ORGANISATIONAL APPRAISAL

MODEL OF STRATEGIC MANAGEMENT

STG 1 STG 2 STG 3 STG 4
EST STRATEGIC STRATEGY STRATEGY STRATEGY
INTENT FORMULATION IMPLEMENTATION EVALUATION

Vision Envt Scan Strat Activation

Evaluate Strat
Carving of Strat Design Structures
Mission (Levels)
Ex Control
Strat Analysis Manage Behaviour
Business Definition
Reformulate Strat
Strat Choice Manage Functional
Implementation
Objectives
Prep of Strat Plan
Operationalise Strat

FEEDBACK
 External Envt
helps an organistion to consider ‘what it might
choose to do’.

Internal Envt
enables a firm to decide ‘what it can do’.
 Dynamics of Internal Environment
• An organisation uses different types of resources and exhibits a
certain type of behaviour.
• The interplay of these different resources along with the
prevalent behaviour produces synergy or dysergy (sometimes,
called antergy) within an organisation, which leads to the
development of strengths or weaknesses over a period of time.
• Some of these strengths make an organisation especially
competent in a particular area of its activity causing it to develop
competencies.
• Organisational capability rests on an organisation's capacity
and the ability to use its competencies to excel in a particular
field thereby giving it strategic advantage.

© Azhar Kazmi & Adela Kazmi, 2015 5

Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects and

competencies of an organisation determine the nature of its internal environment.
6
 Organisational Resources
• A firm is a bundle of resources, tangible and intangible that include all assets,
capabilities, organisational processes, information, knowledge, etc.

• They are classified as physical, human and organisational resources.

• Physical resources
- technology, plant and equipment, geographic location, access to raw
materials.
• Human resources
- training, experience, judgement, intelligence, relationships, etc.
• Organisational resources
- formal systems and structures, informal relationships within groups.

• Resources of an organisation can eventually lead to strategic advantage for it if they

are
- valuable, rare, costly to imitate and non-substitutable.

• Strategic advantage flows from the efficiency of utilisation of these resources.

7
Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects

and competencies of an organisation determine the nature of its internal
environment.
8
 Organisational Behaviour
• Mere possession of resources does not make an org capable.
• Much depends upon their usage within an org – based on Org Behaviour.
• Organisational behaviour is the manifestation of the various forces and
influences operating in the internal environment of an organisation that
create the ability of, or erect constraints to, the usage of resources.
• Organisational behaviour is unique - it leads to the development of a
special identity and character of an organisation.
• Some of the important forces and influences that affect organisational
behaviour are:
– the quality of leadership,
– management philosophy,
– shared values and culture,
– quality of work environment and organisational climate,
– organisational politics,
– use of power.
• Resources and Behaviour collectively create Strengths / Weaknesses.

9
Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects

and competencies of an organisation determine the nature of its internal
environment.
10
 Strengths and Weaknesses
• Strength
- is an inherent capability which an organisation can use to gain
strategic advantage.

• Weakness
- is an inherent limitation or constraint which creates a strategic
disadvantage for an organisation.
Eg: obsolete plant and machinery, uneconomical operations, etc.

• Strengths and weaknesses do not exist in isolation but combine within a

functional area, and also across different functional areas, to create
synergistic effects.

11
 Synergistic Effects
• A situation where attributes do not add mathematically but combine to
produce an enhanced or a reduced impact is known as the synergistic
effect. The ‘2 plus 2 is equal to 5 or 3 effect’.
• Within an organisation, within a functional area, say of marketing, the
synergistic effect may occur when the product, pricing, distribution, and
promotion aspects support each other, resulting in a high level of marketing
synergy.
• At a higher level, the marketing and production areas may support each
other leading to operating synergy.
• In this manner, synergistic effects are an important determinant of the
quality and type of the internal environment existing within an organisation
and may lead to the development of competencies.

