Assignment 08: Internal Strengths and Weaknesses

crtshhill58

Chapter20.pptx

Home >Nursing homework help >Assignment 08: Internal Strengths and Weaknesses

Strategic Analysis for Healthcare

Chapter 20

Health Administration Press

Grand Strategy Matrix

Grand strategies are overarching, long-term strategies that set the direction for a company.

The grand strategy matrix (GSM) is intended to assist a strategist in deciding which grand strategies are most appropriate.

The GSM is a four-block matrix that considers a company’s competitive position in the market as well as the growth rate of the market.

These factors are similar to the concepts used in the BCG matrix and the GE matrix.

Health Administration Press

Grand Strategy Matrix

Health Administration Press

Grand Strategy Matrix

Definitions of each strategy are in your book on page 134.

Health Administration Press

Grand Strategy Matrix

Companies in Quadrant 1 of the GSM are in a great strategic place because they have a strong competitive position in a rapidly growing market.

These companies should leverage their existing competitive advantages and focus on their current products and markets.

Strategies such as market penetration, market development, and product development are appropriate.

If a company in this quadrant has extra cash on hand, it might consider integration strategies such as backward, forward, or horizontal integration.

If the company is heavily dependent on a single product or limited customer base, or is in some other way narrowed in scope, concentric diversification may be appropriate.

Health Administration Press

Grand Strategy Matrix

Companies in Quadrant 2 of the GSM are in a weak competitive position in a growing market.

They need to reevaluate their existing strategies to determine why that is.

Because the market is growing rapidly, they need to employ intensive strategies such as market penetration, market development, and product development.

If a company does not have a tangible competitive advantage, it may try to gain efficiency and economies of scale through horizontal integration.

If the strategist believes that a significant competitive advantage cannot be developed and horizontal integration is not an option, the company may choose to sell off the business and use the proceeds from the sale to reinvest in other businesses that may produce a greater return on investment.

If a buyer is not available and the business is a cash drain on the parent company, liquidation might be a last resort.

In such cases, the company is shut down and its assets are sold to pay debts. Obviously, liquidation is not an attractive strategy, but it could save a parent company from further losses.

Health Administration Press

Grand Strategy Matrix

Companies in Quadrant 3 have a weak competitive position in a slow growth market.

These companies have to take quick action to ensure a turnaround and avoid being driven out of business.

Retrenchment tactics, such as cost reductions and sale of assets, can help conserve cash.

Alternatively, diversification strategies designed to reposition the business into different areas may be appropriate.

These strategies may include horizontal diversification and conglomerate diversification.

If all else fails, the company may be sold off or liquidated.

Health Administration Press

Grand Strategy Matrix

Companies in Quadrant 4 have a strong competitive position but are in a slow growth market.

Because of their strength and cash flow, these companies have the ability to reallocate assets into more attractive markets or grow their dominance of the current market.

They may pursue these goals through concentric diversification, horizontal diversification, or conglomerate diversification.

Additionally, by combining with another company in a strategic joint venture, they can gain further leverage in the market.

Health Administration Press

Exercise

Complete a grand strategy matrix for your project organization using the chart on page 137 of your book.

Which strategies are appropriate and which are not? Why?

Health Administration Press

Quadrant 2

 Market penetration

 Market development

 Product development

 Horizontal integration

 Divestiture

 Liquidation

Quadrant 1

 Market penetration

 Market development

 Product development

 Horizontal integration

 Forward integration

 Backward integration

 Concentric diversification

Quadrant 3

 Concentric diversification

 Horizontal diversification

 Conglomerate diversification

 Retrenchment

 Divestiture

 Liquidation

Quadrant 4

 Concentric diversification

 Horizontal diversification

 Conglomerate diversification

 Joint venture

Weak Competitive Position

Strong

Competitive Position

Slow Market Growth

Rapid Market Growth