Strategic Control Map

Strategic Control Map is a concept developed by McKinsey in 1990’s, and is essentially a classification and visual representation of companies performance and size with respect to the market capitalization. The strategic control map is plotted with the Market to Book ratio on the y-axis and the book value on the x-axis. It divides the players in an industry in three categories viz. Megas, Mezzos, and Specialists and identifies strategy for each category. This mapping strategy becomes important particularly in an industry which witnesses deregulation. 

• Companies in the bottom left are companies with earning low returns on few investments. These low performance companies are prime acquisition target if they won't improve their performance.
• Companies in the bottom right are large companies with low performance. They need to focus on cost consolidation as their large investment base needs to earn higher returns.
• Companies in the upper left are the companies which possess proprietary knowledge or skills that enable them to earn high returns from intangibles. The drop in performance level will make them vulnerable to takeover given their smaller size but attractive returns.
• Companies in the upper right are the ones which are larger and top performer. They are in control as earning high returns on a large amount of investments. They need to continuously find out opportunities (organic or inorganic) to sustain their growth. 

Further Readings:

http://treasurycafe.blogspot.in/2012/08/this-strategic-control-map-is-nuts_19.html http://www.mckinsey.com/insights/corporate_finance/enduring_ideas_the_strategic_control_map