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The Interpretation of Matrices

The close analysis of Chipotle’s current standing on the market has resulted in the construction of three matrices: IE (internal-external), BCG (growth-share), and TOWS (a variation of the SWOT matrix). All the matrices are important for strategic planning that would advance the company and give it a competitive edge over its contenders (Rothaermel, 2016). The BCG matrix was introduced more than five decades ago and has become one of the most iconic strategic management tools since. As Madsen (2019) explains, at some point, the BCG matrix enjoyed a particularly high standing in the business community but later became deinstitutionalized. Despite the ebbs and flows in its history, this instrument still finds use when it comes to strategic analysis.

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The analysis of Chipotle has shown that the industry in which the corporation is operating is fast growing. However, the relative market share of Chipotle is not particularly big. According to the assumptions that the BCG matrix makes, the restaurant chain is now in the second division known as “Question mark (Channon & Jalland, 2016).” Question marks are brands that require close consideration because they are practically in a limbo. On the one hand, they carry a lot of potential due to the promising development of the industry, suggesting that they might become a star and then a cash cow. On the other hand, not all “question marks” succeed: some of them never overcome the limitations of their position and fail to push beyond their market share.

The IE matrix is widely used in business analysis as it combines a multitude of internal and external factors into one suggestive model. While it is somewhat similar to the BCG matrix, it has evolved past the assumption that high market share is the primary success factor. The IE matrix for Chipotle demonstrates high scores on both x- and y-axes. The result suggests that the internal structure of the company is characterized by strength and resilience (David, 2013). At the same time, Chipotle is operating in an environment that presents plenty of opportunities, many of which the corporation can put to good use. The scores put the restaurant chain in the second division, meaning that it should grow and build its position. Chipotle is resourceful enough to take high-risk high-reward decisions such as tapping into foreign markets.

The SWOT matrix stands for strengths, weaknesses, opportunities, and threats. The main idea behind this framework is similar to that of the IE matrix. SWOT analysis encompasses both internal and external factors that inform a company’s strategy (DeFusco et al., 2015). As a result, the SWOT matrix provides meaningful information that can be used to capitalize on a company’s strengths, make use of opportunities, and minimize the adverse effect of weaknesses and threats. Chipotle’s SWOT matrix demonstrates significant internal advantages such as its strong presence on the US market, ethical approach to food sources and production, and high-quality product. At the same time, the company suffers internally from limited development and advertising and externally from fierce competition and crowdedness of the market. However, the environment presents plenty of opportunities as customers’ interest in healthy, ethical, and diverse food grows.

Based on the three matrices described above, it is safe to conclude that Chipotle can act from the place of strength and confidence. It is a successful company with a good reputation and a loyal customer base. However, in these uncertain times, Chipotle is at the crossroads: not taking action will mean stagnation and losing edge over contenders. Based on the strategic analysis, now is a good time to diversify the company’s portfolio, sway foreign markets, and invest more in research, development, and technology.

References

Channon, D. F., & Jalland, M. (2016). Multinational strategic planning. Springer.

David, F.R. (2013). Strategic management concepts: A competitive advantage approach. Pearson.

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DeFusco, R. A., McLeavey, D. W., Pinto, J. E., Runkle, D. E., & Anson, M. J. (2015). Quantitative investment analysis. John Wiley & Sons.

Madsen, D. O. (2017). Not dead yet: the rise, fall and persistence of the BCG Matrix. Problems and Perspectives in Management, 15(1), 19-34.

Rothaermel, F. T. (2016). Strategic management: Concepts (Vol. 2). McGraw-Hill Education.

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