Defining the line of business in the ADL matrix
In the ADL Matrix approach, the strategist must identify discrete businesses by finding commonalities among products and business lines using the following criteria as guidelines:
* Common rivals
* Divestment or liquidation
Assessing the Industry Life Cycle stage in the ADL Matrix
The assessment of the Industry Life Cycle stage of each company is made on the basis of:
* Business market share,
* Investment, and
* Profitability and cash flow.
Assessing the competitive position in the ADL Matrix
The competitive position of a firm is based on an assessment of the following criteria:
* Dominant. Rare, often the result from a almost-monopoly or protected leadership.
* Strong. A strong company can follow a strategy without too much consideration of moves by rival companies.
* Favorable. Industry is fragmented. No clear leader among stronger rivals.
* Tenable. The company has a niche, either geographical or defined by the product.
* Weak. Business is too small to be profitable or survive over the long term. Critical weaknesses.
Some known limitations of the ADL Matrix are:
* There is no standard life cycle length.
* Determining the current industry life cycle phase is difficult.
* Competitors may influence the length of the life cycle.