Functional area profile and resource development matrix:

Hofer-Schendel Matrix
Brief History
The principal purpose of analysis for strategic planning is to identify the major opportunities andthreats a business
unit faces in the future and to identify the skills around which it can develop astrategic intelligence plan to exploit
the opportunities and negotiate around the threats. Hofer andSchendel felt that the major weakness with the General
Electric business screen was that it didnteffectively depict the positions of new businesses that are just starting to
grow in new industries.They suggested in 1975 that changes in basic competitive positions are easier to accomplish
atcertain stages in the evolution of an industry than others. The Boston Consulting Group alsoalluded to this with
their assumption that market growth was related to life cycle and was used asthe one axis on their matrix. The
competitive position / market evolution matrix was developedin the late 1970s by Charles W. Hofer and Dan
Schendel
.
This method takes into account the key factors affecting organizational functioning. Informationregarding the key
factors is generally collected after a series of meetings discussions andsurveys. Answers in each functional area are
being closely examined with a view to rate the keyfactors. The relative impact of each factor (favorable or
unfavorable) on a particular result is alsoexamined using mathematical models.

Hofer and Schendel have developed this technique to make a comparative analysis of a firmsown resources
deployment position and focus of efforts with those of competitors. First thetechnique requires the preparation of
a matrix of functional areas with common features. For e.g.focus of financial outlay, physical resources,
organizational systems and technologicalcapability. Second a matrix is prepared showing deployment of resources
and focus of effortover a period of time. This profile shows how key functional areas stand in relation to each
other and as compared to the competitors with regard to deployment of resources and the focus of efforts in each
functional area. The matrix can be shown thus:The matrix gives data pertaining to resources deployment in various
functional areas over a period of time. It also shows how the focus of efforts has changed within a time
frame. Strategiescan draw their own conclusions based on past experience, current trends and future
expectations.They can find out whether the firm is able to strengthen the areas of advantage or dissipate itsenergies
over a period of time. While drawing comparisons it is advisable to compare firms,which are in the same phrase of
product life cycle.