Hofers Cell Matrix
-
Upload
bliss-heaven -
Category
Documents
-
view
217 -
download
0
Transcript of Hofers Cell Matrix
-
8/3/2019 Hofers Cell Matrix
1/19
Prepared ByMohsin Mohammed Ali
MBA/7017/10
-
8/3/2019 Hofers Cell Matrix
2/19
The business portfoliois the collection ofbusinesses and products that make up thecompany. The best business portfolio isone that fits the company's strengths and
helps exploit the most attractiveopportunities.
-
8/3/2019 Hofers Cell Matrix
3/19
Business portfolio analysis as an
organizational strategy formulation techniqueis based on the philosophy that organizationsshould develop strategy much as they handleinvestment portfolios. Just as sound financialinvestments should be supported and
unsound ones discarded, soundorganizational activities should beemphasized and unsound onesdeemphasized.
-
8/3/2019 Hofers Cell Matrix
4/19
Charles W. Hofer and Dan Schendel, theydescribed seven stages of the life cycle,each with certain characteristics by whichthe position of the market can be identified.
-
8/3/2019 Hofers Cell Matrix
5/19
A significant contribution in the field of strategic businessportfolio analysis belongs to Charles W. Hofer.
The specialty literature mentions in under the name of
HoferMatrix or "Product/Market Evolution Matrix.
He proposed a new assessment matrix of businessportfolio of a company, organized into 15 quadrants. Thepicture below displays the matrix where strategic
business units are graphically represented according totwo basic indicators: competitive position on the marketand the stage corresponding to the product/marketevolution.
-
8/3/2019 Hofers Cell Matrix
6/19
-
8/3/2019 Hofers Cell Matrix
7/19
He took series of research studies
showing thatthe stage of the life cycle of
the product representsa factor that
influences to greater or smaller extentthe
success of a strategy
-
8/3/2019 Hofers Cell Matrix
8/19
Charles W. Hofer described seven stages of the life cycle,each with certain characteristics by which the position ofthe market can be identified.
-
8/3/2019 Hofers Cell Matrix
9/19
-
8/3/2019 Hofers Cell Matrix
10/19
Hofer matrix implies the division of the company intostrategic business units.
Assessing the competitive position of businessunits.
The position occupied by the strategic business unitis graphically represented by using the two axes of
the matrix. Thus, on the vertical axis the competitiveposition of strategic business units is set and on thevertical axis the stage of the life cycle specific to themarket where these operate is set.
-
8/3/2019 Hofers Cell Matrix
11/19
Further on, strategic business units are outlined,from a graphical point of view, under the form ofcircles. The size of each circle is proportional to the size of the
market where the strategic business unit carries out itsactivity (measured on the basis of total income resulted onthe mentioned markets), while the hatched areas, inside thecircle, represent the market shares held by the strategicbusiness units.
-
8/3/2019 Hofers Cell Matrix
12/19
A
B C
D
E
F
G
HOFERS MATRIX EXAMPLE
-
8/3/2019 Hofers Cell Matrix
13/19
Business unit A
It would to be a developing winner. Its relatively large share of
the market combined with its being at the development stage of
product- market evolution and its potential for being in a strong
competitive position make it a good candidate for receiving
more corporate resources.
Business unit B
It is somewhat similar to A. However, it has a relatively smallshare of the market given its strong competitive position. A
strategy would have to be developed to overcome this low
market share in order to justify more investments.
-
8/3/2019 Hofers Cell Matrix
14/19
Business unit C
It might be classified as a potential loser. A strategy must be
developed to overcome the low market share and weak
competitive position in order to justify future investments.
Business unit D
It is in a shakeout period, has a relatively large share of the
market, and is in a relatively strong position. Investment should
be made to maintain that position.
-
8/3/2019 Hofers Cell Matrix
15/19
Business units E and F
They have relatively large market share and has strong
competitive position. It should be used for cash generation.
Business unit G
It has low market share and weak competitive position. It
should be managed to generate cash in the short run, if
possible; however, the long-run strategy will more the likely be
divestment or liquidation.
-
8/3/2019 Hofers Cell Matrix
16/19
o Set objective and allocate resourceso Use of externally oriented datao Cash flow availability
o Graphical communication of business mixo Identify developing winnerso Illustrates distribution of business in an industryo Encourages promotion of competitive analysiso Selective earmarking of financial resourceso Reduce risks, increases concentration and
involvement in competitive world.
-
8/3/2019 Hofers Cell Matrix
17/19
o Difficulty in defining product/market segment.o Suggests impractical standard strategies.
o Naively following portfolio prescriptions mayreduce profit.
o No clear idea what makes an industry attractive.
-
8/3/2019 Hofers Cell Matrix
18/19
steconomice.uoradea.ro/anale/volume/2008/v4.../166.pdf
-
8/3/2019 Hofers Cell Matrix
19/19
THANK YOU