5.2.6 Grand Strategy Matrix

Grand Strategy Matrix

The Grand Strategy Matrix has become a widely used tool for developing alternative strategies. By using this tool you will be able to determine your company's position within the industry and thus formulate specific strategies according to that position.

This matrix is based on two aspects located in two axis. First you find Competitive position in the x axis, being the left side weak position and the right side strong position. Then you find market or industry growth in the y axis, being the top rapid growth and the bottom slow growth.

At first we analyzed our competitive position within the market. We have a projected market share of 0,5% in the optimistic scenario and 0,3% in the pessimistic scenario. With a market share this low, we have a weak competitive position and that immediately placed us on the left side of the matrix.

After that we went back to analyzed our industry and the grow it has had. We found out that the average yearly growth in sales for the past 10 years is 14% which we consider a rapid growth. This positioned us in quadrant II.

Positioning Libooks

Defining strategies

After positioning our company in quadrant II we had 6 main types of strategies from which to choose, so we proceeded to analyze each one of them:

1. Market development: It aims to expand actual products into new geographical areas. Great option that could help us better our competitive position and increase our sales but as we are starting as a company we don't have the money or the logistics in order to expand our areas of operation so we think these type of strategies are not feasable.

2. Market penetration: Increase market share through greater marketing efforts. This is a great alternative that could help us improve our competitive position and it is possible to develop with our limited budget.

3. Product development: Tries to improve sales by improving or modifying current products and it usually requires huge investments in R&D. As our industry is rather stable in terms of product innovation we don't see this as a key point in improving our company's perfomance, beside our limited budget woul not be able to fund R&D programs to this extent.

4. Horizontal integration: Buying all or part of a competing company. Could be great in order to buy our way into higher market share and stablished processes but it is not feasible due to our limited budget.

5. Divestiture: Selling a division or part of an organization. As a company with two employees we really have not much to sell.

6. Liquidation: Selling the company's assets by parts. We haven't even started our business, giving up and liquidating the company is not an option at this point.

After analyzing the possible types of strategies for our current position, we decided to focus on market penetration as it directly attacks our problem of competitive position at it could be done with our budget.

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