Strategy Analysis and Selecting Chapter 7 Strategy Analysis and Selecting

Content Introduction of strategy analysis Types of strategies analysis SWOT Matrix SPACE Matrix BCG Matrix IE Matrix Grand Strategy Matrix Conclusion

Introduction Nature of Strategy Analysis & Choice -- Establishing long-term objectives -- Generating alternative strategies -- Selecting strategies to pursue -- Best alternative - achieve mission & objectives Source: http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid=110148

SWOT Matrix SWOT matrix is a way to analyze competitive position, both internal and external aspects of doing your business. SWOT method is a key tool for company top officials to formulate strategic plans. Each letter in SWOT matrix stands for: S: Strengths W: Weaknesses O: Opportunities T: Threats Internal factors External factors http://www.maxi-pedia.com/SWOT+analysis+matrix+method+model

SWOT Matrix Developing the SWOT There are 8 steps to develop a SWOT

SWOT Matrix Internal Factors External factors Strengths S Weaknesses W Opportunities O SO strategies WO strategies Threats T ST strategies WT strategies 6

SPACE Matrix The Strategic Position and ACtion Evaluation matrix or short a SPACE Matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization. The SPACE matrix is based on 4 areas of analysis: Financial Strength (FS) Competitive Advantage (CA) Environmental Stability (ES) Industry Strength (IS) Internal strategic dimension External strategic dimension http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

SPACE Matrix The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy: Aggressive Conservation Defensive Competitive There are 7 steps to develop a SPACE matrix. http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

SPACE Matrix Steps to develop a SPACE matrix Select a set of variables to define FS, CA, ES, & IS Assign a numerical value: From +1 to +6 to each FS & IS dimension From -6 to -1 to each ES & CA dimension Compute an average score for each FS, CA, ES, & IS http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

Steps to Developing a SPACE Matrix Steps to develop a SPACE matrix (cont’d) Plot the average score on the appropriate axis. Add the average scores of CA and IS on the x-axis and plot the point. Add the average scores of ES and FS on the y-axis and plot the point. Draw a directional vector from the origin through the new intersection point. http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

Sample of a SPACE matrix

A completed SPACE matrix look like

BCG Matrix The BCG matrix model is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. BCG matrix is often used to prioritize which products within company product mix get more funding and attention. The BCG model is based on classification of products into four categories, which focus on market-share position & industry growth rate. http://www.maxi-pedia.com/BCG+matrix+model

BCG Matrix

BCG Matrix BCG STARS High relative market share and high growth rate Best long-run opportunities for growth & profitability Substantial investment to maintain or strengthen dominant position Integration strategies, intensive strategies, joint ventures http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

BCG Matrix BCG Question mark Low relative market share – compete in high-growth industry Cash needs are high Case generation is low Decision to strengthen (intensive strategies) or divest http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

BCG Matrix CASH COWS High relative market share, competes in low-growth industry Generate cash in excess of their needs Milked for other purposes Maintain strong position as long as possible Product development, concentric diversification If weakens—retrenchment or divestiture http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

BCG Matrix DOGS Low relative market share & compete in slow or no market growth Weak internal & external position Liquidation, divestiture, retrenchment http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

IE Matrix The Internal-External (IE) matrix, is another strategic management tool used to analyze working conditions and strategic position of a business, which is based on an analysis of internal and external business factors that are combined into one suggestive model. The IE matrix is based on the following two criteria: Score from the EFE matrix -- this score is plotted on the y-axis. Score from the IFE matrix -- plotted on the x-axis. http://www.maxi-pedia.com/internal+external+IE+matrix

IE Matrix Steps to develop IE matrix Record your organization’s IFE total score on the X-axis. (Chapter 5) Record your organization’s EFE total score on the Y-axis. (Chapter 4) Plot the location of your company in the appropriate sector from quadrant I to IX.

IE Matrix Quadrant I,II,IV: Grow and Build: Market penetration, market development, product development. Quadrant III,V,VII: Hold and Maintain: Market penetration, product development. Quadrant VI,VIII,IX: Harvest or Divest: Retrenchment, divestiture, liquidation. http://www.kulzick.com/stu/IEmatrix.htm

Grand Strategy Matrix Tool for formulating alternative strategies Based on two dimensions Competitive position (X-axis): can be either strong or weak, depending on such factors as market share, ability of the firm to compete on price and quality, customer recognition, etc. Market growth (Y-axis): can be considered as either rapid or slow depending on the annual growth rate (sales) within the particular market/ industry in which the firm competes. http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

Weak Competitive Position Strong Competitive Position Grand Strategy Matrix Rapid Market Grow Quadrant 2: Market penetration Market development Product development Horizontal integration Divestiture Liquidation Quadrant 1: Forward integration Backward integration Concentric diversification Quadrant 3: Retrenchment Horizontal diversification Conglomerate diversification Quadrant 4: Concentric Diversification Conglomerate Diversification Joint Ventures Weak Competitive Position Strong Competitive Position Slow Market Grow

Grand Strategy Matrix Quadrant 2: Quadrant 1: Quadrant 3: Quadrant 4: Evaluate present approach seriously How to change to improve competitiveness Rapid market growth requires intensive strategy Quadrant 1: Excellent strategic position Concentration on current markets and products Take risks aggressively when necessary Quadrant 3: Compete in slow-growth industries Weak competitive position Drastic changes quickly Cost and asset reduction indicated (retrenchment) Quadrant 4: Strong competitive position Slow-growth industry Diversification indicated to more promising growth areas http://faculty.utep.edu/LinkClick.aspx? fileticket=5QiypiXvRI4%3D&tabid=50620 &mid=110148

Conclusion Strategy Analysis is really important for developing the company against the economic crisis or the competitors. There are lots of strategies which created by the entrepreneur who face to the problem. Although it has many choices, but we should consider about its limited. Efficient strategy while in the right condition, and environment.

Thanks for your Attention !!!