HOFERS PRODUCT-MARKET EVALUATION MATRIX

Hofer and Schendel propose a 15 cell matrix that considers the stages of development of the product or market ant the

competitive position of different businesses in a companys

corporate portfolio.

In the GE nine cell matrix, circles are plotted to represent the size of the industry while the segments denote the business market share.

 Five businesses have been shown with their respective

market shares with regard to the industry size.

Business A represents a product/market that has a high potential and deserves expansion strategies through large investments. Business B has a strong competitive position but has a

product that is entering the shake-out stage and,

therefore, needs a cautious expansion strategies.

 Business C is probably a Dog, while D represents a business which 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

disinvestment.
In this manner the product/market evolution matrix portrays a companys corporate portfolio with a high level of accuracy and completeness.

Directional Policy Matrix

The Directional Policy Matrix(DPM) developed by Shell chemicals, UK, uses the two parameters of business sector

prospects and companies competitive abilities.

A number of factors such as market growth, market quality, market supply, and so on, are used to rate the business sector prospects as unattractive, average or attractive.

 A companys competitive abilities are similarly judged as weak,

average or strong on the basis of several factors. The 3x3 matrix when plotted, as shown in the figure, forms the

basis for recommending baseline strategies.

One advantage of DPM is that one of its extension, risk matrix, provides an alternative way to analyze environmental risk.

 In a risk matrix, environmental risk is taken as third dimension and is divide into four categories from low risk to very high risk. Each risk position is determined on the basis of environmental threats and probability of their occurrence.