The vertical axis represents the industry attractiveness. Factors such
as the bargaining power of the buyers and the suppliers, the internal
rivalry and the threat of new entrants and substitutes are weighed and
considered. The horizontal axis represents the firm's strength or ability
to compete in the industry. The competitive strength includes an analysis
of the value and quality of the offering, its market share, staying power,
The circle on the matrix represents your enterprise. Both axes are divided into
three segments, yielding nine cells. The nine cells are grouped into three zones:
The Green Zone consists of the three cells in the upper left
corner. If your enterprise falls in this zone you are in a favorable
position with relatively attractive growth opportunities. This indicates
a "green light" to invest in
The Yellow Zone consists of the three diagonal cells from the lower
left to the upper right. A position in the yellow zone is viewed as having
medium attractiveness. Management must therefore exercise caution when making
additional investments in this product/service. The suggested strategy is to
seek to maintain share rather than growing or reducing share.
The Red Zone consists of the three cells in the lower right corner.
A position in the red zone is not attractive. The suggested strategy is that
management should begin to make plans to exit the industry.