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 and
threats a business unit faces in the future and to identify the skills around which it can develop a
strategic intelligence plan to exploit the opportunities and negotiate around the threats. Hofer and
Schendel felt that the major weakness with the General Electric business screen was that it didn’t
effectively 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 at
certain stages in the evolution of an industry than others. The Boston Consulting Group also
alluded to this with their assumption that market growth was related to life cycle and was used as
the one axis on their matrix. The competitive position / market evolution matrix was developed
in the late 1970s by Charles W. Hofer and Dan Schendel.

This method takes into account the key factors affecting organizational functioning. Information
regarding the key factors is generally collected after a series of meetings discussions and
surveys. Answers in each functional area are being closely examined with a view to rate the key
factors. The relative impact of each factor (favorable or unfavorable) on a particular result is also
examined using mathematical models.
Hofer and Schendel have developed this technique to make a comparative analysis of a firm’s
own resources deployment position and focus of efforts with those of competitors. First the
technique requires the preparation of a matrix of functional areas with common features. For e.g.
focus of financial outlay, physical resources, organizational systems and technological
capability. Second a matrix is prepared showing deployment of resources and focus of effort
over 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. Strategies
can 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 its
energies over a period of time. While drawing comparisons it is advisable to compare firms,
which are in the same phrase of product life cycle.
SOURCE :
http://www.cipher-sys.com/HofHelp/Holfer%20Shendel/hofer-schendelhelpfile.htm
http://www.cipher-sys.com/hoferschendel_matrix.html
http://www.citeman.com/13482-key-factor-ratings/