The McDonald Directional Policy matrix was developed to overcome the limitations seen in the BCG matrix and to simplify the Shell directional policy and GE McKinsey matrices, which both illustrated a nine box matrix.
This matrix provides for Market attractiveness on the y-axis and Relative Business Strength on the x-axis and is made up of four quadrants (but nine quadrants can also be used).
Business Strengths are defined in terms of Critical Success Factors (CSF’s). A critical success factor represents something that a company must do right in the eyes of the customer.
Factors on both matrices are weighted and scored. Relative strength on the x-axis is included in the mathematical calculation of the co-ordinates.
The circles are placed in any one of five positions on the matrix each with a specific generic strategy or guideline for management. These are
Invest for growth
Maintain market position, manage for earnings
Selective
Manage for cash
Opportunistic development
This matrix is a good one to use if the organisation wishes to assess the competitors relative to themselves as it allows for a good analysis of the strengths and weaknesses of the competitors from the customers point of view.