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Hoffers Model

The document summarizes Hofers Product/Market Evaluation Matrix, which plots businesses along two dimensions: the industry's stage in its life cycle and the business unit's competitive position. It then explains the five possible positions on the matrix - representing different strategic implications. Position A indicates high potential and deserves expansion. Position B is strong but in a shake-out stage, needing cautious expansion. Position C is a weak "dog". Position D can generate cash to invest in A and B. Position E is a potential loser requiring divestment. The strengths are that it provides an image of a company's portfolio distribution and allows predicting and balancing the portfolio. A weakness is it does not consider all relevant market attractiveness factors.

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Pradnya Surwade
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3K views10 pages

Hoffers Model

The document summarizes Hofers Product/Market Evaluation Matrix, which plots businesses along two dimensions: the industry's stage in its life cycle and the business unit's competitive position. It then explains the five possible positions on the matrix - representing different strategic implications. Position A indicates high potential and deserves expansion. Position B is strong but in a shake-out stage, needing cautious expansion. Position C is a weak "dog". Position D can generate cash to invest in A and B. Position E is a potential loser requiring divestment. The strengths are that it provides an image of a company's portfolio distribution and allows predicting and balancing the portfolio. A weakness is it does not consider all relevant market attractiveness factors.

Uploaded by

Pradnya Surwade
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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HOFERS PRODUCT/ MARKET EVALUATION MATRIX

By Pradnya Surwade

Introduction:
Hoffer developed 15 cell matrix. Businesses are plotted in terms of industrys stage in evolutionary life cycle and business units competitive position. Industrys stage in evolutionary life cycle consists following stages Development, Growth, Shakeout, Maturity, Decline Business units competitive position consists following positionsStrong, Average and Weak Hoffer's life cycle

Hofers model
Circles represents the size of industry Segments denotes the business market share

HOFERS PRODUCT/ MARKET EVALUATION MATRIX

Five businesses are shown in fig. with their respective market shares with regard to the industry size. Business A: product/ market that has a high potential and deserves expansion strategies through large investments. Business B: strong competitive position but has a product that is entering the shake-out stage and there fore needs cautious expansion strategy.

Cont.
Business C: is probably a dog. Business D: can be used for cash generation that could be diverted to A and B. Business E is a potential loser and may be considered for divestment.

strengths of the Hofer method


The main strengths of the matrix resides in the fact that it provides an image regarding the manner of distribution of the businesses undertaken by a company during specific stages of a life cycle. The company may predict how the present portfolio will develop in the future and it may also act in real time in order to guarantee that his portfolio is in a balanced condition.

Cont.
Another advantage of the present matrix is that it manages to divert the managements attention from the corporate level and focus on potential strategies specific to the strategic business unit. According to specialty literature, the market life cycle represents one of the main factors that contribute to the adoption of strategic decisions at the level of the strategic business unit. Therefore, the corporate management may identify strategic procedures that must be integrated and implemented at the level of strategic business units.

weaknesses of the Hofer method


The disadvantage of the matrix resides in the fact that it does not focus on all the relevant factors that influence the level of attractiveness of a market. According to the McKinsey matrix, the present model illustrates as well the fact that the stage of the market life cycle is very important, but this element must not be deemed as being the only and the main influence factor of the level of market attractiveness.

Conclusion:
In this manner, the Product/ market evolution matrix portrays a companys corporate portfolio with a high level of accuracy and completeness.

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