Strategic Choices for Businesses
Once you’ve ascertained the life cycle stage of the industry and your business’s competitive position, the appropriate business strategy can be found at the intersection of these two variables, on the ADL matrix.
The strategic options for each intersection are:
Strategy-1 (Dominant, Embryonic): At this stage your business is either the only or the chief player in the market, so your business should aim to increase and strengthen its consumer base. The more control you have over your customer base, the easier it will be for you to prevent the competitors from entering into the game.
Strategy-2 (Dominant, Growth): The business should focus its strategies towards maintaining its market share as well as its market position.
Strategy-3 (Dominant, Mature): The ideal course at this juncture would be to hold on to your market positions and grow your market share.
Strategy-4 (Dominant, Ageing): Here a business should focus on holding onto its market position, and as for the market share it’s bound to fall and nothing much can be done about it.
Strategy-5 (Strong, Embryonic): This combination requires an aggressive effort to improve competitive position as well as to increase the market share.
Strategy-6 (Strong, Growth): Here, the strategy remains quite the same as above, except that the focus should be slightly more on improving the competitive position.
Strategy-7 (Strong, Mature): Since the industry is maturing at this point, you need to safeguard your market position. At the same time try to grow your market share, keeping it proportionate to the growing market share of the industry.
Strategy-8 (Strong, Ageing): Here you’re left with two options either to tightly hold on to your market position, or to cut down on the expenses so as to harvest more profits.
Strategy-9 (Favorable, Embryonic): The business should find ways to improve its market position and it should keep pushing to increase its market share.
Strategy-10 (Favorable, Growth): In this situation the business should make investments to boost its market position, and thus increase its market share.
Strategy-11 (Favorable, Mature): At this point, the strategy should aim at identifying a niche market, to protect the business’s market position and to grow its market share.
Strategy-12 (Favorable, Ageing): With the exit point approaching, the ideal strategy here is to cut out expenses, start harvesting profits and develop a phased withdrawal plan.
Strategy-13 (Tenable, Embryonic): The one and only thing that should remain in focus is the market position, and all efforts should be directed towards improving the market position.
Strategy 14 (Tenable, Growth): The business with such odds cannot survive until it finds a niche for itself or can add in a strong differentiating factor to entice the consumers and increase its market share.
Strategy-15 (Tenable, Mature): As with the above strategy, here too you need to find a niche and guard it closely. And if that’s not possible, quitting the industry is advisable.
Strategy-16 (Tenable, Ageing): This situation is not likely to bring in any substantial profits, thus the business should think along the lines of planning a phased withdrawal or abandoning the industry.
Strategy-17 (Weak, Embryonic): This is a bad situation, and the business needs to measure the rewards of staying in the industry against the costs. If it’s not a profitable proposition, it’s best to get out of the market.
Strategy 18 (Weak, Growth): Either you can work on ways to improve both the market share and the market position, or you can call it quits.
Strategy-19 (Weak, Mature): Again, either you work on ways to turnaround your competitive position and market share, or simply plan a phased out withdrawal.
Strategy-20 (Weak, Ageing): The only choice a business has in this extreme situation is to abandon.
While an ADL matrix does prove to be of exceptional assistance in developing a business strategy, it still has its share of shortcomings. The absence of a standard life cycle length, problems in correctly identifying the current stage of the industry and a bunch of factors affecting the industry’s life cycle are some of the hurdles that limit the extensive use of this business strategy tool.