In mature industries, the best stratregy is to differentiate your products.
Part of thinking about strategy involves thinking about the state of your industry; understanding how your organization fits into it; and, from this, figuring out your best way forward.
While there are many tools that help you do this, you can get particularly useful insights with the Arthur D Little (ADL) Matrix. Developed in the late 1970s by the highly respected Arthur D Little consulting company, it helps you think about strategy based on:
If your business unit has a strong market presence and a newly emerging product line, you’ll likely want to aggressively push its position and capture as much market share as you can. But this strategy does not apply so well to business lines with dominant competitive positions in declining markets. In this instance, you’re better off putting your energy into new, growing markets and simply maintaining your current market position in the declining industry.
The ADL Matrix addresses these unique needs by recommending general strategies for different combinations of competitive position and industry maturity.
The ADL Matrix is often associated with strategic planning at business unit level. However it works equally well when applied to product lines, or at the level of an individual product.
There are four categories of industry maturity (also referred to as the industry life cycle):
The five categories for competitive position are as follows:
The resulting ADL Matrix looks like this, with the various strategies prescribed for each of the 20 combinations:
This ensures that you don’t lose your plan.
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