Use of the AD Little matrix is claimed to aid in the reduction and balancing of overall risk for the portfolio of strategic business units.
This matrix is used when a firm wants to know what the investment potential of the businesses is likely to be – the industry maturity gives a good indication of this.
This model may be usefully applied to assigning strategies to each SBU using the generic strategies.
This model is particularly useful for high tech industries in which life cycles are relatively short and therefore if situational strategies are not employed, a strategic business unit may fall short of its goals
It can also be used to establish the desired corporate portfolio profile, to formulate specific business strategies for each SBU and close any gap existing between corporate and SBU level.
This model can also be used for competitor analysis at both the corporate and SBU level.