The main ones are: SWOT model, (also known as TOWS analysis, Dawes matrix) that is, situational analysis, put forward in the early 1980s by Weirick, a professor of management at the University of San Francisco in the U.S., is often used in corporate strategy development, competitor analysis and other occasions. SWOT analysis should be considered a well-known tool in strategic planning reports nowadays. SWOT analysis from McKinsey & Company includes analyzing a company's Strengths, Weaknesses, Opportunities and Threats. Therefore, SWOT analysis is actually a method of synthesizing and summarizing all aspects of an organization's internal and external conditions, and then analyzing the organization's strengths and weaknesses, and the opportunities and threats it faces. Through SWOT analysis, it can help an organization focus its resources and actions on its strengths and where it has the most opportunities In addition to the SWOT model, there are other models that can be used for both strategic analysis and strategic decision-making, such as the Boston Matrix and the GE Matrix.
Boston Matrix (BCG Matrix) is also known as Market Growth Rate - Relative Market Share Matrix, Boston Consulting Group Method, Four Quadrant Analysis Method, Product Family Structure Management Method and so on. One of the most popular methods for developing company-level strategies is the BCG Matrix. Developed by the Boston Consulting Group (BCG) in the early 1970s, the BCG Matrix labels each of an organization's Strategic Business Units (SBUs) on a kind of 2-dimensional matrix diagram, thus showing which SBUs provide high potential revenue and which SBUs are funnels for the organization's resources.The inventor of the BCG Matrix, the Boston Consulting Group, is the founder of the Boston Consulting Group, and is responsible for the development of the BCG Matrix. Bruce, the inventor of the BCG matrix and founder of the Boston Company, believed that "to be successful, a company must have a portfolio of products with different growth rates and market shares. The composition of the portfolio depends on the balance of cash flows." In this way, the essence of BCG is to achieve cash flow balance of the company through the optimal combination of businesses.
The BCG matrix distinguishes four business portfolios. (QuestionMarks, meaning high growth, low market share)
In this area are speculative products that carry a high degree of risk. These products may have high profit margins but hold a small market share. This is often a new business for a company, and in order to develop a problem business, a company must build factories, add equipment and personnel to keep up with the rapidly growing market and outperform competitors, which implies a large capital investment. "Problem" aptly describes a company's approach to this type of business, because it is at this point that the company must carefully answer the question, "Should it continue to invest in the business and grow it?" This is the question that must be answered carefully. Only those businesses that meet the company's long-term goals, have a resource advantage, and enhance the company's core competencies are answered in the affirmative. Problematic businesses that receive a positive answer are suitable for the growth strategy mentioned in the strategic framework, which aims to increase the market share of SBUs, even at the expense of near-term revenues, because for a problematic business to develop into a star business, it must have a large increase in its market share. Problematic businesses that receive a negative answer are suitable for a contraction strategy. How to choose the problematic business is the most important and difficult part of developing a strategy using the BCG matrix, which is about the future growth of the organization. BCG also provides a simple way to prioritize the various business growth options in a growth strategy. Using the chart below, weigh the options that have a relatively high ROI and require a lesser breadth of resource investment. (STARS, high growth, high market share)
Products in this segment are in fast-growing markets and have a dominant market share, but may or may not generate positive cash flow, depending on the amount of investment required for new plant, equipment and product development. A star business is one that has grown from continued investment in a problem business and can be considered a leader in a fast-growing market, and it will be the company's cash cow business in the future. However, this does not necessarily mean that the star business will bring a constant flow of cash to the business, as the market is still growing at a high rate and the business must continue to invest in order to keep up with the growth of the market and to beat back competitors. A business without a star business loses hope, but the twinkling stars can also blindside top management and lead to poor decisions. This is where it is important to have the ability to recognize planets and stars, and invest the limited resources of the business in stars that can develop into cash cows. Similarly, star businesses to develop into cashcow businesses lend themselves to the use of growth strategies. (Cashcows, meaning low growth, high market share)
Products in this space generate a lot of cash, but the prospects for future growth are limited. This is the leader in a mature market and it is a source of cash for the business. Because the market is mature, the business does not have to invest heavily to expand the size of the market, and at the same time, as a leader in the market, the business enjoys economies of scale and high marginal margins, thus generating large amounts of cash flow for the business. A cash cow business is often used to pay bills and support three other cash-intensive businesses. The cash cow business lends itself to the stabilization strategy mentioned in the strategic framework, which aims to maintain the market share of SBUs. (Dogs, meaning low-growth, low-market share)
The products in this remaining area neither generate a lot of cash nor require a lot of cash to be invested, and there is no hope that these products will improve their performance. In general, this type of business is often marginally profitable or even loss-making, thin dog-type business exists more due to emotional factors, although it has been operating at a small profit, but like people have been raising a dog for many years like a love affair and can not bear to give up. In fact, the thin dog type of business usually take up a lot of resources, such as capital, management time, etc., most of the time is not worth the loss. Thin-dog businesses lend themselves to the contraction strategy mentioned in the strategic framework, which aims to sell or liquidate the business in order to shift resources to more favorable areas.
Why BCG Matrix?The essence of the BCG Matrix is that it tightly integrates strategic planning and capital budgeting, categorizes a complex business behavior into four types using two important measures, and responds to complex strategic issues with four relatively simple analyses. The matrix helps companies with multiple operations determine which products are appropriate to invest in, which are appropriate to manipulate for profit, and which are appropriate to eliminate from the business portfolio so that the portfolio achieves optimal operating results.
GE Matrix (GE Matrix/Mckinsey Matrix) The GE Matrix method is also known as the General Electric Company method, the McKinsey Matrix, the Nine Box Matrix method, and the Industry Attractiveness Matrix. When it comes to the GE Matrix it must be discussed in comparison with the BCG Matrix, because the GE Matrix can be said to have been developed to overcome the shortcomings of the BCG Matrix. Since the basic assumptions and many of the limitations are the same as the BCG matrix, the biggest improvement lies in the fact that more metrics are used to measure the two dimensions. In response to the many problems with the Boston Matrix, General Electric (GE) developed a new portfolio analysis method, the GE Matrix, in the 1970s. I believe many people have heard the story of GE's diversification, if not "one of the best" SBUs have to get off GE's carrier, GE is to use this matrix. GE matrix compared to the BCG matrix, GE matrix also provides a similar comparison between the attractiveness of the industry and the strength of the business, but unlike the BCG matrix to measure the attractiveness of the market growth rate, the relative market share, and the market share of the company. attractiveness and relative market share to measure strength, just a single indicator; while the GE matrix uses a greater number of factors to measure these two variables, with the vertical axis using multiple indicators to respond to industry attractiveness, and the horizontal axis using multiple indicators to respond to the competitive position of the enterprise, while adding intermediate grades. Also because the GE matrix uses multiple factors, it can be easily adapted to a manager's specific intentions or the requirements of an industry's specificity by adding or subtracting certain factors or changing their focus.