By: Ali Shirzadeh Chaleshtari
The entire developments of any organization can be summarized in two major aspects, product and market, which means any development directly or indirectly targets either of these. Market development entails obtaining larger shares in the current markets, targeting new types of customers in the current markets, or entering new geographical markets, while product development involves in adding new products of the same or different natures as of the current products in the basket. These varieties of courses of action bring complexity to devise development strategy of a business such that optimal results are obtained in tradeoff with resources consumed.
We introduce a simple graphical tool in here that helps to obtain an overview of current shape of business, get insights of the possible current issues, and the best course of further developments. The tool specifies the business situation in terms of products and their market divided by the types of industries that the business is active in. On this basis, two products of the business are from the same industry only if they are the same both in nature and conceive technology, as such two products have the same nature when they respond to similar wants of the target customers.
With this viewpoint, we can imagine a two-dimensional chart for every industry where the company is active in, and have the products of that industry listed on horizontal axis and color their market volume in vertical bars. Now we put the charts for various industries on each other to obtain a cube over width of which the industry varies. In this way, the colored section of the cube characterizes the market volume of different products in various industries of the business. We acquire a graphic overview of the business, and we can see how the business has been developed until now and what probably would be the best strategy of further development. Followings are the remarks.
- If the colored volume of the cube is relatively narrow on horizontal axis, the business has probably not benefited enough from the its active industries before entering into new industries. This is also the case if there are many unbalances in the horizontal direction of the colored part. In this case, the most beneficial development scenario should probably be focusing on product developments over the industries with fewer products, unless those industries are expiring, risky, competitively overwhelmed, or have been only chosen just to supplement products of the other industries in the company’s basket.
- If the colored part is unbalanced in vertical axis in one industry, either the marketing endeavors have not been sufficient for the less pervasive products, or the quality of products’ designs have not been good enough, and if none of these are the case, those products are serious alternatives to be omitted from the basket. When the colored part is unbalanced in height among various industries, similar problem can exist again, or the root cause may be nature difference of the industries from the viewpoint of demand or competitions over their supply. So less prevalent industries are again the alternatives of exclusion from the basket.
- If the colored section is narrow in width, but the situation is good on the other two dimensions, the company has strong tradename most likely, and should be ready to gradually enter new industries, best of which among would probably be those similar to the current active industries for which the technologies are also in hand. If the situation is not good in the dimensions of product and market, the best alternative should be focusing on the current active industries, since entering new ones is usually much more costly and involves longer way to yield.
Ali Shirzadeh Chaleshtari
University of Massachusetts Boston