12
Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects

and competencies of an organisation determine the nature of its internal
environment.
13
 Competencies, Core Competencies and
Distinctive Competencies
• Competencies
- are special qualities possessed by an organisation that make them
withstand pressures of competition in the marketplace.
• Core competence
- is capability to use those competencies exceedingly well.
• Distinctive competence
- is a specific ability possessed by a particular organisation exclusively or relatively in
large measure.
- any advantage a firm has over its competitors because it can do something which
they cannot or it can do something better than they can.
- the unique capability it gives an org in capitalising upon a particular opportunity.
- making it the corner stone of its strategy.
• Organisations achieve strategic success by building distinctive competencies
around a critical success factor.
• Eg: a two-wheeler, which is more fuel efficient than its competitor products.
14
- Superior research and development skills, not available with competitors.
 Core Competence
(more popularly used)
• Be able to provide access to a wide variety of market.
• Make a significant contribution to the perceived customer benefits of the end
product.
• Should be difficult for the competitors to imitate.
• Eg : Sony in miniaturization, Honda in engines, Escorts in light-engineering.

• Core competencies can be developed, but also lost.

• Can diminish over time as they do not exist perpetually.
• Have the potential to turn into core rigidities – resulting in strategic myopia.
• A single core competence may restrict an org’s freedom to act when fresh
opportunities lure it towards a new direction.

• Core or Distinctive competencies serve a useful purpose if they are used to

develop sustained strategic advantage through building up organizational
capability .
Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects

and competencies of an organisation determine the nature of its internal
environment.
17
 Organisational Capability
• Organisational capability is the inherent capacity or potential of an
organisation to use its strengths and overcome its weaknesses in order
to exploit opportunities and face threats in its external environment.
• Skill for coordinating resources and putting them to productive use.
• Without capability, resources – even though valuable and unique –
may be worthless.
• Strategists are primarily interested in organisational capability
because of two reasons.
– First, they wish to know what capacity exists within the
organisation to exploit opportunities or face threats in its
environment.
– Secondly, they are interested in knowing what potential should be
developed within the organisation so that opportunities could be
exploited and threats could be faced in future.
© Azhar Kazmi & Adela Kazmi, 2015 18
Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects

and competencies of an organisation determine the nature of its internal
environment.
19
 Strategic and Competitive Advantage
• Strategic advantages
 are the outcomes of organisational capabilities.
 Activities that lead to rewards in terms of financial parameters such as
profit or shareholder value and/or non-financial parameters such as market
share or reputation.
• Competitive advantage
 is a special case of strategic advantage where there is one or more
identified rivals against whom the rewards or penalties could be measured.
 Outperforming rivals in profitability or market standing could be a
competitive advantage for an organisation.

• Strategic advantage is a broader concept, while Competitive advantage is a

special case of strategic advantage when it is relative to identifiable
competitors.
20
 Organisational Capability Factors
• Organisational capability factors (or simply, capability factors)
 are the strategic strengths and weaknesses existing in different
functional areas within an organisation which are of crucial
importance to strategy formulation and implementation.
• Other term synonymous to organisational capability factors are:
strategic factors, strategic advantage factors, corporate competence
factors, etc.
• There are six largely accepted & commonly understood functional
areas:
 finance,
 marketing,
 operations,
 personnel,
 information,
 general management.
© Azhar Kazmi & Adela Kazmi, 2015 21
Framework for the Development of Strategic
Advantage by an Organisation
STRATEGIC ADVANTAGE

ORGANISATIONAL
CAPABILITY

COMPETENCIES

SYNERGISTIC EFFECTS

STRENGTHS AND
WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR

The resources, behaviour, strengths and weaknesses, synergistic effects

and competencies of an organisation determine the nature of its internal
environment.
34
Considerations in Organisational Appraisal
• The purpose of organisational appraisal (also referred to as internal appraisal,
internal analysis, internal audit, company or organisational analysis)
 Is to determine the organisational capability in terms of strengths and
weaknesses that lie in the different functional areas.
 This is necessary since the strengths and weaknesses have to be matched with
the opportunities and threats of the external environment.

