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ADL MATRIX

(Arthur D. Little Matrix)


NITIE STUDENTS CONSULTING CLUB

ABOUT ADL MATRIX


Portfolio management method based on PLC (Product Life Cycle)
The ADL approach uses the dimensions of environment assessment
and business - strength assessment ie. Competitive Position and
Industry Maturity
The combination between the dimensions yields 5 (competitive
positions) by 4 (life cycle stages) matrix
The positioning in the matrix identifies a general strategy
ADL Matrix is a great tool for uncovering high level strategies that
may be successful.

INDUSTRY MATURITY
There are four categories of industry maturity (also referred to as the industry
life cycle):
Embryonic The introduction stage, characterized by rapid market growth,
very little competition, new technology, high investment and high prices.
Growth The market continues to strengthen, sales increase, few (if any)
competitors exist, and company reaps rewards for bringing a new product to
market.
Mature The market is stable, theres a well-established customer base,
market share is stable, there are lots of competitors, and energy is put toward
differentiating from competitors.
Aging Demand decreases, companies start abandoning the market, the fight
for market share among remaining competitors gets too expensive, and
companies begin leaving or consolidating until the markets demise.

INDUSTRY MATURITY ASSESMENT


The assessment of industry life cycle stage of each business is made
on the basis of
1.
2.
3.
4.

Business Market Share


Investment
Profitability
Cash flows

COMPETITIVE POSTION
The five categories for competitive position are as follows:
Dominant This is rare and typically short-lived. Theres little, if any, competition,
usually a result of bringing a brand-new product to market or having built an extremely
strong reputation in the market (think Microsoft).
Strong Market share is strong and stable, regardless of what your competitors are
doing.
Favourable Your business line enjoys competitive advantages in certain segments of the
market. However, there are many rivals of equal strength, and you have to work to
maintain your advantage.
Tenable Your position in the overall market is small, and market share is based on a
niche, a strong geographic location, or some other product differentiation. Strong
competitors are overtaking your market share by building their products and defining
clear competitive advantages.
Weak Theres continual loss of market share, and your business line, as it exists, is too
small to maintain profitability

COMPETITIVE POSTION - ASSESSMENT


The assessment of competitive position is identified for discrete
business, and not by a product or organizational unit. Following can
be used as guidelines
1.
2.
3.
4.
5.
6.

Common Rivals
Prices
Customers
Quality/Style
Substitutability
Divestment or Liquidation

ADL MATRIX

GENERAL STRATEGIES
Industry Maturity

Embryonic
C
o
m
p
e
t
i
t
o
r
A
n
a
l
y
s
i
s

Dominant
Strong

Favorable

Tenable

Weak

Growth

Aggressive push for market share Maintain industry position and market
share
Invest faster than market share Invest to sustain growth
dictates
Aggressive push for market share Aggressive push for market share

Mature

Aging

Maintain position, grow market share Maintain industry position


as the industry grows
Reinvest as necessary
Reinvest as necessary

Maintain position, grow market share Maintain industry position or cut


as the industry grows
expenditures to maximize profit
(harvest)
Look for ways to improve
Look for ways to improve competitive Reinvest as necessary
Minimum reinvestment
competitive advantage
advantage
Invest faster than market share Invest to increase growth and
dictates
position
Moderate to aggressive push for Look for ways to improve competitive Develop a niche or other strong
Cut expenditures to maximize profit
market share
advantage and market share
differentiating factor and maintain it. (harvest) or plan a phased withdrawal
Look for ways to improve
competitive advantage
Invest selectively

Selectively invest to improve position Minimum or selective reinvestment

Minimum investment or look to get out


of current investment

Look for ways to improve


industry position

Develop a niche or other strong


differentiating factor and maintain it

Phased withdrawal or abandon market

Invest very selectively

Invest selectively

Develop a niche or other strong


differentiating factor and maintain it
or plan a phased withdrawal.
Selective reinvestment

Decide if potential benefits


outweigh costs, otherwise get
out of market
Invest or divest

Look for ways to improve share and


position, or get out of the market

Look for ways to improve share and Abandon market


position or plan a phased withdrawal

Invest or divest

Selectively invest or divest

Get out of investments or divest

Divest

WHERE TO USE
According to ADL, there are six generic categories of strategy that
could be employed by individual SBU's:
Market strategies.
Product strategies.
Management and systems strategies.
Technology strategies.
Retrenchment strategies.
Operations strategies.

CASES
NIVEA For Men Re-launch
http://www.marketingtango.com/nivea-used-marketing-planningrelaunch-brand/
http://www.ices-study.org/WhatIsEnterpreneurship/CaseStudies/
(case%20study)%20nivea.pdf

CASES
Thomas Cook, GM, Tesco - Retrenchment
http://www.tutor2u.net/blog/index.php/business-studies/comments/
thomas-cook-begins-down-the-long-road-of-retrenchment
http://www.tutor2u.net/blog/index.php/business-studies/comments/
tesco-and-retrenchment
http://stockexchangepakistan.info/general-motors-to-retrench-23000more-emplyees-by-2011/