Management Question

Nine-Cell Industry AttractivenessCompetitive Strength Assessment Step-by-Step Guide

Step 1: Define the Scope of Analysis

Before you start, be precise.

Identify the focal firm (e.g., Disney, Coca-Cola)

Define the industry or industries the firm competes in

Break the firm into strategic segments (e.g., streaming, theme parks, beverages)

Why this matters: The nine-cell model evaluates segments, not just the firm overall.

Step 2: Select Industry Attractiveness Factors

Choose 59 factors that determine whether an industry is attractive.

Common Categories (use PESTEL + economics):

Market growth rate

Profitability (industry margins)

Competitive intensity (e.g., Porters Five Forces)

Regulatory environment

Technological change

Barriers to entry

Customer demand stability

Environmental/social pressures

Guideline:

These should reflect external conditions, not firm performance.

Step 3: Assign Weights to Industry Factors

Assign each factor a weight between 0 and 1

Ensure all weights sum to 1.0

Key Insight:

Weights reflect strategic importance, not ease of measurement.

Step 4: Score Each Industry (Segment-Level)

Score each segment on each factor (typically 110 scale)

1 = very unattractive

10 = highly attractive

Example: Streaming industry may score high on growth but lower on profitability.

Step 5: Calculate Industry Attractiveness Score

For each segment:

Industry Attractiveness = sum (Weight * Score)

Output: A single score (110) for each segment.

Step 6: Select Competitive Strength Factors

Now shift to internal performance of the firm.

Choose 59 Key Success Factors (KSFs) such as:

Market share

Brand strength

Cost position (VERY important)

Innovation capability

Distribution network

Financial resources

Operational efficiency

ESG alignment (increasingly important)

Guideline:

These should reflect what it takes to win in the industry.

Step 7: Assign Weights to Competitive Strength Factors

Again, assign weights that sum to 1.0

Tip:

This is where strategic thinking matterswhat actually drives success?

Step 8: Score the Firm (and Competitors if Needed)

Score the focal firm (and optionally competitors) on each KSF

Use the same 110 scale

Step 9: Calculate Competitive Strength Score

Competitive Strength = {Weight} * {Score})

Output: A single score (110) for each segment.

Step 10: Plot the Nine-Cell Matrix

Create a 33 grid:

High Industry Attractiveness

High Strength

Invest/Grow

Medium Strength

Selective Investment

Low Strength

Harvest/Divest

Axes:

X-axis: Industry Attractiveness (Low High)

Y-axis: Competitive Strength (Low High)

Plot each segment as a bubble:

Position = (Attractiveness, Strength)

Size = revenue or importance of segment

Step 11: Interpret the Results

Each cell implies a strategy:

Position

Strategic Recommendation

HighHigh

Invest aggressively

HighLow

Build or acquire capabilities

LowHigh

Harvest or reposition

LowLow

Divest

Important:

The model is a decision-support tool, not a decision itself.

Step 12: Provide Strategic Recommendations

For each segment:

Explain why it sits where it does

Recommend:

Invest

Maintain

Harvest

Divest

Tie your recommendation to:

Weighted scores

Strategic logic

External + internal alignment

Pro Tips (What Differentiates Excellent Work)

Justify weights clearly (this is where rigor shows)

Highlight extreme scores (very high / very low)

Be consistent in scoring across segments

Use data where possible, not just opinion

Connect results to strategy execution

Deliverables (What You Should Submit)

Excel File

Weighted attractiveness model

Weighted strength model

Calculations included

Nine-Cell Matrix Visualization

Bubble chart

Clearly labeled axes

Written Analysis

Factor justification

Results interpretation

Strategic recommendations

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