In last month's newsletter I discussed the benefits of benchmarking the attractiveness of your industry (Industry Attractiveness chart). These were the "Phantom Competitors" or the external forces that impact your decision to pursue a given market or industry. Today I will demonstrate an expanded use of the Industry Attractiveness chart when combined with an analysis of your Enterprise Strength.

The General Electric Company, with the aid of the Boston Consulting Group and McKinsey and Company, pioneered the nine cell strategic business screen illustrated below. Plotting the position of your product or service (offering) on this chart can help you determine the value of investing in that offering.

The vertical axis represents the Industry Attractiveness rating from last month's newsletter. The horizontal axis represents your company's strength, or ability to compete in the industry. Factors to consider when scoring your enterprise strength are detailed below.

Enterprise Strength Factors:

Ability to Sustain a Competitive Advantage
For companies seeking venture capital, this is a critical issue, but existing businesses should also be concerned about sustaining a competitive advantage. Here are some questions to help you judge your ability.
- Can you keep competitors from imitating you?
- If your price is higher than the competitors, can you easily justify it and do your customers appreciate the added value?
- Is your offering years away from becoming obsolete?
- Can you focus your promotion and development efforts to an underserved market?

Potential to Differentiate your Product or Service
Some products or services are inherently unique by technical or patent designs, others achieve uniqueness from marketing or by combining products and services as a package.
- Your first rating criteria should be the inherent uniqueness.
- You also must have excellent marketing abilities.
- For a technical product, you must possess significant internal engineering skills.
- There are other factors to consider that have less impact on your score, like tenure, reputation, research skills, internal coordination and distribution.

Barriers to Competitive Entry
One of the factors in last month's Industry Attractiveness chart was the Threat of New Entrants, or Barriers to Competitive Entry. This also factors into your overall business strength. Some factors to measure include:
- Is it expensive/difficult for customers to switch away from your offering?
- Do you have proprietary and protected technology?
- Do you have all the distribution channels locked-up?
- Can you significantly benefit from economies of scale?

Prominence of Your Company
Small or startup businesses often fail to consider the impact of larger companies currently selling or soon entering the same market. A new company can win, but it is an uphill battle.
- Do you have an established presence in the market?
- Does your company's founder have a positive reputation in the market?
- Do you have brand recognition or other intangible assets?
- Can you attain product endorsements from high-profile people?

Interpreting your Results

The Green Zone consists of the three cells in the upper left corner. If your enterprise falls in this zone you are in a favorable position with relatively attractive growth opportunities. This indicates a "green light" to invest in this offering.

High Attractiveness / Strong Enterprise
- provide maximum investment
- diversify
- consolidate your position to focus your resources
- accept moderate near-term profits to build market share

High Attractiveness / Average Enterprise
- build selectively on strength
- define the implications of challenging for market leadership
- fill weaknesses to avoid vulnerability

Medium Attractiveness / Strong Enterprise
- invest heavily in selected segments
- establish a ceiling for the market share you wish to achieve
- seek attractive new segments to apply strengths

The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A position in the yellow zone is viewed as having medium attractiveness. You must therefore exercise caution when making additional investments in this offering. The suggested strategy is to seek to maintain share rather than growing or reducing share.

Low Attractiveness / Strong Enterprise
- defend strengths
- shift resources to attractive segments
- examine ways to revitalize the industry
- time your exit by monitoring for harvest or divestment opportunities

Medium Attractiveness / Average Enterprise
- segment the market to find a more attractive position
- make contingency plans to protect your vulnerable position

High Attractiveness / Weak Enterprise
- ride with the market growth
- seek niches or specialization
- seek an opportunity to increase strength through acquisition

The Red Zone consists of the three cells in the lower right corner. A position in the red zone is not attractive. The suggested strategy is that you should begin to make plans to exit the industry.

Medium Attractiveness / Weak Enterprise
- act to preserve or boost cash flow as you exit the business
- seek an opportunistic sale
- seek a way to increase your strengths

Low Attractiveness / Average Enterprise
- make only essential commitments
- prepare to divest
- shift resources to a more attractive segment

Low Attractiveness / Weak Enterprise
- exit the market or prune the product line

So where do you go from here?

The Business Insight Solution
We've seen thousands of companies benefit from analyzing their industry and identifying new ways to improve their situation. By performing our Business Insight analysis they have decided which products or services to invest in and which ones to drop. The Business Insight analysis has also been used to determine whether to introduce a new product or service. Our Business Insight analysis will ask the right questions and apply the GE strategic model to your business. We are so confident that you will benefit from our Business Insight analysis that we guarantee your money back if you are not satisfied.

Model for Success
Business Insight will use information about your company to create a unique model of your industry based on: