MATRICES DIRECCIONALES Y PORTAFOLIOS DE PRODUCTOS June 2010

MATRICES
DIRECTIONAL AND
PORTFOLIOS OF
PRODUCTS

LRC. Virgilio Torres Morales MBA.

Mexico City, June 2010

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 MATRICES DIRECCIONALES Y PORTAFOLIOS DE PRODUCTOS Junio 2010

MARKETING LIBRARY, PUBLICATION DATA

Author: Virgilio Torres Morales

Title: Matrices and marketing product portfolio

Editorial: Higher School of Commerce and Administration

Published: Mexico City.

Descripción: E-book 54 paginas

Subject: Brand name product DIRECTIONAL MATRICES AND PORTFOLIO

PRODUCTS

Control No: 10-2009-1

ISBN: In process

Contacto: Tel. 5535-7298, 01800-557-4444, [Link]

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 MATRICES DIRECCIONALES Y PORTAFOLIOS DE PRODUCTOS June 2010

INDEX

I. Prologue
II. Overview of matrices in the Mexican market
III. Market Product Growth Matrix
a. Author
b. Concept
c. Market penetration
d. Market development
e. Product development
f. Diversification
IV. BCG Product Portfolio
a. Author
b. Our heritage
c. Concept
d. Approach
e. Application
f. Children's product problem
g. Star products
h. Dairy cow products
i. Dog products
j. Ideal product portfolio
k. Different types of strategies

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V. General Electric Product Portfolio

a. Author
b. What is the McKinsey matrix
c. What is a portfolio
d. What is a UEN
e. The objective of portfolio analysis
f. The Mckinsey matrix and the BCG matrix
g. Typical internal factors that affect market attractiveness
h. Typical internal factors that affect competitive strength
i. A six-step approach for the implementation of the matrix
j. Some limitations of the McKinsey matrix
VI. Shell Product Portfolio
a. A little history
b. Limitations of the DPM Shell
c. Énfasis estratégico
VII. Product Portfolio of Arthur D. Little
a. History
b. Location
c. Matrix and life cycle
VIII. S.W.O.T. or F.O.D.A. Matrix
a. Introduction
b. Authors
c. Market research
d. Acronym
IX. R.O.I. Matrix
a. Introduction
b. Most common uses
c. Formula

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X. Competitive mosaic
a. Introduction
b. Operation
XI. Strategic positioning matrix
a. Introduction
b. What does it consist of
c. Concept
It also includes the evaluation
XII. Strategic Board Games
a. Introduction
XIII. Bibliography

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I. PROLOGO

Due to the need we have at the academic and professional level to have material
bibliographic, periodical, and other reliable information sources for your inquiry that
allow knowledge of the different methods regarding marketing matrices that
they have proposed with the aim of unifying criteria for the understanding of its meaning and of the
The application of the so-called product portfolio refers specifically in terms of, given such
evidence at the Higher School of Commerce and Administration, we set out to investigate and
bring us several publications related to that theme in order to prepare a summary
about such controversial concepts.

As a result of the reference research, it has been concluded that in large

companies (mainly multinationals that are presumed to know this) for example do not have the
full knowledge of what these techniques are and what they mean, let alone their exact application in
the daily tasks of marketing. In small and medium-sized enterprises, these techniques are unknown
completely and therefore its application is nonexistent.

On the other hand, the proper use of the product portfolio provides greater security regarding the direction.
correct that must be taken in the determination of the destination and development of the satisfiers; good
either supporting them or exploiting them, until the moment that it is strategically convenient to do so
substitution in the market.

It should be emphasized that the technical notes of this project are conceived and designed with the intention
that serve as a reference source where students of commercial relations can rely
marketing, (for the study of its subjects), as well as all those interested in the
knowledge of the subject.

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II. OVERVIEW OF MARKET MATRICES IN MEXICO

Despite the fact that in Mexico we have a large number of transnational companies and that the
marketing activity is of good quality, the knowledge of marketing matrices is
scarce and at times nonexistent in its application. The companies that are supposed to be known and
to apply these concepts with full accuracy and efficiency are the advertising agency and
marketing since they are the natural advisors of companies however the knowledge of
this matrix leaves much to be desired in the Mexican marketing market and the
advertising, moreover, the manufacturer or client of these agencies very rarely takes the time to review or to
validate the concepts that the agency proposes to you, so this information is almost null in the
development of marketing strategies.

Let's look at a very common case when a Brief is given to an agency, it is said that the Brief
it must be developed by both parties, partly with the participation of the Brand manager and by the other
side with the participation of the account executive, however when that document is delivered
There is at least a directional matrix of how the markets have behaved in this last period.
study period, we see this daily, and it is that universities, whether where one studies
Marketing or business relations or advertising do not give it the corresponding diffusion.
techniques for evaluating or designing strategies.

The practice indicates that having this type of longitudinal analysis is very useful for defining
clearly a strategy or to assess an existing one, good marketing directors or
Sales directors must be very knowledgeable in the application of marketing matrices.
These matrices are generally emphasized in the writing of marketing plans.
of a company.

