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IE and
StrategyMatrix
Presenter:
Muhammad Absar Hussain
1
GRAND
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -2
Strategy-Formulation Framework
SWOT Matrix
SPACE Matrix
BCG Matrix
IE Matrix
Grand Strategy Matrix
Stage 2:The Matching Stage
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -3
The Internal-External Matrix
Positions an organization’s various divisions in a nine-cell display
Similar to BCG Matrix except the IE Matrix: Requires more information about the divisions Strategic implications of each matrix are different
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -4
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -5
IE Matrix
Based on two key dimensions The IFE total weighted scores on the x-axis The EFE total weighted scores on the y-axis
Divided into three major regions Grow and build – Cells I, II, or IV Hold and maintain – Cells III, V, or VII Harvest or divest – Cells VI, VIII, or IX
IFE Matrix
EFE Matrix
IE Matrix
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -9
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -10
Strategy-Formulation Framework
SWOT Matrix
SPACE Matrix
BCG Matrix
IE Matrix
Grand Strategy Matrix
Stage 2:The Matching Stage
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -11
Grand Strategy Matrix
Tool for formulating alternative strategies
Based on two dimensions Competitive position
Market growth
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -12
Quadrant IV
1. Related diversification
2. Unrelated diversification
3. Joint ventures
Quadrant III
1. Retrenchment
2. Related diversification
3. Unrelated diversification
4. Divestiture
5. Liquidation
Quadrant I
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Related diversification
Quadrant II
1. Market development
2. Market penetration
3. Product development
4. Horizontal integration
5. Divestiture
6. Liquidation
RAPID MARKET GROWTH
SLOW MARKET GROWTH
WEAK COMPETITIVE
POSITION
STRONGCOMPETITIVE
POSITION
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -13
Grand Strategy Matrix
Excellent strategic position
Concentration on current markets/products
Take risks aggressively when necessary
Quadrant I
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -14
Grand Strategy Matrix
Evaluate present approach
How to improve competitiveness
Rapid market growth requires intensive strategy
Quadrant II
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -15
Grand Strategy Matrix
Compete in slow-growth industries
Weak competitive position
Drastic changes quickly
Cost & asset reduction (retrenchment)
Quadrant III
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch 6 -16
Grand Strategy Matrix
Strong competitive position
Slow-growth industry
Diversification to more promising growth areas
Quadrant IV
Industry Overview
Athletic footwear manufactures captured nearly one-third of the total footwear market in the early 1970s.
Over a span of more than 25 years, American consumers spent $300 billion on 7.5 billion pairs of athletic shoes.
Reebok international Ltd. and Adidas became $ 3.5 Billion companies, while Nike Inc. became the first ever $ 9.5 Billion company.
By 1996 the number of establishments had dropped to about 52, with 12 factories closing since 1995.
China's imports increase by 6 percent to 1.26 billion pairs in 2003 . Brazil's share increased 2.3 percent to 83.5 million pairs in 2003. Vietnam's share jumped 91.9 percent to 23.5 million pairs in 2003. The US markets continue to be dominated by imports from countries with
low-cost labor. From 1997 to 2001, the value of industry shipments declined from $ 219.6
million to $106.5 million. U.S. shoe manufacturing plants declined by 775 between 1967 and 2001,
the number of new plants opening dwindled to nearly zero.
Athletic Shoe Market Share (2000)
Competitive Profile Matrix (CPM)
The Grand Strategy Matrix
Potential Strategies: - Market
Development - Market Penetration - Product
Development - Backward
Integration - Forward Integration - Concentric
Diversification
Matrix Analysis
Decisions
Primary: Focus on finding the most promising customers (kids and women) and introduce more products or improve current ones to satisfy potential increase in demand
Alternative: Keep expanding into current and future foreign markets by being
aggressive and the worldwide leader of the footwear industry Accelerate funding for numerous marketing campaigns in order to get to
specific markets or customer groups Focus on improving working conditions and human rights at international
manufacturer centers and at the same time increasing their productivity Implement product diversification with company’s newest technologies
so resulting increased earnings could be reinvested into R&D plans
Why this strategy?
U.S. Women: Prefer fashion, not footwear, they prefer clothing, we must create a shopping style based in athletic shopping.
U.S. Kids: E-commerce, influenced by innovation and design, not only comfort or sports
We need to consolidate US sales compared to international sales and international competitors
Difficult to expand towards other sports or population segments
