Researchers, consultants, and managers have devoted extensive efforts to develop ways of classifying generic business strategies. The logic of generic strategy is that it can be followed by any organization encountering the same situational factors. Generic strategies offer several advantages in guiding strategy selection;

1. They combine separate, situation-specific strategies, capturing their major commonalities so that they facilitate the understanding of broad strategic patterns.

2. They guide corporate-level decisions concerning business portfolio management and resource allocation.

3. They assist business-level strategy development by suggesting priorities and indicating broad guidelines for action. Importantly, the generic strategies are not complete strategies.

Their value is in indicating the type of strategy (e.g., downsizing) that is appropriate for a particular situation. The generic strategy suggests what should be accomplished (e.g., growth). Management must decide how to achieve the strategy. Strategic classification models and generic strategy guidelines are useful in setting business-unit priorities and suggesting general strategy guidelines. Combining this information with more specific customer and competitor analysis, strategic plans are developed for each business unit in the. corporate portfolio. One type of generic classification model places business units into strategy categories (e.g., growth, retrenchment) using two or more contingency factors as the basis of classification. These models position a corporation's business units on two-way grids based on market attractiveness and business strength. For example, attractiveness can be measured by the estimated future growth rate of the market. Relative market share compared to the market leader is one gauge of business strength. The objective of the analysis is to determine how to allocate resources to each of the business units in the corporate portfolio. Two examples of these models are the Boston Consulting Group (BCG) growth-share matrix and the General Electric/McKinsey screening grid. Although the BCG growth-share matrix helped establish the concept of business portfolio analysis, companies have moved beyond using only market growth and market share measures for positioning SBUs or products on grids. The evaluation of multiple factors may be necessary to fully understand a company's strategy situation. The GE screening grid is an example of the multiple factor model (Exhibit 2-9). SBUs can be plotted as circles on the Exhibit 2-9 grid, using areas proportional to the SBU's contribution to total company sales. Those units that fall into the high-high categories are in a desirable zone for investing/growing the business, whereas a low-low positioning indicates harvesting or divesting the unit. The premise is that return on investment will be high in a high-high category and so on.32