Whenever we issue a marketing document, whatever it may be, it must contain strategies.
which should be evaluated using one of the existing matrices in the market, as has been
previously indicated.

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The matrices that are of great importance and used in the business world for visualization
in two dimensions the strategic options offered to companies. The matrices constitute a
pedagogical tool, even though in most cases they tend to simplify reality and
that in inexperienced hands can lead to rushed analyses and strategic disasters.

These matrices are analysis tools and not decision-making tools. One should not rely particularly on
the so-called directional matrices, since only the manager-strategist decides. No tool,
No matter how sophisticated it is, it cannot replace strategy. But it can be useful.

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III. PRODUCT MARKET GROWTH MATRIX.

1. Development Matrices.

These matrices are used to define the axes of evolution of a company or an industrial sector.
a. Descriptive matrices: They clarify the vocabulary of business development and illustrate the
logic of development.
i. Development vectors (Igor Ansoff)
ii. International Development (Jean Paúl Sallenave)
iii. Sectoral development (Richard K. Lochridge)
b. Directional matrices: They indicate the preferable strategic axes according to the situation of the
company in a certain sector.
i. Strategic semaphore (General Electric Company)
ii. DPM Matrix (Shell Company)
iii. ADL Matrix (Arthur D. Little)

2. Portfolio Matrices.

These matrices describe the portfolio of sectors or strategic segments of a company.

Several competitors can also be represented in the same matrix to compare their strengths.
relative.
a. Descriptive matrices: They allow for a global diagnosis of static and dynamic equilibrium.
(comparing the evolution of the matrix over several years) of the company.
a. BCG Matrix (Boston Consulting Group)
b. ADL Matrix (Arthur D. Little)

b. Financial matrices: They represent the characteristics of growth and profitability of a

portfolio, to issue a judgment regarding the company's growth balance.
a. Variation matrix of market participation
b. Variant of 2.2
c. ROI/ROS Matrix (Jean Paul Sallenave)
d. ROE/ROA Matrix (Jean Paúl Sallenave)
e. Contribution matrix
f. Matrix of commercial effectiveness
g. Matrix of cash flows
h. Matrix of contribution to financial profitability and growth

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3. Competitive Scenario Matrices

a. Competitive mosaic
b. Strategic positioning map
c. Board of strategic games (R. Buarun)

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Famous phrase from one of the pioneers of retail activity on the American continent, creator of
first self-service and one of the most influential in aspects
Advertisers of their time:

John (Nelson) Wanamaker (July 11, 1838 – December 12, 1922) Founder of OAK HALL in
Philadelphia, USA. It said:

I know that half of my advertising is wasted, but I don’t know which half.

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IV. PRODUCT MARKET GROWTH MATRIX.

a) Autor: Igor Ansoff

In the late 1950s, the Russian-American engineer, Igor Ansoff, founder of strategic management,
he stated that strategic planning is essential for companies operating in an environment
complex and turbulent. At that moment, sociologists dominated the research on adaptation
strategic of non-profit organizations, and mainly the conclusion that the ad-hoc management
was appropriate when demand and technology in the company's markets have evolved
gradually.

Ansoff's article, "diversification strategies," in the Harvard Business Review,

provides a practical framework for selecting a company's expansion path in a market each
increasingly competitive, the reasoning that long-term planning was necessary for
to promote administrative decision-making when the speed of change exceeds capacity
response from the company.

b) Concept

Ansoff simplified the competitive position of companies by defining two dimensions:

a) the products - what it sells and
b) the markets - to which they are sold

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Effective growth management requires that new products fit within the
the company's mission, the strengths of the organizations are the existing products. The
A common threat among existing products is to create synergy. A company could carry out four
strategic options based on market novelty and its products.

c) Market penetration

The low risk of the growth strategy aimed at selling existing products to the
existing clients, mainly through market and product knowledge. A
market penetration strategy seeks two objectives
a) maintain or increase the market share of current products;
b) increase the usage of the product by existing customers.
This strategy works best in industries where economies of scale apply when the
the average cost of the production and distribution company decreases as
reduce the size of its operation increases. To execute this penetration strategy
in the market requires a defensible competitive position to avoid probable retaliation from
the competitors.

Market development

The medium-risk strategy is growth to sell existing products to new customers.

clients. Their large number of applications include:

a) development of new geographic markets;

b) in addition to the new distribution channels;
c) adoption of different pricing policies to attract different customers;

The creation of new market segments and the lack of knowledge about new markets and/
or new market segments creates a risk offset by superior quality products.

e) Product development
This strategy is also of medium risk and is the growth of introducing new products to the
existing customers. The organization needs to develop products that attract customers at the same time
existing ones in order to encourage them to invest more in these products. This strategy is likely to generate the
development of new competencies of organizations and requires better coordination of sales
non-competitive immature products in the portfolio to minimize risk by compensating it with the
strong customer orientation and the innovation process.

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f) Diversification
This is a high-risk strategy as new product markets enter new markets and
require the acquisition of experience in both sectors. Diversification can become fragmented.
in two

a) horizontal diversification: new products, related to the market;

b) vertical diversification: moving to the existing suppliers of companies or businesses
from the clients;
c) concentric diversification: new products closely related to the product
current in the market;
d) conglomerate diversification: entirely new product in an entirely new market
new.