• In organisational appraisal, the various forces and influences operating within

the internal environment of an organisation have to be analysed.
 These arise owing to the organisational resources, behaviour, synergistic
efforts and the competencies of the org.

• The various considerations involved in organisational appraisal relate to the

factors that affect appraisal, the approaches that can be adopted to appraise
them, and the sources of information available to perform the appraisal.
35
Factors Affecting Organisational Appraisal
• The factors that affect organisational appraisal relate to the
Strategists, the Organisation and the Internal Environment.
 Strategists
- The ability of the strategists to comprehend and analyse the
different forces and influences.
 Organisation
- The size of the organisation affects the quality of appraisal. Larger
organisations are usually more difficult to appraise than smaller ones.
 Internal environment
- If the internal environment of an organisation is vitiated owing to
opposing political forces and power games, the quality of appraisal
is likely to suffer. A cohesive management team, on the other hand,
is more likely to appraise the organisation better.

36
Approaches to Organisational Appraisal
• Systematic Approach & Ad hoc Approach
• A systematic approach
- adopted as a proactive measure to appraise the organisation
and is used when the strategists opt for formal strategic
planning systems.
• An ad hoc approach
 generally used as a reactive measure in response to a crisis or an
unusual development.
 For instance, in smaller organisations which operate under the
entrepreneurial mode, the chief executive may do the appraisal
alone, without the aid of formal systems.

© Azhar Kazmi & Adela Kazmi, 2015 37

 Sources of Information for
Organisational Appraisal
• The strategists need to tap different types of information
sources for organisational appraisal.
 These sources may be verbal as well as written.
 They may also be internal as well as external sources.
- Internal. may rely on employees' opinion, company files
and documents, financial statements, the management
information system, and other internal sources.
- External. For comparative appraisal with similar
organisations in the industry and across industries, it may
be necessary to have access to external sources of
information like company reports, magazines and journals.
Help may also be sought from consultants.
38
 Methods and Techniques used for
Organisational Appraisal
The methods and techniques could be classified in three parts as below:
Internal analysis
1. VRIO framework
2. Value chain analysis
3. Quantitative analysis
4. i. Financial analysis
ii. Non-financial analysis
(Factors that are specific to the org)
Comparative analysis
1. Historical analysis
2. Industry norms
3. Benchmarking
4. Qualitative analysis
(In relation to its own past record or
with reference to its competitors)

Comprehensive analysis
1. Key factor rating
2. Business intelligence systems
3. Balanced scorecard
(Overcome different purposes & limitations of above)
40
 VRIO framework
• Valuable, Rare, Inimitable, Organised for Usage
• Valuable: The organisational capabilities possessed by the firm that help it to
generate revenues by capitalising on opportunities and / or to reduce costs by
neutralising threats.
 Eg – Ability to generate amicable relationship with Govt, or to provide high
quality after-sales service.
• Rare: The organisational capabilities that are possessed by the firm exclusively
or just by a few other firms in the industry.
 Eg – An exclusive location, or highly satisfied and motivated work force.
• Inimitable: The organisational capabilities possessed by the firm that are
impossible, very difficult or not worthwhile to duplicate or substituted by the
competitors.
 Eg – Favourable corporate image, or the ability to acquire and integrate new
businesses.
• Organised for usage: The organisational capabilities possessed by the firm
that could be used through structures, processes, and systems that avilable.
 Eg – Availability of competent R&D personnel and research labs.
vail41
 How Organisational Capabilities Contribute to Strengths and
Weaknesses?
Are the Are the Are the Are the Are the
capabilities capabilities capabilities capabilities capabilities
Valuable? Rare? Costly to Organised for Strengths or
imitate? usage? Weaknesses?
No - - No Weakness

