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An ADL Matrix is a strategy that can be used to help an organization understand its competitive position in the market. To effectively use this matrix, senior leaders need to consider: 1) the amount of influence the organization has in the market, and 2) the age of the industry. The various combinations of these two factors produce a matrix that will indicate where the company sits. Therefore, the ADL Matrix can be used as an initial step for executive decisions concerning how to hold or improve the company’s position.
Description of ADL Matrix
ADL Matrix is comprised of the industry life-cycle and the strength of the organization’s strategic position. Industry lifecycle is broken up into four stages and strategic position is comprised of five categories.
- Industrial Maturity
- Embryonic Stage: This describes an industry that is relatively new, and as such, has very few organizations that compete against each other. However, the industry is still in existence because it is of peak interest in society and growing rapidly. As such, organizations in this industry are able to sell their products and services at a high cost.
- Growth Stage: These industries are not as new, but are still cutting edge. Because they are slightly more established than an embryonic industry, the market for these industries is larger, thus creating more opportunity for sales. However, to keep up with the demand, growth stage industries might be comprised of a few more companies, increasing competition.
- Maturity Stage: Well-established industries fall into this category. These industries are characterized as having stable or growing shares as well as an established and reliable customer base. Because of the influx of cash, organizations in a mature industry can lower their prices. However, they have to make sure that the cost and quality of their goods and services are comparable with those of other companies. Competition is typically heavier in these industries because there are more organizations to keep up with customer demand.
- Aging Stage: This stage describes industries that are dying out. More specifically, demand for the products and services of the organizations within this industry are outdated or unnecessary, and customers are abandoning these products in favor of more cutting-edge, innovative goods. Competition is minimized as organizations will merge or get out of the industry.
- Competitive Position
- Dominant: Organizations that dominate the market are typically those that exist where there is very little or absolutely no competition. Typically, these are companies that offer brand-new products or services or those that individuals have not heard much about.
- Strong: This position describes organizations that have a steady stream of customers, but share their customer base with other companies in the industry. However, these organizations are able to maintain strong bottom-line performance, regardless of that of their competition.
- Favorable: These organizations have a number of competitors, but have certain unique characteristics that allow them to have control over certain segments of the market but not others.
- Tenable: Companies in this position do not enjoy the majority of the market share. Organizations have a number of competitors and have to work to differentiate themselves. In fact, any area of the market that they do appeal to is primarily based on a very idiosyncratic feature of their products and services that other companies in the industry do not have.
- Weak: These organizations see consistent decreases in the proportion of the market that they occupy in the industry. As such, these companies continually lose customers, and are therefore not very profitable.
Praxie's Online ADL Matrix Tools & Templates
The new online ADL Matrix template from Praxie provides an alternative to traditional competitive analysis approaches. A strategy team that does not understand what their competitors are doing within a particular market or sector often lacks the ability to act quickly when outside challenges threaten company growth. The ADL Matrix was developed in the late 1970s to help consulting companies plot the competitive position of one business against another. If your strategy team is looking to compare two companies on a competitive basis, the ADL Matrix is a tool which can be beneficial to you. Not only does the ADL Matrix help a strategy team determine how it stacks up against the competition, it helps identify opportunities for growth and differentiation of one’s own company in the competitive landscape.
Get started with our ADL Matrix template.
How to use it:
- List your organization’s offerings or business strategies in the relevant cells based on the current maturity level of the markets or industry within which you operate and your competitive position within the market or industry.
- Use the model to define your current state and/or your future state to inform your strategy.
- Create an action plan focused on building your ADL Matrix, gathering any relevant data, and analyzing results with your team or other stakeholders.
- List any actions based on the strategic implications the matrix holds for your strategy and implementation plans.
Unlike most traditional ADL Matrix techniques, Praxie’s online ADL Matrix tools allow any team or organization to instantly begin working with our web templates and input forms. Our digital platform goes far beyond other software tools by including progress dashboards, data integration from existing documents or other SaaS software, elegant intuitive designs, and full access on any desktop or mobile device.