The choice of a growth strategy depends on the company's level of risk, its current
set of products and markets, and the preference of the organization, whether for the products or
markets. These strategies help the systematic management of preparing for the future by
understanding the difference between the current position and the company's desire.

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Graph #1 Product Market Choice

producto
market present new

present penetration of development of

market products

new development of diversification

market

Graph # 2 strategy selection

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Famous quote:

Lido Anthony "Lee" Lacocca(nacido el 15 de octubre de 1924 en Allentown, Pensilvania, Estados

United States), of Italian descent, is one of the most representative figures in the industry of
automobile from the late 20th century and early 21st century. It is responsible for the creation of the Ford
Mustang and Chrysler Minivans.

Competitive advantage is having 10% of information one day in advance and

knowing what to do with her

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IV. PRODUCT PORTFOLIO B.C.G. (BOSTON CONSULTING GROUP)

a) Autor: Bruce Henderson 1915-1992, fundador de Boston Consulting Group en 1963.

b) Our heritage:

Decades of practice in the industry and functional experience, from BCG, goes beyond the
standard solutions for developing new ideas and mobilizing organizations, with results
tangibles for companies to be more capable. Since its founding in 1963, BCG has been
leadership in business management, many of our ideas and concepts have had an impact
fundamental to the success of companies that have become central to the business lexicon
since its creation in 1963. BCG continues to lead the way on cutting-edge issues of
thinking and management practices, such as global advantage, value management, sustainability, and the
networks.
We are proud to see our ideas successfully implemented. Many of our most
Deep interactions with clients have been the companies that transformed their industries. This tradition of the
The transformation of companies and industries continues to motivate us today.

c) Concept:

The simplest, quantitative method known as product analysis or strategy centers is

development by the Boston Consulting Group in the late 1960s and materializes in the matrix of
growth-market share. This method is also known as BCG Analysis or Analysis of
Portfolio.

This approach considers cash flow (profits + amortizations) as the most important variable for
decision-making time regarding the composition of the product portfolio or strategy centers
a company, and on how to allocate resources.

It is important to achieve a balance within the company; for this, highly

productive ones, which are providing liquidity to the company, must finance the deficit ones.

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d) The BCG approach is based on two premises:

• The liquidity obtained through the company's operations is a function of the unit cost, which
it is also a function of sales volume and experience, which ultimately depend on
the market share (scale effect, related to fixed costs).
• The liquidity necessary for investment in facilities, equipment, and working capital is a function
from the growth rate of the sector in which the company is located or the strategic segment
of business.

e) Application:

Thus, the strategy associated with each 'strategy center' will be determined by the two factors
of those that depend on the company's cash flow, that is, since cash flow is a function of the fee of
relative market and the growth rate of the company or sector, the differences regarding these two
factors will indicate the strategy to follow.

Operationally and with practical adaptability, the BCG can be used to analyze the range of
products of the company, those of the competition and even the franchise networks. Once known
the variables that frame the growth-share matrix, the next step is the
construction of said matrix.

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Chart # 3. Growth-share matrix (BCG)

These concepts of growth rate and market share, properly combined, allowed
Boston Consulting Group to classify products according to their positioning
the same, in order to analyze the portfolio, taking into account its generation or consumption capacity
income, and as a consequence, establish different strategies. The graphic representation of these
variants are carried out by plotting on the axis of abscissas (horizontal coordinate or X's) the quota of
market achieved, and on the vertical axis (Y coordinate) the growth rate
of the product concerning its market. In this way, a matrix or board divided into four is obtained.
quadrants. Each of these represents the position of a product, considering its capacity.
generation of cash flows and their monetary needs. Thus, different categories are established
of products or groups of products. In graph # 3, of the matrix, the coordinates (X - X') and (Y - Y')
indicate the average of the sector, both of the market share and of the rate of
growth.

Various authors maintain that the coordinate axis (X - X') is equivalent to the critical mass, that is,
that its growth rate is above or below 10%; in practice, this is not possible either
useful since in consolidation stages of a certain sector, growing above 5% and this
can position the company above the competition by turning its products into stars or children
problem.

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f) Products question-children problem

The question mark products or problem children are those located in high-growth markets.
with reduced relative market shares, which implies lower profits, and the
the need for large investments to maintain their market shares and, of course, increase them.
The units located in this area may be products that are introduced for the first time in a
existing market, products previously introduced but for some reason not
they achieved a high market share, or products that came to have a high market share but
They lost it. Generally, these are products with high growth in the market and small shares of
Participation. They represent the future of the company, which is why they require appropriate management.
of prices, promotion, distribution... which translates into a need for resource investment. They are
the so-called 'star products'.

g) Star products

Those situated in high growth markets and high market share are called
stars. They are characterized by having an unbalanced cash flow, as the large profits
obtained are offset by the large money needs to finance their growth and
maintain their market share. Situated in the growth phase, they are the ones that present
better opportunities, both for investing and for obtaining profits.

In these products, it is essential to maintain and consolidate their market share, for which sometimes
It will be necessary to sacrifice margins in order to establish barriers to entry for competition. The policy of
Pricing can be an important strategy, as it allows choosing between obtaining lower cash flows.
cash in exchange for increasing market share. Some companies abandon the product at this stage.
to maintain a leadership in image.

h) Dairy cow products

Products situated in low growth markets and high market share receive the
number of dairy cows. They are sources of liquidity, as they do not require large
investments will be used to finance the growth of other units, research and development of
new products, and compensate both equity and debt.

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These products are usually in the maturity phase, with a high market share and rate of
low or no growth. They are products with a great accumulated experience, lower costs than the
competition and, as a consequence, better income. They constitute the fundamental basis for
allow us to finance the products 'questions or problem children', their research and development, and
compensate for the income sacrifices required from the 'star' products.

It is necessary to keep in mind that the growth expectations of these 'cash cows' are nil.
that do not require additional funding and will sooner or later reach their stage of decline. By
Thus, investments must be exclusively aimed at maintaining the achieved quota, while...
get the replacement for 'star products'.

i) Dog products

Products with low market share and low growth are called
"dogs". They are true liquidity traps, since due to their low market share, their
profitability is very small and it is difficult for them to become a great source of liquidity, so they are
immobilizing company resources that could be more appropriately invested in other centers.
The units located in this area may be:

• Products that failed to achieve a leadership position during the stage of

growth.
• New brands recently introduced in the market to compete with the products
dairy cows
• Products that have gone from being 'cash cows' to being 'dogs'.

They have a low growth rate and market share. The main characteristic of these
products are that, in most cases, they will hardly be profitable. There are competitors with
better costs, greater experience, fee, and better income.

They are products that are difficult to promote, reposition, and that require many hours of dedication.
unjustified, which is why it is not logical to invest in them. The best strategy for these products is
use them as cash generators until they 'give out' or try to find a segment, a
market niche, suitable for them, in which, by marking a differentiation, an objective can be achieved.
high participation and defend it.

Likewise, there are companies that maintain products in this category for corporate image or
brand, because otherwise they would not have a complete range of products. Exception to what is stated here.
they are all handcrafted products whose economic income is positive, but that
The very philosophy of production does not allow them for mass manufacturing and, therefore, growth.

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j) Ideal product portfolio

According to the classification made by BCG, companies must keep their balance well maintained.
wallet, that is to say, they must be introducing products into the market with future prospects in
question mark products and star products, in addition to cash cow products,
that provide income through which investments and research actions will be carried out
marketing in the previous ones. They can also have dog products, as long as they are good.
differentiated and have a specific market cycle. The graphical representation of the portfolio is made
through a point cloud, placing them in the location that corresponds to their participation in the
market and growth rate.

k) Different types of generic strategies

The BCG approach proposes four types of strategies, all of them in terms of market share.
market. Determining which is the most appropriate depends, among other reasons, on the current market of
product, from its life cycle, from the company's resources, and from possible reactions of the
competition.

In this regard, I would like to remind you that the term market share, while being important, has left
part of its prominence to that of customer share. These strategic actions, which convey their
Objectives expressed in terms of quota or market share are four:

• Increase market share. It can be an offensive or defensive action.

depending on whether you are looking for an increase in profitability, in the first case; or, in the second, if
seeks to obtain the critical market share that allows it to survive in the market.
• Maintain market share. What is suitable for products that are in the
maturity stage and have large relative market shares, due to the fact that at this stage
buying habits tend to be more stable and harder to change, and an attempt to
increasing the fee would be at the expense of the other consumers. It is the most strategy
adopted, always considering what is the most cost-effective way to maintain the quota of
market.
• Harvest. It consists of maximizing short-term benefits and cash flow, allowing that
market share decreases. To carry out this strategy it is necessary
reduce costs to the maximum. It is the most appropriate strategy for the range of products that
have a small market share in low-growth markets.
• Withdraw. It consists of liquidating the product, as the resources may be better utilized in
another part. It should be applied to those strategic products with a market share
inferior to criticism.

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Famous quote:

Peter Ferdinand Drucker, 1909-2005, who is the father of modern management, said:

optimal results are achieved more by taking advantage of opportunities than

solving problems

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V. PORTFOLIO OF PRODUCTS OF MCKINSEY & G.E (GENERAL

ELECTRIC

a) Author: James O. McKinsey & Company was founded in Chicago in 1926 by James O. ("Mac")
McKinsey, accounting professor at the University of Chicago, who was a pioneer in budgeting.
as a management instrument. Marshall Field's became a customer in 1935, and soon convinced
de McKinsey para dejar la empresa y convertirse en su consejero delegado, sin embargo, murió
unexpectedly of pneumonia in 1937.

Marvin Bower, who had joined the company in 1933, in place of McKinsey, took over.
one of the places of world fame and established many of its guiding principles. McKinsey When
he died, the main office was in Chicago, Bower revived the New York office, and changed the
the name of McKinsey & Company. One of the first partners of McKinsey was Andrew T. Kearney,
who retained the Chicago office and renamed the competing management consulting firm AT
Kearney from the same branch.

