An industry attractiveness-business strength matrix, also known as a "nine-box matrix," is a tool used in strategic management to evaluate a company's market position. It helps organizations understand the relative attractiveness of an industry and the strength of their own business within that industry.
To create an industry attractiveness-business strength matrix, businesses first need to assess the attractiveness of their industry. This can be done by considering factors such as the size of the market, growth potential, profitability, competitive intensity, regulatory environment, and technological change. Industries that score highly on these factors are considered more attractive.
Next, businesses need to assess their own strength within the industry. This can be done by considering factors such as market share, brand strength, financial performance, and organizational capabilities. Businesses that score highly on these factors are considered to have a strong position within the industry.
Once the industry attractiveness and business strength have been assessed, the two can be plotted on a matrix with industry attractiveness on the x-axis and business strength on the y-axis. This creates a grid with nine cells, each representing a different market position.
The top-left cell represents businesses with a strong position in a highly attractive industry. These are considered the "stars" of the matrix and are likely to generate high levels of revenue and growth. The top-right cell represents businesses with a strong position in a less attractive industry. These are considered "cash cows" and are likely to generate steady, but slower, growth.
The bottom-left cell represents businesses with a weak position in a highly attractive industry. These are considered "question marks" and may require significant investment to improve their position. The bottom-right cell represents businesses with a weak position in a less attractive industry. These are considered "dogs" and are unlikely to generate significant growth or profits.
By evaluating a company's position within the industry attractiveness-business strength matrix, businesses can make informed decisions about where to allocate resources and how to prioritize their efforts. For example, a company with a strong position in a highly attractive industry may choose to focus on expanding its market share, while a company with a weak position in a less attractive industry may choose to exit the market or redirect its resources to more promising opportunities.
In conclusion, the industry attractiveness-business strength matrix is a valuable tool for strategic management, helping businesses understand their market position and make informed decisions about where to allocate resources and focus their efforts.
