grand-strategy-matrix

What Is The Grand Strategy Matrix? The Grand Strategy Matrix In A Nutshell

The grand strategy matrix was created by American business theorist Paul Joseph DiMaggio in 1980. The matrix, which first appeared in the Strategic Management Journal, was initially used as a strategic option tool for managers.  The grand strategy matrix helps organizations develop feasible alternative strategies based on their competitive position and the growth of their industry.

Understanding the grand strategy matrix

Later, the approach became popular with business strategists who believed it was useful for any business operating during very early or very late phases of the industry life cycle.

In truth, the grand strategy matrix reveals feasible strategic options for virtually any business – regardless of its industry, size, or life cycle stage. It is one of several similar tools including the SWOT analysis, SPACE matrix, BCG matrix, and IE matrix.

The four quadrants of the grand strategy matrix

The grand strategy matrix consists of a graph containing four quadrants, with:

  • Competitive position represented on the x-axis, with the left side of the matrix indicating weak competitiveness and the right side strong competitiveness.
  • Market growth represented on the y-axis, with the top of the matrix indicating rapid growth and the bottom indicating slow growth.

Depending on the degree of competitiveness and market growth, the business will occupy one of four quadrants. Collectively, the quadrants model four broad strategic options that it can use to meet its needs at a particular point in time.

With that said, let’s take a look at each quadrant below:

  1. Quadrant I (strong competitive position/rapid market growth) – companies located in this quadrant enjoy an excellent strategic position. This enables them to focus resources on market development, market penetration, and product development. Here, maintaining a dominant position should be the priority.
  2. Quadrant II (weak competitive position/rapid market growth) – companies in the second quadrant need to determine why they are unable to compete in a rapidly growing market. To improve their competitive position, strategies such as market development, market penetration, horizontal integration, and decentralization should be considered.
  3. Quadrant III (weak competitive position/slow market growth) – in this quadrant, the business is dealing with an unenviable combination of strong competition and lackluster market growth. As a result, major action is required. This may include retrenchment, diversification, or in some cases, liquidation.
  4. Quadrant IV (strong competitive position/slow market growth) – these organizations should consider diversification into untapped markets by leveraging their existing resources. Diversification may be horizontal, vertical, or conglomerate. The excess of resources may also be channeled into joint ventures.

Key takeaways:

  • The grand strategy matrix generates feasible business strategies based on competitive position and industry growth. It was released by business theorist Paul Joseph DiMaggio in 1980.
  • The grand strategy matrix can be used by any business regardless of size, industry, or life cycle stage.
  • The grand strategy matrix is divided into four quadrants, with each based on varying degrees of competitive position and industry growth. The first quadrant favors strategies that maintain competitive advantage, while the remaining three focus on strengthening it with suitable courses of action.

Other Business Matrices

SFA Matrix

sfa-matrix
The SFA matrix is a framework that helps businesses evaluate strategic options. Gerry Johnson and Kevan Scholes created the SFA matrix to help businesses evaluate their strategic options before committing. Evaluation of strategic opportunities is performed by considering three criteria that make up the SFA acronym: suitability, feasibility, and acceptability.

Hoshin Kanri X-Matrix

hoshin-kanri-x-matrix
The Hoshin Kanri X-Matrix is a strategy deployment tool that helps businesses achieve goals over the short and long term. Hoshin Kanri is a method that seeks to bridge the gap between strategy and execution. Strategic objectives are clearly defined and the goals of every level of the organization are aligned. With everyone moving in the same direction, process coordination and decision-making ability are strengthened.

Kepner-Tregoe Matrix

kepner-tregoe-matrix
The Kepner-Tregoe matrix was created by management consultants Charles H. Kepner and Benjamin B. Tregoe in the 1960s, developed to help businesses navigate the decisions they make daily, the Kepner-Tregoe matrix is a root cause analysis used in organizational decision making.

Eisenhower Matrix

eisenhower-matrix
The Eisenhower Matrix is a tool that helps businesses prioritize tasks based on their urgency and importance, named after Dwight D. Eisenhower, President of the United States from 1953 to 1961, the matrix helps businesses and individuals differentiate between the urgent and important to prevent urgent things (seemingly useful in the short-term) cannibalize important things (critical for long-term success).

Decision Matrix

decision-matrix
A decision matrix is a decision-making tool that evaluates and prioritizes a list of options. Decision matrices are useful when: A list of options must be trimmed to a single choice. A decision must be made based on several criteria. A list of criteria has been made manageable through the process of elimination.

Action Priority Matrix

action-priority-matrix
An action priority matrix is a productivity tool that helps businesses prioritize certain tasks and objectives over others. The matrix itself is represented by four quadrants on a typical cartesian graph. These quadrants are plotted against the effort required to complete a task (x-axis) and the impact (benefit) that each task brings once completed (y-axis). This matrix helps assess what projects need to be undertaken and the potential impact for each.

TOWS Matrix

tows-matrix
The TOWS Matrix is an acronym for Threats, Opportunities, Weaknesses, and Strengths. The matrix is a variation on the SWOT Analysis, and it seeks to address criticisms of the SWOT Analysis regarding its inability to show relationships between the various categories.

GE McKinsey Matrix

ge-mckinsey-matrix
The GE McKinsey Matrix was developed in the 1970s after General Electric asked its consultant McKinsey to develop a portfolio management model. This matrix is a strategy tool that provides guidance on how a corporation should prioritize its investments among its business units, leading to three possible scenarios: invest, protect, harvest, and divest.

BCG Matrix

bcg-matrix
In the 1970s, Bruce D. Henderson, founder of the Boston Consulting Group, came up with The Product Portfolio (aka BCG Matrix, or Growth-share Matrix), which would look at a successful business product portfolio based on potential growth and market shares. It divided products into four main categories: cash cows, pets (dogs), question marks, and stars.

Growth Matrix

growth-strategies
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).

Ansoff Matrix

ansoff-matrix
You can use the Ansoff Matrix as a strategic framework to understand what growth strategy is more suited based on the market context. Developed by mathematician and business manager Igor Ansoff, it assumes a growth strategy can be derived by whether the market is new or existing, and the product is new or existing.

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Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which reached over a million business students, executives, and aspiring entrepreneurs in 2020 alone | He is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate | Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy | Visit The FourWeekMBA BizSchool | Or Get The FourWeekMBA Flagship Book "100+ Business Models"