Shell Directional Policy Matrix - 2276 Words

The Shell Directional Policy Matrix is another refinement upon the Boston Matrix. Along the horizontal axis are prospects for sector profitability, and along the vertical axis is a companys competitive capability. As with the GE Business Screen the location of a Strategic Business Unit (SBU) in any cell of the matrix implies different strategic decisions. However decisions often span options and in practice the zones are an irregular shape and do not tend to be accommodated by box shapes. Instead they blend into each other. Each of the zones is described as follows: * Leader - major resources are focused upon the SBU. * Try harder - could be vulnerable over a longer period of time, but fine for now. * Double or quit - gamble on†¦show more content†¦The Shell directional policy matrix can be used to analyse different business sectors in an industry as well as competitors within a business sector The Approach The general technique of this model can be applied to any business with separate identifiable sectors even though it was developed for the petro-chemical industry. Business Sectors In the petro-chemical environment it is not difficult to identify a business sector as these can be acknowledged as product sectors. These are distinct businesses with well-defined boundaries and substantial competition within the boundaries. Geographical Areas Any geographical area can be analysed but in this industry it has been found that economic blocs such as Western Europe should be measured, as there is usually a greater amount of movement within these blocs than between them. Forecasting Period For most petroleum-based companies a time scale of 10 years is considered, as this is the effective forecasting horizon. Business Sector Prospects. (Horizontal x-Axis) Profitability prospects (or attractiveness) for businesses in the petroleum sector are judged on four criteria 1. Market Growth Rate – market growth is necessary for the growth of sector profits but sectors with the highest growth rate are not necessarily thoseShow MoreRelatedKodak Case Study Essay4195 Words   |  17 PagesEastman Kodak Company 3. Analysis of Strategic Position of Kodak a. Analysis of External Environment i. General Environment ii. Industry Environment iii. Competitive Environment of Kodak iv. Introduction of Directional Policy Matrix v. 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