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ind_att-bus_str_a.pptFactors Considered in Constructing an Industry Attractiveness-Business Strength Matrix
(Industry Attractiveness)
| Nature of Competitive Rivalry | Bargaining Power of Suppliers/Customers | Threat of Substitutes/New Entrants |
| Number of competitors Size of competitors Strength of competitors’ corporate parents Price wars Competition on multiple dimensions | Relative size of typical players Numbers of each Importance of purchases from or sales to Ability to vertically integrate | Technological maturity/stability Diversity of the market Barriers to entry Flexibility of distribution system |
(contd.)
| Economic Factors | Financial Norms | Sociopolitical Considerations |
| Sales volatility Cyclicality of demand Market growth Capital intensity | Average profitability Typical leverage Credit practices | Government regulation Community support Ethical standards |
(Business Strength)
| Cost Position | Level of Differentiation | Response Time |
| Economies of scale Manufacturing costs Overhead Scrap/waste/rework Experience effects Labor rates Proprietary processes | Promotion effectiveness Product quality Company image Patented products Brand awareness | Manufacturing flexibility Time needed to introduce new products Delivery times Organizational flexibility |
(contd.)
| Financial Strength | Human Assets | Public Approval |
| Solvency Liquidity Break-even point Cash flows Profitability Growth in revenues | Turnover Skill level Relative wage/salary Morale Managerial commitment Unionization | Goodwill Reputation Image |
The Industry Attractiveness-Business Strength Matrix
High
Medium
Low
Industry Attractiveness
High
Low
Business Strength
Medium
Invest
Selective
Growth
Grow or
Let Go
Harvest
Divest
Grow or
Let Go
Harvest
Selective
Growth
Grow or
Let Go
Description of Dimensions
Industry Attractiveness: Subjective assessment based on broadest possible range of external opportunities and threats beyond the strict control of management
Business Strength: Subjective assessment of how strong a competitive advantage is created by a broad range of the firm’s internal strengths and weaknesses
Advantages of the Industry Attractiveness-Business Strength Matrix Over the BCG Matrix
Terminology is less offensive and more understandable
Multiple measures associated with each dimension tap many factors relevant to business strength and market attractiveness
Allows for broader assessment during both strategy formulation and implementation for a multibusiness company
