Arthur D. Little Model

The Arthur D. Little Model

This model is based on competitive position and stage of industry maturity. The competitive position is recognized in five main categories: (a) Dominant, (b) Strong, (c) Favourable, (d) Tenable, and (e) Weak. The second dimension of the model – the stage of industry maturity – ranges from embryonic to aging.

The combination of competitive position and industry maturity provides the basis for determining the SBU’s strategic conditions and subsequently, the identification and evaluation of the strategic options open to the company.

The ADL model is as follows:

DominantGrow fast Build barriers Act offensivelyGrow fast Aim for cost leadership Defend position Act offensivelyDefend position Increase the importance of cost Act offensively.Defend position Focus
StrongGrow fast DifferentiateLower cost Differentiate Attack small firms.Lower costs Differentiate
FavorableGrow fast DifferentiateFocus Differentiate
Focus Differentiate Hit smaller firms.Harvest
TenableGrow with the industry
Hold on or withdraw Niche aim for growthNiche Hold on or withdraw.Withdraw
WeakSearch for a niche
Attempt to catch other markets
Niche to withdrawWithdrawWithdraw
Stage of Industry Maturity
Source: Adapted from ADL

Portfolio model has its own limitations but it augments managerial thinking and allows marketing managers to think strategically. It allows them to analyze the economies of their operation and the strategic strengths of their business units. They understand that every business unit operates in a different competitive environment and market growth rates vary across product markets.

It helps them to analyze their business plans and refine them to be more sensitive to evolving market conditions. Portfolio models help in identifying weaker business units and unattractive markets and help marketing managers to take decisions relevant to each product-market situation in filling up business information gaps and strengthening their investments in tomorrow’s breadwinners for the company.

The application of portfolio models assumes that companies are ready to invest in growth-oriented businesses, which may lead them to neglect their current business. Models also fail to show the synergy between different businesses.

Such static evaluation may lead to averaging all the SBUs around the center of the chart over a period of time. However, portfolio models are a good application of strategic tools to decide on the allocation of scarce resources of the firm on the basis of market growth rate and relevant competitive position of the firm.

The mobile phone production industry can be said to be at the favorable embryonic stage in India. The reason for this can be seen in the fact that we see an entry of a new mobile set in the Indian market virtually every week.

Though the products might have just a slight variation so as to differentiate a new product from the existing ones, gives the tech-savvy customer a good and convincing enough reason to buy new sets quite frequently.

Similarly, the mobile service-providing industry can be said to be at a favorable growth stage in India since it is quite focused on what to deliver, how to deliver and to whom to deliver; has differentiated services and defends itself very well at the time of environmental threats.

  • Tapan K Panda, Marketing Management, Excel Books.

  • Philip Kotler, Marketing Management, Pearson, 2007.

  • Ramphal and Gupta, Case and Simulations in Marketing, Galgotia.

  • Jayachandran, Marketing Management, Tata McGraw Hill, 2003.


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