are directly
related.
The use of high and low to form four categories is too
simplistic.
Growth rate is only one aspect of industry attractiveness and
high growth markets are not always the most profitable.
It considers the product or business in relation to the largest
player only. It ignores the impact of small competitors
whose market share is rising fast.
Market share is only one aspect of overall competitive
position.
It ignores interdependence and synergy.


Companies will frequently search for a balanced



portfolio, since..
Too many stars may lead to a cash crisis
GE Matrix
The nine-cell matrix was developed by General
Electric with the assistance of McKinsey. As
with the BCG it comprises a matrix of 2
dimensions.
 (a) Industry attractiveness
 (b) Business strength / competitive position
In contrast to the BCG, the GE includes much
more input than simply industry growth rate
and relative market share to assess the
attractiveness of the industry and the
competitive position of the business unit.

Factors
Industry attractiveness will include such factors as
 Market growth rate
 Industry profitability
 Industry size
 Pricing practices
Business strength may include such factors as
 Profitability
 Technological position
 Size
 Individual products or business units (SBU) are

plotted as circles. The area of the circles is

proportional to the industry size (in term of sales),
The shaded pie represents the market share for
each product or SBU
Constructing a GE
Attractiveness/Strength
Matrix
 Use quantitative measures of industry
attractiveness and business strength to
plot location of each business in matrix
 Each business unit appears as a circle
Area of circle is proportional to size of
business as a percent of company
revenues

(Or area of circle can represent
relative size of industry with pie slice
showing the company’s market
share)
 Procedure: Rating the Relative
Attractiveness of Each Industry
Step 1: Select industry attractiveness factors
Step 2: Assign weights to each factor

(sum of weights = 1.0)

Step 3: Rate each industry on each

factor (use scale of 1 to 10)

Step 4: Calculate weighted ratings; sum to get

an overall industry attractiveness rating

for each industry
Attractiveness criteria Weight Rating Weighted
Size 0 . 15 4
score
0 . 60
Growth 0 . 12 3 0 . 36
Pricing 0 . 05 3 0 . 15
Market diversity 0 . 05 2 0 . 10
Competitive structure 0 . 05 3 0 . 15
Industry profitability 0 . 20 3 0 . 60
Technical role 0 . 05 4 0 . 20

Inflation vulnerability 0 . 05 2 0 . 10
Cyclicality 0 . 05 2 0 . 10

Customer financials 0 . 10 5 0 . 50
Energy impact 0 . 08 4 0 . 32
Social GO 4 --
Environmental GO 4 --
Legal GO 4 --
Human 0 . 05 4 0 . 20

Total 1.00 3.38

 Rating the Competitive Strength
of Each Business
Step 1: Select competitive strength factors
Step 2: Assign weights to each factor

(sum of weights = 1.0)

Step 3: Rate each business on each

factor (use scale of 1 to 10)

Step 4: Calculate weighted ratings; sum to get

an overall attractiveness rating for each

business
Key success Factors Weight Rating Weighted
score
Market share 0 . 10 5 0 . 50
SBU growth rate X 3 --
Breadth of product line 0 . 05 4 0 . 20
Sales distribution 0 . 20 4 0 . 80
effectiveness
Advertising and promotion 0 . 05 4 0 . 20
effectiveness
Facilities location and 0 . 05 5 0 . 25
newness
Experience curve effects 0 . 15 4 0 . 60
Raw materials cost 0 . 05 4 0 . 20
Value added X 4 --
Relative product quality 0 . 15 4 0 . 60
R & D advantages / position 0 . 05 4 0 . 20
Cash throw - off 0 . 10 5 0 . 50
Calibre of personnel X 4 --
General image 0 . 05 5 0 . 25
Total 1.00 4.30
 General Electric’s Industry
Attractiveness-Business Strength
Matrix
Business Strength
•Relative Market Share •Relative Costs
•Reputation/ Image •Profit Margins
Industry •Bargaining Leverage •Fit with KSFs
Attractiveness •Ability to Match Quality/Service•
10. Averag
Strong 6.7 3.3 Weak 1.0
•Market Size 0 e
•Growth Rate
•Profit Margin High
•Intensity of Competition
•Seasonality 6.7
•Cyclicality Mediu
•Resource Requirements m
•Social Impact
•Regulation 3.3
•Environment
•Opportunities & Threats Low
•
1.0