Graphic # 4. General Electric McKinsey Matrix

b) What is the McKinsey matrix?

The McKinsey Matrix is a model for conducting a portfolio analysis of a business.

corporation, based on the analysis of the strategic business units it possesses. The synonyms for
this method is; GE Matrix or Tools for Business Valuation
Assessment Array), GE Business Screen.

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Chart # 5. General Electric Mckinsey Matrix

Analyze the portfolio of Strategic Business Units using commercial attractiveness and their strength.
competitive. Description of the McKinsey Matrix

c) What is a portfolio?

A business portfolio is a portfolio or collection of strategic business units that together,

they create a corporation. The optimal business portfolio is one that fits perfectly with the
strengths of the company and helps to exploit the most attractive industries or markets.

d) What is a business strategic unit?

A strategic business unit (SBU) can be an entire mid-sized company or a

division of a large corporation. While formulating its own business strategy and having objectives
separated from the main office.

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e) The objective of portfolio analysis

1. Analyze your current business portfolio and decide which strategic business unit should
receive more or less investment
2. Develop growth strategies to add new products and businesses to the
wallet
3. Decide which businesses or products should not be retained.

The BCG Matrix (Boston Consulting Group matrix) is the best-known planning framework
portfolio. The MacKinsey Matrix is a later and more advanced proposal than the BCG Matrix.

f) The McKinsey matrix and the BCG

The McKinsey Matrix is more sophisticated than the BCG Matrix in three aspects:

1. The attractiveness of the market (or industrial sector) is used as the dimension that determines
the attractiveness of the industry, instead of market growth. The determination of
market attractiveness takes into account a wider range of factors instead of just focusing on
report only the growth rate of the market (or the industrial sector). Also compare with:
Five forces
2. The determination of competitive strength replaces market share with the
competitiveness of each UEN. The determination of the competitive strength of the UEN includes
a wide range of factors instead of just focusing on market share.
3. Finally, GE works with a 3 x 3 platform, while the BCG Matrix has
only 2 x 2. This also allows for greater sophistication.

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Chart # 6. General Electric McKinsey Matrix

g) Typical (external) factors that affect market attractiveness:

Market size
Market growth rate
Market profitability
Price trends
Competitive intensity/rivalry
Total risk of profitability in the industry
Entry barriers
Opportunity to differentiate products and services
Demand variability
Segmentation
Structure of the distribution
Development of technology

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h) Typical (internal) factors that affect the competitive strength of a strategic unit
business

Strengthening of assets and capabilities

Relative strength of the brand (marketing)
Market share

Market share growth

Customer loyalty
Relative cost position (cost structure compared to competitors)

Relative profit margins (compared to competitors)

Distribution strength and production capacity
Technological record and other innovations.

Quality
Access to financing and other investment resources

Administrative Fortress

Frequently, in the GE Matrix, business strategic units are drawn as circles.

where:
• The size of the circles represents the market size.
• The size of the divisions of these circles represents the market share of
the Strategic Business Unit
• The arrows represent the direction and movement of the business strategic unit.
in the future.

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i) A six-step approach for implementing the McKinsey matrix

1. Specify the management factors of each dimension. The corporation must determine
carefully the factors that are important for your overall strategy.
2. Determine a weight for each management factor. The corporation must assign weights.
relatives according to the importance of each managerial factor.
3. The score for each strategic business unit in each management factor.
4. Multiply the weights and scores for each UEN
5. See the resulting graph and interpret it.
6. Conduct a review/sensitivity analysis. Use different weights and scores.
(there may not be consensus).

j) Some limitations of the McKinsey matrix

• The assessment of various factors.
• The accumulation of indicators is difficult.
• The core capabilities are not represented.
• Interactions between the strategic business units are not considered.

Graph # 7. General Electric McKinsey Matrix

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Famous phrase:

John Von Neumann and Oskar Morgenstern introduced the concept of strategy in 1948 with their theory of
games.

Game theory and economic behavior

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VI. Shell product portfolio

A little history
While General Electric and McKinsey were developing the business screen, Shell - one of
the largest petrochemical companies in the world developed a framework that would come to be known
like the matrix direction policy of Shell. The Shell DPM was a technique originated by the
systematic analysis of the qualitative factors present in the organization, which had an impact on the
business planning. It was also developed to compare business sectors and positions
from the company in a way that was independent of the financial forecasts.

Like the General Electric matrix, with two dimensions (competitive capacity of the company
vertical, the profitability prospects of the horizontal sector)
The products of the companies are plotted in one of the nine cells.
The horizontal axis: includes the criteria of market growth rate, market quality,
the situation of the industry and the environmental considerations will be rated out of five stars. Each one of
These criteria can be assessed using the additions such as pricing policy (of the 'quality
from the market"), and this is also assessed to find the score "overall in profitability of
the sector is the sum of the scores of the four factors
VERTICAL AXIS: The same "favorites" approach is used, but in this approach that the donkeys, on
the basis of market position, product research and development, and the ability to
production. Again, these can be subdivided!
Shell emphasized that whatever the strategy ultimately chosen may be, the goal is that it must
"flexible", that is to say, viable in a wide range of possible futures.

