1. Chapter 6 Strategy Analysis and Choice

2. Why Are Clear Objectives Needed?
To Provide Direction To Provide Purpose
To Allow Synergy To Aid in Evaluations
To Establish Priorities To Reduce Uncertainty
To Minimize Conflicts To Stimulate Exertion
To Allocate Resources To Design Jobs
To Motivate Managers & Employees
©1999 Prentice Hall

3. Strategy-formulation Framework
Stage 1: The input stage
External factor evaluation matrix (EFE)
Competitive profile matrix (CPM)
Internal factor evaluation matrix (IFE)
Stage 2: The matching stage
Strengths, weaknesses, opportunities and threats matrix (SWOT)
Strategic position and action evaluation matrix (SPACE)
Boston consulting group matrix (BCG)
Internal-external matrix (IE)
Grand strategy matrix (GS)
Stage 3: The decision stage
Quantitative strategic planning matrix (QSPM)

4. The TOWS Matrix (Figure 6-3)
STRENGTHS - S
WEAKNESSES - W
List strengths
List weaknesses
OPPORTUNITIES - O
SO STRATEGIES
WO STRATEGIES
Use strengths to take advantage of opportunities
Overcome weaknesses by taking advantage of opportunities
List opportunities
THREATS - T
ST STRATEGIES
WT STRATEGIES
Use strengths to avoid threats
Minimize weaknesses and avoid threats
List threats
©1999 Prentice Hall

5. Boston Consulting Group Matrix
Allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization.
Relative market share position - ratio of a division’s own market share to the market share held by the largest rival.

6. Relative Market Share Position in the Industry
The BCG Matrix
Relative Market Share Position in the Industry
High Medium Low
High
Medium 0
Low
Stars (II)
Question Marks (I)
Industry Sales Growth Rate (Percent) ?
Cash Cows (III)
Dogs (IV)
©1999 Prentice Hall

7. The BCG Matrix and Strategic Direction
Question marks - strengthen them via market penetration, market development or product development, or sell them.
Stars - forward, backward and horizontal integration; market penetration; market development; product development; or joint venture.
Cash cows - for strong ones product development or concentric diversification; for weak ones, retrenchment or divestiture.
Dogs - liquidate, divest or retrench.

8. The Internal-external Matrix and Strategic Direction
Positions an organization’s various divisions in a nine-cell display based on SWOT analysis weighted scores (from EFE and IFE matrices).
Grow and build (divisions in cells 1, 2 or 4): market penetration, market development, product development or backward, forward and horizontal integration.
Hold and maintain (divisions in cells 3, 5, 7): market penetration or product development.
Harvest or divest (divisions in cells 6, 8, 9): divest, liquidate, or retrench.

9. The Grand Strategy Matrix
Organizations or divisions are positioned into one of four quadrants based on market growth and competitive position.
Each quadrant suggests alternative strategies.

10. The Decision Stage: The Quantitative Strategic Planning Matrix
Use input from stages 1 and 2.
Not all strategies generated in stage 2 need to be included.
Must assign an “attractiveness score” for each strategy by examining external and internal (SWOT) critical success factors and asking “Does this factor affect the choice of strategies being made?” If yes, then the strategies should be compared relative to that key factor and assign a score of 1 (not attractive) to 4 (highly attractive) to each factor.
Calculate “total attractiveness scores” by multiplying weights by “attractiveness scores”.