Rating Scale: 1 = Weak ; 10 = Strong

 Strategy Implications of
Attractiveness/Strength Matrix

Businesses in upper left corner

Accorded top investment priority
Strategic prescription is grow and build
Businesses in three diagonal cells
Given medium investment priority
Invest to maintain position
Businesses in lower right corner
Candidates for harvesting or divestiture
May be candidates for an overhaul and
reposition strategy
Product Market Evaluation
Matrix
Charles Hofer has proposed a three-by-five
matrix where businesses are plotted in terms
of their product/market evolution and the
competitive position. Relative sizes of
industries are shown by circles wherein in the
market share of the company
THE HOFER LIFE-CYCLE MARKET
EVOLUTION MATRIX
 BUSINESS STRENGTH / COMPETITIVE POSITION


 STRONG AVERAGE WEAK

 EARLY ------------------------------
 DEVELOPMENT
 ------------------------------
STAGE OF RAPID GROWTH /
 TAKE-OFF
INDUSTRY / MARKET ------------------------------
 SHAKE-OUT
 EVOLUTION
 ------------------------------
 MATURITY /
 SATURATION
 ------------------------------
 DECLINE /
 STAGNATION
 ------------------------------


 ONLY ONE DIMENSION IS DIFFERENT FROM THE GE BUSINESS SCREEN

 Except for the Stage of Market Evolution, this model is identical to the GE Business
Screen
Shell’s directional policy
matrix
Cell Position Busines Competitive Recommended Strategy
s Compatibility
Prospect
Leader sHigh Strong Hold high market position with
necessary resources
Try Harder High Medium Allocate more resources to
become leader
Take a risk? High Weak Pick products likely to be future
(double or quit) high flyers for doubling and
Looking for Average Average Many
abandonhave strong competition
others
growth (leader Strong with no one company as leader.
growth)
Maintain or look Average Average Allocate
May haveenough resources to
many competitors
for growth grow in the
minimize market and
resources
/custodial maximize cash generation
Phase Low Average Slow withdrawal to recover most
withdrawal of the investment
Cash Generation Low Strong Spend little cash for further
expansion and use this as cash
resource from faster growing
Disinvest Low Weak business
Liquidate and invest elsewhere
 Bowman’s Strategy Clock

Source: Based on the work of Cliff Bowman. See C.Bowman and D.Faulkner.
Competitive and Corporate Strategy, Irwin, 1996.
 The Strategy Clock: Bowman’s Competitive Strategy Options

Low price/low added value Likely to be segment specific

•
Low price Risk of price war and low
margins/need to be cost leader
•
Hybrid Low cost base and reinvestment in
low price and differentiation
Differentiation
(a) Without price premium Perceived added value by user,
yielding market share benefits
(b) With price premium Perceived added value sufficient to
bear price premium
•
 Focused differentiation Perceived added value to a
particular segment, warranting price
premium

 Increased price/standard
 Higher margins if competitors
do not value follow/risk of losing
market share

 Increased price/low value
 Only feasible in monopoly
situation
Low value/standard price

 Loss of market share

PIMS Model
A programme for the Profit Impact of Market
Strategy (PIMS) was started at General Electric,
and was later used by the Strategic Planning
Institute. The PIMS programme analyses data
provided by member companies to discover
‘general laws which determine the business
strategy in different competitive environments
producing different profit results.
SPI uses multi dimensional cross-sectional
regression studies of profitability of more than
2000 businesses. It then develops industry
characteristics, Business Average Profitability,
and compares it with performances in the
concerned company .Profitability is closely linked
with market share. A 10% improvement in
profitability is linked with 5% improvement in
Return on Investment.
Arthur D Little matrix
Arthur D. Little Company’s matrix links the
stages of the product life cycle with the
business strength. On the vertical axis, the
businesses are classified with respect to their
business strength: Weak, Tenable, Favourable,
Strong, or Dominant. Along the horizontal
axis four stages in the life-cycle, Embryonic,
Growth, Mature and Decline.
 Dominant
HARVEST

Strong HOLD
BUILD
Business Strength

Favorable

Tenable
Unacceptable

Weak

Embryonic Growth Maturity Decline

SPACE ANALYSIS