Grand Strategy Selection Matrix (GSSM)
Grand Strategy Selection Matrix has become an effective tool in devising alternative strategies. The matrix is based on the following four important elements.
The above four elements form a four quadrant matrix wherein every organization can be placed in a way the identification and selection of appropriate strategy becomes an easy task. With the result, the matrix can be adapted to choose the best strategy based on the current growth and competitive state of the company. A huge company with many divisions can also plot its divisions in this four quadrants Grand Strategy Matrix by formulating the best strategy for each division.
The management must select the strategy that is cohesive with the market and competitive position. Broadly speaking the four elements of GSSM can be described as two evaluative dimensions of market growth and competitive position.
Quadrant 1: This quadrant is meant for companies that are in strong competitive position and flourishing with market growth. The companies have an excellent strategic position and should focus on current markets and product and its development strategy. With resources they can also expand in backward, forward, or horizontal integration. A single product company here should diversify to avert risks with the slender product line. Companies in this quadrant can afford to exploit external opportunities and enhance their financial muscle.
Quadrant II: Companies in this quadrant of the GSSM have weak competitive position in a fast growing market. Companies here are in growing market but they are competing ineffectively. An intensive and effective strategy must be adopted. Companies can adapt to horizontal integration. If they cannot have a suitable strategy, then divestiture of some divisions can be considered. As a last resort, liquidation can be considered and another business can be acquired.
Quadrant III: Here companies are in a slow growth industry with weak competition. Drastic changes are required. The management must change its philosophy and new approaches to governance are the need. Overall revamping at a cost may be warranted. Strategic asset reduction, retrenchment may be the best option. Diversifying by shifting the resources may be another option. Final option could be divestiture or liquidation.
Quadrant IV: The companies are in strong competitive position, but in a slow growth industry. Companies must look for promising growth areas and to exploit opportunities in the growing markets as they have the strength. These companies have limited requirement of funds for internal growth and enjoy high cash flow due to a strong competitive position. They can look for related or unrelated diversification with cash flow and funds; they can also look for joint ventures.
Examples of GSSM
|Rapid Market Growth|
|Characteristics of Company with weak competitive position in rapid growth market||Characteristics of Company with strong competitive position in rapid growth market|
|Slow Market Growth|
|Characteristics of Company with weak competitive position in Slow growth market||Characteristics of Company with strong competitive position in Slow growth market|