Yes No - Yes Strength

Yes Yes No Yes Strength &

distinctive
competence
Yes Yes Yes Yes Strength and
sustainable
distinctive
competence
• Capabilities that are not valuable, rare and can be imitated,
should not be emphasized by the org.
• If the org has systems and processes to use such capabilities it
would lead to strategic disadvantage.
 Value Chain Analysis
• A value chain is a set of interlinked value-creating activities performed by
an organisation.
• Porter (1985) divided the value chain of a manufacturing organisation into
primary and support activities.
• Primary activities
 Directly related to the flow of product to the customer and include five sub-
activities as:
– Inbound logistics: All activities that an organisation uses for receiving, storing,
and transporting inputs going into the production process.
– Operations: All activities required for transformation of raw materials to
finished products.
– Outbound logistics: All activities that an organisation uses for receiving, storing,
and transporting outputs going out of the production process.
– Marketing and sales: All activities that an organisation uses to market and sell
products to customers.
– Service: All activities that an organisation uses for enhancing and maintaining a
product’s value. 44
 Value Chain Analysis - Support activities
Support activities are provided to sustain the primary activities:
– Firm infrastructure: All activities that an organisation uses for ascertaining
external opportunities and threats, identifying strengths and weaknesses, and
generally managing the organisation for achieving its objectives.

– Human resource management: All activities that an organisation uses for

managing human resources.

– Technology development: All activities that an organisation uses for creating,

developing, and improving products and services.

– Procurement: All activities that an organisation uses for procuring inputs

needed to produce products or provide services.

45
Porter's Generic Value Chain
Firm infrastructure
Support activities
Human Resource Management

Technology development

Profit
Procurement margin

Inbound Operations Outbound Marketing Service

logistics logistics and Sales

Primary activities

46
 Value Chain Analysis
The value chain analysis is a useful method for organisational appraisal as it
helps in providing clarity about the areas where the strengths and
weaknesses of the organisation reside. A value chain analysis requires:
– Identifying the activities that make up the organisation’s value chain and
classifying them into primary and support activities
– Identifying the things done in those activities that contribute to providing
value for the customer
– Identifying how the value contribution can be increased so that it costs less
to provide the same or more value thereby increasing the profit margin for the
organisation
– Identifying how the value configuration could be improved by innovatively
reconfiguring or recombining activities

© Azhar Kazmi & Adela Kazmi, 2015 47

 Methods and Techniques used for
Organisational Appraisal
The methods and techniques could be classified in three parts as below:
Internal analysis Comparative analysis
1. VRIO framework 1. Historical analysis
2. Value chain analysis 2. Industry norms
3. Quantitative analysis 3. Benchmarking
4. i. Financial analysis 4. Qualitative analysis
ii. Non-financial analysis
(Factors that are specific to the org) (In relation to its own past record or
with reference to its competitors)

Comprehensive analysis
1. Key factor rating
2. Business intelligence systems
3. Balanced scorecard
(Overcome different purposes & limitations of above)
52
 Comparative Analysis
It can be done through:
• Historical analysis:
 is a good measure of good and bad performance of an
organisation with respect to its own past performances.
• Industry norms:
 The industry to which a business belongs is the obvious choice
for comparison with a wide range of parameters.
• Benchmarking:
 It is a reference point for taking measures against and aimed at
finding the best practices.

53
 Benchmarking
• A Benchmark is a reference point for taking measures against.
• The process of benchmarking is aimed at finding the best practices
within and outside the industry.
• The purpose of benchmarking is to find the best performers in an area
so that one could match one’s own performance with them and surpass
them.
• Three types of Benchmarking based on ‘what is to compared’:
 - Performance benchmarking – comparing one’s performance.
 - Process benchmarking – comparing methods and practices.
 - Strategic benchmarking – compare the long-term, significant decisions
and actions undertaken to achieve objectives.
• Aim – to identify best practices, so that one could conform to them.
• Helps to show where a firm excels or lags behind. Assists in assessing the
strengths and weaknesses of an org and determining its capability.
 Structuring Organisational Appraisal
• Just as environmental appraisal is structured through an
environmental threat and opportunity profile (ETOP) ,
organisational appraisal can also be structured through various
techniques.
• Strategic advantage profile (SAP) is a technique where
the results of organisational appraisal are presented in a
summarised form.
• The SAP is then matched with the environmental threats and
opportunity profile, (ETOP) prepared while structuring the
environmental appraisal, in order to look for strategic
alternatives and exercise a strategic choice.

