Shells DPM is based on two parameters:

Companys competitive capabilities Business sector prospects

The basic matrix developed by Shell may be used to plot the position of products in the companys portfolio, or it could be used for competitor analysis by plotting all the competitors across the different cells. The specific strategies recommended for each cell/position in the matrix can be given as:

Shell Directional Policy Matrix

A Nine Celled directional Policy Matrix
The Shell Directional Policy Matrix is another refinement upon the Boston Matrix. Along the horizontal axis areprospects for sector profitability, and along the vertical axis is a company's competitive capability. As with the GE Business Screen the location of a Strategic Business Unit (SBU) in any cell of the matrix implies different strategic decisions. However decisions often span options and in practice the zones are an irregular shape and do not tend to be accommodated by box shapes. Instead they blend into each other.

Each of the zones is described as follows:

Leader - major resources are focused upon the SBU. Try harder - could be vulnerable over a longer period of time, but fine for now. Double or quit - gamble on potential major SBU's for the future. Growth - grow the market by focusing just enough resources here. Custodial - just like a cash cow, milk it and do not commit any more resources. Cash Generator - Even more like a cash cow, milk here for expansion elsewhere. Phased withdrawal - move cash to SBU's with greater potential. Divest - liquidate or move these assets on a fast as you can.

SHELL DIRECTIONAL POLICY MARKET FOR PORTFOLIO ANALYSIS Strategic Implications Unlike the Boston Matrix in which one is looking for a balance of business opportunities spread amongstgrowth and maturing markets, in the Directional Policy Matrix the concentration of business opportunities shouldbe focused around the Leader domain, i.e. the top left hand area of the matrix. Under such circumstances, oneis looking at a strong portfolio where the company is focusing on markets that are attractive and where it isacknowledged as being competitive. Note that metrics relating to market size and growth may not feature in theSegment Attractiveness axis; it is quite possible for segments labelled as Cash Cows (bottom right handcorner in the Boston Matrix) to appear in this domain.The closer an opportunity is towards the bottom and the right hand corner of the matrix, the weaker thecompany is in relation to market requirements, and the less attractive the Market. If the company findssignificant elements of the portfolio in the Divest domain it needs to think quickly about what actions to take,e.g. to what extent should they be milked and how quickly should they be disposed of. Despite its potential, anopportunity labelled as a Question Mark product in the Boston Matrix could fall into this domain if it is notstrategically aligned with the holding group!Areas in between are more problematic. The company will need to make a strategic decision on whether or notto keep the segment in the portfolio, the amount to invest in it, whether it can ever hope to achieve marketleadership, the extent to which it should generate cash and so on. Generally speaking the further towards thetop and right, the more likely one is to invest, as one is approaching markets that the company would deem asattractive, despite the fact that the company is not yet competitive. Conversely those opportunities towards thebottom and left are in areas that the company would find less attractive, and should be managed diligently for cash.

Leader Domain The strategy should be to maintain this position. At certain stages this may imply a need for

resources whichcannot be met entirely from funds generated by the product, (e.g. resources to expand capacity), althoughearnings should be above average. Try Harder Domain The implication is that the product can be moved towards the leadership box by judicious application of resource. In these circumstances the company should certainly consider making available resources in excessof what the product can generate. Growth Domain Investment should be made to allow the product to grow with the market. Generally, the product will generatesufficient cash to be self-financing and should not be making demands on other corporate cash resources.

Double or Quit Domain Tomorrows breadwinners among todays R&D projects may come from this area. Putting the strategy simply,those with the best prospects should be selected for full backing and development; the rest should beabandoned. Proceed with Care Domain In this position, some investments may be justified but major investments should be made with extreme caution. Cash Generator Domain A typical situation in this matrix area is when the company has a product that is moving towards the end of itslife cycle and is being replaced in the market by other products. No finance should be allowed for expansion,and so long as it is profitable, the opportunity should be used as a source of cash for other areas. Every effortshould be made to maximise profits since this particular activity has no long-term future. Phased Withdrawal Domain A product with an average to weak position with unattractive market prospects or a weak position with averagemarket prospects is unlikely to be earning any significant amounts of cash. The indicated strategy is to realisethe value of the assets on a controlled basis to make the resources available for redeployment elsewhere. Divestment Domain Products falling in this area will probably be losing money, not necessarily every year, but the losses in badyears will outweigh the gains in good years. It is unlikely that management will be surprised by specific activitiesfalling into this area since poor performance should already be known