Strama Report

THE BOSTON CONSULTING
GROUP MATRIX &

INTERNAL-EXTERNAL
MATRIX
(BCG MATIX) & (IE MATIX)
GRAND STRATEGY MATRIX
Jonh Ray B. Medina

BCG & IE MATRIX
The Buston Consulting Group (BCG)

Matrix & Internal-External (IE) Matrix are
designed specifically to enchance a multi-
divisional firms to formulate strategies.
BCG Brief History
Companies that are large enough to be

organized into strategic business units face the
challenge of allocating resources among those
units. In the early 1970's the Boston Consulting
Group developed a model for managing a
portfolio of different business units (or major
product lines).
Boston Consulting Group Matrix
Enhances multidivisional firms efforts to formulate

strategies
Firms divisions may compete in different
industries/markets requiring separate strategy.
Graphically portrays differences among divisions
Manage business portfolio through relative market share
position and industry growth rate.
Buston Consulting Group Matrix
The BCG growth-share matrix displays

the various business units on a graph of
the market growth rate vs. market share
relative to competitors:
Buston Consulting Group Matrix
Resources are allocated to business units according
to where they are situated on the grid as follows:
1. Star
2. Question Mark
3. Cash Cow
4. Dog
BCG Matrix Graph
1. Question Marks- 3. Cash Cows
Low relative market share High relative market share position,
position yet compete in high- but compete in low-growth industry
8 growth industry. Generate cash in excess of their
Cash needs are high with low needs
profit generation. Milked for other purposes
Decision to strengthen Maintain strong position as long as
(intensive strategies) or divest possible
Product development, concentric
2. Stars diversification
High relative market share and If becomes weakretrenchment or
high industry growth rate. divestiture.
Best long-run opportunities for
4. Dogs
growth and profitability
Low relative market share position
Substantial investment to
and compete in slow or no market
maintain or strengthen growth
dominant position
Weak internal and external position
Integration strategies, intensive
Decision to liquidate, divest,
strategies, joint ventures
retrenchment
Internal-External (IE) Matrix
The Internal-External (IE) matrix is another

strategic management tool used to analyze working
conditions and strategic position of a business.
The Internal External Matrix or short IE matrix is
based on an analysis of internal and external
business factors which are combined into one
suggestive model.
IE matrix is used to analyze working conditions and
strategic position of a business. The IE matrix is a
continuation of the EFE matrix & IFE matrix models.
It works on a similar manner like the BCG matrix, the IE
matrix positions an organization into a nine cell matrix.
The IE matrix is based on the following two criteria:
I. EFE matrix Score - this score is plotted on the y-axis
II. IFE matrix Score- plotted on the x-axis
On the x axis of the IE Matrix, an IFE total weighted score of 1.0
to 1.99 represents a weak internal position. A score of 2.0 to 2.99 is
considered average. A score of 3.0 to 4.0 is strong.
On the y axis, an EFE total weighted score of 1.0 to 1.99 is
considered low. A score of 2.0 to 2.99 is medium. A score of 3.0 to
4.0 is high.
The IE Matrix can be
divided into three major
regions that have different
strategy implications.
IE matrix is used to analyze working conditions and
strategic position of a business. The IE matrix is a
continuation of the EFE matrix & IFE matrix models.
It works on a similar manner like the BCG matrix, the IE
matrix positions an organization into a nine cell matrix.
The IE matrix is based on the following two criteria:
I. EFE matrix Score - this score is plotted on the y-axis
II. IFE matrix Score- plotted on the x-axis
On the x axis of the IE Matrix, an IFE total weighted score of 1.0
to 1.99 represents a weak internal position. A score of 2.0 to 2.99 is
considered average. A score of 3.0 to 4.0 is strong.
On the y axis, an EFE total weighted score of 1.0 to 1.99 is
considered low. A score of 2.0 to 2.99 is medium. A score of 3.0 to
4.0 is high.
The IE matrix can be divided into three major
regions that have different strategy implications.
Grow & Build Hold & Maintain
Market Penetration Market Penetration
Market Development Product Development
Product Development Harvest or Divest
Backward Integration Retrenchment
Forward Integration Divestiture
Horizontal Integration Liquidation
IE matrix requires more information about the business than the BCG matrix
IE matrix example
Lets we calculated IFE
matrix for a company &
got total weighted score
of 2.79 which shows an
above-average internal
strength.
We also calculated the
EFE matrix for the same
company & got total
weighted score calculated
of 2.46 which suggests a
slightly less than average
ability to respond to
external factors.
Grand Strategy Matrix
The model defines the situation of business
through the market growth and their competitive
position in the market.
All organizations (or divisions) can be positioned
in one of four quadrants
Based on two dimensions

Competitive position
Market growth
Grand Strategy Matrix
RAPID MARKET GROWTH
Quadrant II Quadrant I
Market development Market development
Market penetration Market penetration
Product development Product development
Horizontal integration Forward integration
Divestiture Backward integration
Liquidation Horizontal integration
WEAK Related diversification STRONG
COMPETITIVE COMPETITIVE
OSITION Quadrant III Quadrant IV POSITION
Retrenchment Related diversification
Related diversification Horizontal diversification
Unrelated diversification Conglomerate
diversification diversification
Liquidation Joint ventures
SLOW MARKET GROWTH

Four Quadrants of Grand Strategy Matrix
Quadrant I Quadrant III
Excellent strategic position Compete in slow-growth
Concentration on current industries
markets and products Weak competitive position
Take risks aggressively Cost and asset reduction
when necessary indicated (retrenchment)
Quadrant II
Evaluate present approach Quadrant IV
seriously Strong competitive position
How to change to improve Slow-growth industry
competitiveness Diversification indicated to
Rapid market growth more promising growth
requires intensive strategy areas
GRAND STRATEGY MATRIX OF BBC
The BBC lies in Quadrant I, which indicates it

is part of a rapid market growth industry while
maintaining a strong competitive position.
Compared to its rivals in the UK, the BBC has
more financial strength giving it an advantage
over competitors. Globally, the company can
make use of its resources/subsidiaries allowing
an increase in customer base.
END

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THE BOSTON CONSULTING

GROUP MATRIX &

Jonh Ray B. Medina

The Buston Consulting Group (BCG)

Companies that are large enough to be

Enhances multidivisional firms efforts to formulate

The BCG growth-share matrix displays

The Internal-External (IE) matrix is another

Based on two dimensions

SLOW MARKET GROWTH

The BBC lies in Quadrant I, which indicates it

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