Success-Factor-Based Strategy Models

Success-factor-oriented strategy models combine competitiveness with market attractiveness. Prominent examples of this are the PIMS concept (Profit Impact of Market Strategy) by Fred Borch and the portfolio concept according to B. Hedley.

The portfolio concept according to the Boston Consulting Group compares the market growth of a business unit or product with its relative market share (so-called “Boston matrix”). Business areas and products that are in a growth market already benefit from the growth of the market. If your company achieves a high market share with its business areas or products in such markets, it is successful (“stars”). If it does not achieve a high market share in growth markets, it is of low relevance (“question mark”). If your business areas or products are not in a growth market, but you have a high market share, you should “milk” these markets, but invest in new business areas or products to secure the future. Business areas or products that do not give you a high market share in low-growth markets should be abandoned. Focus your attention on other activities.

The approach of McKinsey’s competitive position market attractiveness matrix, the so-called “McKinsey matrix” from the 1990s, is similar. In this approach, the attractiveness of markets is contrasted with their relative competitive position. In doing so, the complexity of reality is better taken into account. In addition to market growth, market attractiveness also includes criteria such as market size, market risk, market entry costs, the competitive situation and investment attractiveness. The competitive position not only includes the relative market share, but also the degree of innovation, the R&D potential, the qualification of the employees, the product quality and the cost situation. By applying the McKinsey matrix, you therefore take into account not only current strength, but also potential, and thus act in a more future-oriented manner than by applying the simpler BCG matrix.

Nevertheless, this approach is also a static view of the situation and is therefore more recommended in relatively stable markets. In rapidly changing markets, a dynamic view of developments is recommended.


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