What is expected is that all possible future scenarios have been evaluated, the results must be
acceptable and without disaster potential.

b) Limitations of the DPM Shell

The same set of factors is supposed to be generally applicable to assess the outlook for
any product or business. The relevant factors and therefore their relevant importance "vary
both in relation to the company's products and the individual characteristics of each company

There are no guidelines on how to apply the strategy, as mentioned in the cell of the matrix.

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c) The strategic emphasis

The traditional way of viewing the strengths of the business units and weaknesses, as well as the
comparison of business sector perspectives was to use historical rates and forecasts
of the return on invested capital. This was done because a sector where the prospects were
favorable and strong position of the company tended to show greater profitability. Shell found that
these records and forecasts were not sufficient for management guidance in planning
corporate and the allocation of resources. The reasons for this are:
The records and forecasts do not provide a systematic explanation of why a business sector
have a more favorable perspective than another or why the company's position in a sector in
Is it strong or weak?

The records and forecasts do not clarify enough about the underlying dynamics and the balance of the
economic sectors of each one or the balance between the sectors.

Using forecasting and the recording method, when the products are being considered new, the
real experience cannot be consulted.

Global inflation has severely undermined the validity and credibility of financial forecasts.
especially in the case of companies that are affected by the oil process.

The basic method of the directional policy matrix is to identify and locate on the horizontal and axes
vertical

The main criteria on which the prospects for a business can be judged as favorable or unfavorable
unfavorable (favorable meaning high profitability and growth potential). The main
criteria by which a company's position in a sector can be judged as strong or weak.

Horizontal Axis
The horizontal labels for the quadrants are the reverse of those in the GE matrix. The quadrant
the far left has the label unattractive, while the corresponding quadrant of the
the GE matrix has the high label.

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The horizontal axis is called 'Business Perspectives of the Sector', while the vertical axis is
denominates 'Company Competitive Capabilities / Position'
Vertical Axis

Please note that the axis labels are the opposite of those of the GE McKinsey matrix and the
lower is called strong lower quadrant compared to the GE matrix.

The Shell matrix management policy can be used to analyze the different sectors of
businesses in an industry, as well as competitors in a business sector.

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Chart # 8. Sell Matrix

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Famous quote:

E. St. Elmo Lewis

1872-1948 the broadest concept in communication and in sales. This technique is still used until the
date.

Attention, interest, desire, and action

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VII. Artur D'little product portfolio

a) History:
The roots of the company began in 1886 by Arthur Dehon Little, a MIT chemist, and partner.
work Roger B. Griffin (Russell B. Griffin), another chemist and a graduate of the University of
Vermont, who had met when both worked for Richmond at the paper company in
East Providence, Rhode Island. After Griffin left Richmond Book next Little, her new
company, Little Griffin, was located in Boston MIT where also was. Griffin and Little prepared
a manuscript for The Chemistry of Paper Manufacturing which[3]was for many years a text
authentic to the area. The book was not fully finished when Griffin died in a
[2]
laboratory accident in 1893.
b) Location:
Arthur D. Little is the world's first management consulting firm defined as such.
same as a pioneering and leader company in the industry from the 1880s to the 2000s.
In 1981, the European Commission produced its first white paper on telecommunications.
deregulation, After completing its first telecommunications database worldwide in the
[5]
installed phones, the markets, the technical trends, services and regulations. It also helped to
privatizing British Rail, considered one of the most complex privatization exercises in the
world. In 2001, Arthur D. Little has more than 20,000 employees worldwide. But, a new
the management team had poorly managed the company's main business, had incurred in
serious manipulation of the Memorial Drive Foundation, and attempted an illegal sale of the technology and
product development business. The ADL Board of Trustees has replaced this management team, but
the damage was already done, and Arthur D. Little had to file for Chapter 11 protection
bankruptcy.

Arthur D. Little has been classified as one of the top management consulting firms.
D. Little publishes a bi-annual leadership thought collection called PRISM.

c) PORTFOLIO MATRIX - LIFE CYCLE (Arthur D. Litle)

The business portfolio matrix proposed by Arthur D. Little (ADL) shares the same
characteristics of the previous matrices that have already been exposed. It coincides with them in that it is a
graphical representation of all the firm's businesses, in two dimensions. One represents the effect
of the external forces that, normally, remain outside the control of the firm. ADL selected four
stages of the business life cycle as descriptors of industry characteristics. The second
dimension represents the strengths that the firm possesses in the industry within which each business
compete. ADL has established six categories of competitive position (dominant, strong, favorable,
defendable, weak and not viable

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Chart # 9. Artur D’little Matrix

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Famous quote:

Bill Bernbach 1911-1982

Famous phrase:

Word of mouth advertising is the best medium of all.