60
Strategic Advantage Profile (SAP) for a Bicycle Company
______________________________________________________________________________
Capability factor Nature of impact Competitive strengths or weaknesses
---------------------------------------------------------------------------------------------------------------------
1. Finance ↓ High cost of capital; reserves and surplus
position unsatisfactory
--------------------------------------------------------------------------------------------------------------------
2. Marketing → Fierce competition in industry;
company's position secure at present
---------------------------------------------------------------------------------------------------------------------
3. Operations ↑ Plant and machinery in excellent condition;
captive sources for parts and components
available
---------------------------------------------------------------------------------------------------------------------
4. Personnel → Quality of managers and workers
comparable with that in competitor companies
---------------------------------------------------------------------------------------------------------------------
5. Information ↑ Advanced management information system
in place; most traditional functions
such as payroll and accounting computerised;
company website has limited scope for e-commerce
---------------------------------------------------------------------------------------------------------------------
6. General management ↑ High quality and experienced top management
generally adopts a proactive stance with regard
to decision-making
______________________________________________________________________________
61
Note: Up arrow indicates strength, down arrow indicates weakness while horizontal arrow indicates a neutral position.
 Concepts of Stretch, Leverage
and Fit

Stretch and Leverage – misfit between resources and

aspirations

Fit – matching organizational resources to its environment

 STRETCH, FIT AND LEVERAGE

Environment is Bridging of This Gap is The

Scope of Strat Mgt
Dynamic
P Strategic Gap
E WANT TO BE HERE
R
• Stretch
F
O Gap Bridging Activities Gap is Wide
• Fit
R ?
• Leverage M We are
A LIKELY TO BE
N if No Changes are
C made to Current
E Ways & Means
We Are Here
T-O T-1 T-2 Tn
(Now)
TIME
 FIT, STRETCH AND LEVERAGE
• Traditional approach – Matching resources to its environment. REALISTIC
FIT • ‘Trimming of Ambition’ by the Strategic Decision Maker
(REALISTIC) • Strat intent is conservative and seems to be more realistic – one may not be
aware of potential of the org which remains dormant
• Misfit between resources & aspirations – induced by top leadership
• Instead of looking at resources one must look at resourcefulness
STRETCH (innovation) – creativity is the engine for org growth and vitality
(IDEALISTIC) • Doing things differently & resourcefully ‘by fundamentally rethinking
• processes, roles
Funtion / tool ofand responsibilities
strategic stretch or by reengineering them’.
• Defined as ‘doing more with what you have’
LEVERAGE • Utilising resources so that the meagre resource base can be stretched
(IDEALISTIC) • Continual search for new, less resource-intensive means
• Concentrating, Accumulating, Complementing, Conserving & Recovering
‘The art of strategic management lies in
leveraging, which also becomes the motivation to
perform better’
•Stretch relates to the aspiration; whereas leverage
relates to the use of capabilities and resources to
achieve these aspirations.

•Leaverage - ‘doing more with what you have’

•Leverage refers to concentrating, accumulating,

complementing, conserving, and recovering resources in
such a manner that the meagre resource base is
stretched to meet the aspirations that an organisation
dares to have.

© Azhar Kazmi & Adela Kazmi, 2015 65

 LEVERAGE
• Concentrating resources around strategic goals
Concentrating • Every individual, function and unit must concentrate on the same
goals

• Organisation must learn from experience and continue learning

Accumulating • It should borrow resources to improve strategic leverage

Complementing • Blending of resources

Conserving • Resources have a cost; conserve resources whenever possible

Recovering • Rapid recovery from set backs - a force multiplier

Meagre resource base is stretched to meet the aspirations

that an organisation dares to have
 STRETCH AND LEVERAGE
• Capabilities are not seen as constraints to
achieving.
• Environment is perceived not as something
given, but as something that can be created
and moulded.

