Shell Directional Policy Matrix
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 company's 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 potential major SBU's for the future. * Growth - grow the market by focusing just enough resources here. * Custodial - just like a cash cow, milk it and do not commit any more resources. * Cash Generator - Even more like a cash cow, milk here for expansion elsewhere. * Phased withdrawal - move cash to SBU's with greater potential. * Divest - liquidate or move these assets on a fast as you can.
The Shell Directional Policy Matrix
Brief History
While General Electric and McKinsey were developing the business screen, Shell – one of the world’s largest petrochemical companies, developed a matrix, which would come to be known as the Shell directional policy matrix.
The Shell DPM was a technique originated for systematically analysing the qualitative factors present in the organisation, which had an impact on corporate planning. It was also developed to compare business sectors and company positions in a way that was independent of financial forecasts.
Brief History
While General Electric and McKinsey were developing the business screen, Shell – one of the world’s largest petrochemical companies, developed a matrix, which would come to be known as the Shell directional policy matrix.
The Shell DPM was a technique
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 potential major SBU's for the future. * Growth - grow the market by focusing just enough resources here. * Custodial - just like a cash cow, milk it and do not commit any more resources. * Cash Generator - Even more like a cash cow, milk here for expansion elsewhere. * Phased withdrawal - move cash to SBU's with greater potential. * Divest - liquidate or move these assets on a fast as you can.
The Shell Directional Policy Matrix
Brief History
While General Electric and McKinsey were developing the business screen, Shell – one of the world’s largest petrochemical companies, developed a matrix, which would come to be known as the Shell directional policy matrix.
The Shell DPM was a technique originated for systematically analysing the qualitative factors present in the organisation, which had an impact on corporate planning. It was also developed to compare business sectors and company positions in a way that was independent of financial forecasts.
Brief History
While General Electric and McKinsey were developing the business screen, Shell – one of the world’s largest petrochemical companies, developed a matrix, which would come to be known as the Shell directional policy matrix.
The Shell DPM was a technique