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VIII. S.W.O.T. or F.O.D.A Matrix

a) Introduction:
The SWOT analysis was developed in the mid-1960s for large organizations to
determine the internal strategic alignment of an organization, the distinctive capabilities, the
external possibilities and the priorities of actions. SWOT stands for Strengths, Weaknesses,
Opportunities

Chart # 10. SWOT Matrix

b) Authors:
In the early 1950s, two professors from the class:
“política de negocios” de Harvard, George Albert Smith y C. Roland Christensen, comenzaron a
to wonder if a company's strategy was in line with its competitive environment. In 1960, a
a group of large North American companies commissioned a long-range study to 'Stanford Research'
Institute to investigate why long-term planning efforts were not successful.

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c) Market research:
The research team of the SRI - Marion Dosher, Otis Benepe, Albert Humphrey, Stewart and Robert
Lie Birger interviewed 5,000 managers from 1,000 companies over more than nine years. They found
that the difference between what the organization plans to do and what is actually achieved has a
35% difference. The problem was not the quality of the management team or the information, but their
ability to reach a compromise agreement on constructive goals instead of
settle for weak or lesser commitments.

Chart # 11. SWOT Matrix

d) Acronym:

Strengths
The possible factors that make a company more competitive than its direct competitors;
2. Weaknesses
both the potential limitations and defects rooted in an organization and/or weak in relation
with the direct factors of their competitors.

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Opportunities
Future factors that allow the organization to improve its relative competitive position.
4. Challenges or threats
It is used to address the factors that reduce the company's future relative competitive position.
The steps in the common three-phase SWOT analysis process are:

Phase 1: Detect strategic issues

1. Identify the relevant external problems to the company's strategic position in
the industry and the general environment in general under the understanding that the
Opportunities and threats are factors that management cannot influence directly.
Identify the internal problems corresponding to the strategic position of the
company.
3. Analyze and prioritize external problems based on probability and impact.
4. List of key factors that strategic issues inside or outside the
organizations that significantly impact the long-term competitive position in
the SWOT matrix.
Phase 2: Determine the strategy of:
5. strategic adjustment of the company Identify given its internal environment capabilities and
external.
6. Formulate alternative strategies to address key issues.
7. Place the alternative strategies in one of the four quadrants of the matrix

SWOT. The strategies that combine:

a. internal strengths with external opportunities are the ideal mix, but understanding how to
the internal strengths can support deficiencies in other areas;
b. internal weaknesses with opportunities should be judged based on the effectiveness of the investment for
determine if the increase is worth the effort of purchasing or developing internal capability,
c. internal strengths with external threats demand knowledge of the value of adapting the organization to
changing the threat into an opportunity.
d. internal weaknesses with threats create a worst-case scenario organization. Changes
Such radical measures as divestment are mandatory.
8. Develop additional strategies for the other 'blind spots' in the SWOT matrix.
9. Select an appropriate strategy.

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• Phase 3: Apply and monitor the strategy

10. Develop an action plan to implement the strategy;
11. Assign responsibilities and budgets;
12. Control the progress;
13. Start the review process from the beginning.

Secrets for the use of this matrix.

This matrix should be read like the Chinese do, from top to bottom.
The forces must be sufficient to achieve the challenges.
Weaknesses must have a direct correlation with opportunities.

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Famous Quote:

David Ogilvy 1899-1999

We pursue knowledge in the same way that pigs pursue it.

truffles

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IX. R.O.I. Matrix

a) Introduction:
From an accounting or financial point of view, it differs from return on investment values.
because it does not measure only the income in relation to costs, but the marketing variables against the
differential growth in sales, for specified periods, subject to any type of
promotional campaign or the measurable equivalent of branding values.

b) What does it consist of:

It is used for the design of campaigns and media plans, and to define marketing strategies in
function to customer loyalty variables, customer lifetime value (CLV)
value), the incremental customer value (ICV, incremental customer value) and customer waste
(lost customers over specified time periods). This helps to define the orientation of the
campaigns and the design and preparation of marketing budgets and media plans.

The focus of companies on measuring ROI and on return-oriented planning

Investment is considered the most effective way to measure the effectiveness of advertising campaigns.1
and the definition of marketing strategies, by financially quantifying the global values of
measurement of campaigns such as GRP or TRP, which measure the overall effectiveness of a campaign
within a target market in cost per contact, but not the direct impact or the reflection of a
campaign in sales. By 2009, in the United States, there was a clear trend towards the use of
2
ROI as a marketing metric over traditional measurements.

The return on investment (ROI) is a percentage calculated based on

from the investment and the benefits obtained to quantify the feasibility of a project. It is used together
to the VAN and to the TIR.

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c) Formula:
There are various ways to obtain it. One of them is:

Where:

Represent the benefits

Cirepresents the initial costs

Arithmetic formula

Where:

Vfrepresents the final investment

Virepresents the initial investment

There are also websites that help you calculate the return on investment with just
insert the necessary values and you get your answer.

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Example:

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Famous quote:

Rosser Reeves, 1910 -1984

The unique selling proposition is the only reason the product needs to
that the buyer acquires our product or that it is better than theirs
competitors

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X. Competitive mosaic.

a) Introduction:
Provides the basis for analyzing possible competitive scenarios; allows one to ask "if a
competitor implements such a strategy in such a sector what would be the consequences of their action for each
competitor logically how are they going to react and how are we going to react?
b) Operation:
In other words, the competitive mosaic juxtaposes the portfolios of all competitors.
important for studying its interaction, is the graphic precursor of a further tool
sophisticated: the computer-based competitive simulation. In this example, our company operates in
four sectors A, B, C, D, against four competitors our portfolio is balanced because
We have a sector in each quadrant of the portfolio (¿,*;$,X) A static diagnosis can be issued
about each more threatening competitor and that a price increase in D, for example would be
much more beneficial for what for us

Graphic # 12 Competitive Mosaic Matrix

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Famous Quote:

Leo Burnett, 1891-1971

Good ideas not only circulate information. They penetrate the mind of the public.
with desire and credibility.

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XI. Strategic positioning matrix

a) Introduction:
This issue concerns a countless number of micro and small businesses across Brazil, and for
the situation in many other countries hinders the development of the necessary managerial muscle
to face the scenarios of changes and transformations that greatly affect businesses.

b) Operation
There is a solution, which consists of adopting a positioning program that considers what I call
The five cardinal points of strategic positioning. The methodology is not new, but the
concept, which I have already had the opportunity to test with many entrepreneurs, shows very positive results
consistent.

If you know the story of 'Alice in Wonderland', you might remember the part where she, upon
lost verse and with the option of having to choose one of the many possible paths to pursue
the rabbit that had fled with the watch engages in the following dialogue with the cat:

• Little friend cat, which path should I take?

• Where do you want to go?
• To anywhere...
• Ah... then, any way works!

For those who do not know where they want to go, any road will do. And that is the concern of millions.
of entrepreneurs, and the reason why companies were led down paths and situations that,
Consciously, it was not thought or imagined to arrive. Worse still, many entrepreneurs define where to
they want to go without considering where and how they are and end up getting lost along the way because they do not
They correctly assessed their situation before setting out to walk.

c) Concept:
To face this situation, I developed the concept that I call 'The five cardinal points of
strategic positioning
approved in numerous companies, with very consistent and practical results, as everything should be
that which is developed for small businesses.

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Chart # 13. Strategic positioning matrix

The concept of the five cardinal points uses the Eastern principle that considers,
primarily, "where am I", unlike the Western one, which has only four points. The point
initially I called it SWOT (also known as FODA analysis).- how I am and part of the
known method of analysis of forces of the internal environment, the strengths (strong points) and the
weak points; and from the external environment, the opportunities and the threats
(threats).

d) Evaluation
From the macro-environment, which increasingly generates more interference in business. Despite the limited power
that small businesses have in that area, including topics such as government decisions, situation
of financial markets, national and international markets, etc.

Pero, antes de sumergirse en elanálisis SWOT, el empresario necesita evaluar profundamente su

business in the business quadrants: Market/Customers, Products/Services, Material Resources
and Human Resources. Next, you must assess your position in the positioning quadrant.
market: price, service, quality, and innovation. With all the data extracted from the analysis, the
The entrepreneur can define the strategic positioning to adopt among the following four.
alternatives

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Famous quote:

Bertrand Russell 1844-1874

Orthodoxy is the tomb of intelligence.

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XII. Board of strategic games

a) Introduction:
This matrix is not necessarily classified as a matrix; however, due to its extensive use in
Marketing we set out to include it and its application turns out to be very useful in the marketing field.
and advertising.

Graphic # 14. Strategic Game Board

The hypothesis that the company can choose its competitors and the weapons with which to attack them, R. Buaron
proposes a board where it indicates four possible strategic games:

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Graphic # 15. Strategic Game Board

b) Most common uses:

The board of strategic games shows the importance of creativity. While to the
most battles are fought in modes 1 and 2, it is in modes 3 and 4 where the company can
to win the maximum. However, a new strategy requires new ideas and a new conception of
the company in its environment a new response to the question What business are you in? (in what business
we are).

The mentioned board is only useful to the extent that the company effectively has the
the possibility of choosing your competitors and the weapons with which to attack them. In this sense, it is
similar to a chessboard: all the pieces and possible moves are known. Many
companies no longer have the necessary freedom of maneuver to choose their competitors and their weapons
checkmate.

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Famous Quote:

Benjamin Franklin
Clean your fingers before pointing out my mistakes

XIII. BIBLIOGRAPHY.
•George A. Steiner, PLANEACIÓN ESTRATÉGICA , EDITORIAL CECSA, 1979
Jean Paul Sellenave, STRATEGIC PLANNING MANAGEMENT, Editorial Group
NORM 2002
•Joaquín Rodríguez Valencia, HOW TO APPLY STRATEGIC PLANNING TO THE
SMALL AND MEDIUM ENTERPRISES, editorial Thompson 2005
[Link] Moya, MANAGEMENT STRATEGY AND DIRECTORIAL SKILLS, Díaz de editorial
Santos 1997
•Guillermo Bilancio, ESTRATEGIA, EDITORIAL Pearson, 2006

HTTP://[Link]/
HTTP://[Link]/
HTTP://[Link]/
HTTP://[Link]/
HTTP://[Link]/

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