© Azhar Kazmi & Adela Kazmi, 2015 67

 GAP BRIDGING ACTIVITIES
Dimension Discipline
Manpower Plg
(Quantitative Aspects)

Human Resource Devp

People (Qualifiable Aspects)

Org Climate and Culture

Organisational Structure
Structure
Design and Analysis

Technology,
Enablers
Financial and Resource Mgt
 MODEL OF STRATEGIC MANAGEMENT
STG 1 STG 2 STG 3 STG 4
EST STRATEGIC STRATEGY STRATEGY STRATEGY
INTENT FORMULATION IMPLEMENTATION EVALUATION

Vision Envt Scan Strat Activation

Evaluate Strat
Carving of Strat Design Structures
Mission (Levels)
Ex Control
Strat Analysis Manage Behaviour
Business Definition
Reformulate Strat
Strat Choice Manage Functional
Implementation
Objectives
Prep of Strat Plan
Operationalise Strat

FEEDBACK
 Corporate Portfolio Analysis
– What businesses should a diversified corporation have
(maintain) and why?

– What organisational structure, management processes, and

philosophy will enable superior performance from the
corporation's individual business units?

– Assists in developing Strategic Objectives for each SBU.

Techniques

– BCG Matrix (Boston Consulting Group)

– GE 9 Cell (General Electric)

70
 BCG Matrix
Life Cycle of a Business / Product
BCG MATRIX
 BCG Matrix
• Identifying and dividing an organization into its SBUs.
• Assessing & comparing the prospects of each SBU according to two
criteria
- SBU’s relative market share – the % of the total market that is being
serviced by the company, measured in terms of revenue or volume.
- Growth rate of the SBU’s industry – a measure of the market’s
attractiveness.
• Classifying the SBUs, depending upon their low or high
performance, into four categories & placing them suitably in the
matrix.
- Question Marks, Stars, Cash Cows, Dogs
• Developing Strategic Objectives for each SBU.
Question Marks - High Growth, Low Market Share
• Most businesses start off as Question marks.
• They absorb great amount of cash.
• They have the potential to become ‘stars” and eventually ‘cash
cows’, but can also become ‘dogs’.

Stars – High Growth, High Market Share

• ‘Stars’ are the leaders in business.
• They require heavy investments to maintain high market share.
• Large cash consumption and large cash generation.
• Should be made to hold the market share or these ‘stars’ will
become ‘cash cows’.
Cash Cows – Low Growth, High Market Share
• They are the foundations of the organization and often the ‘stars’ of
yesteryears.
• They generate more cash than required, but with minimum
investment.
• Able to fund the ‘Question Marks’ and ‘Stars’.
• They are located in an industry that is mature – not growing nor
declining.

Poor ‘Dogs’ – Low Growth, Low Market Share

• Dogs are the cash traps.
• Do not have the potential to bring in revenue.
• Declining Stage of the industry.
P
 PRODUCTS
FANTA, SPRITE, THUMBS UP, MAAZA, KINLEY, LIMCA, COCA COLA,
DIET COKE, KINLEY SODA,
 GE Nine Cell Matrix
• A nine-cell (3 x 3) matrix used to perform business portfolio
analysis as a step in the strategic planning process.
• Developed by General Electric and McKinsey.
• The objective of the analysis is to position each SBU on the matrix,
depending on its strength and the Attractiveness of the industry
on which it is focused.
• Each axis is divided into Low, Medium and High.
General Electric Nine-Cell Matrix

INDUSTRY ATTRACTIVENESS
High

Medium

Low

Strong Average Weak

BUSINESS STRENGTH / COMPETITIVE POSITION

STRATEGIC
ZONE SIGNAL
INVEST / GO AHEAD
GREEN EXPAND

YELLOW HOLD /
MAINTAIN
WAIT & SEE
RED HARVEST
/ DIVEST STOP

90