1. Lecture 15 Strategy Analysis And Choice

2. Grand Strategy Matrix
Popular tool for formulating alternative strategies
All organizations (or divisions) can be positioned in one of four quadrants
Based on two evaluative dimensions:
Competitive position
Market growth

3. RAPID MARKET GROWTH Quadrant II Market development Market penetration
Product development
Horizontal integration
Divestiture
Liquidation
Quadrant I
Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Concentric diversification
WEAK
COMPETITIVE
POSITION
STRONG
COMPETITIVE
POSITION
Quadrant III
Retrenchment
Concentric diversification
Horizontal diversification
Conglomerate diversification
Liquidation
Quadrant IV
Concentric diversification
Horizontal diversification
Conglomerate diversification
Joint ventures
SLOW MARKET GROWTH

4. Grand Strategy Matrix Quadrant I Excellent strategic position
Concentration on current markets and products
Take risks aggressively when necessary

5. Grand Strategy Matrix Quadrant II Evaluate present approach seriously
How to change to improve competitiveness
Rapid market growth requires intensive strategy

6. Grand Strategy Matrix Quadrant III Compete in slow-growth industries
Weak competitive position
Drastic changes quickly
Cost and asset reduction indicated (retrenchment)

7. Grand Strategy Matrix Quadrant IV Strong competitive position
Slow-growth industry
Diversification indicated to more promising growth areas

8. Formulation Framework
Stage 3:
The Decision Stage
Quantitative Strategic
Planning Matrix
(QSPM)

9. QSPM Quantitative Strategic Planning Matrix
Only technique designed to determine the relative attractiveness of feasible alternative actions

10. QSPM Quantitative Strategic Planning Matrix
Tool for objective evaluation of alternative strategies
Based on identified external and internal crucial success factors
Requires good intuitive judgment

11. QSPM Quantitative Strategic Planning Matrix
List the firm’s key external opportunities & threats; list the firm’s key internal strengths and weaknesses
Assign weights to each external and internal critical success factor

12. QSPM Quantitative Strategic Planning Matrix
Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing
Determine the Attractiveness Scores (AS)

13. QSPM Quantitative Strategic Planning Matrix
Compute the total Attractiveness Scores
Compute the Sum Total Attractiveness Score

14. Strategic Alternatives
QSPM
Strategic Alternatives
Key Internal Factors
Management
Marketing
Finance/Accounting
Production/Operations
Research and Development
Computer Information Systems
Strategy 3
Strategy 2
Strategy 1
Weight
Key External Factors
Economy
Political/Legal/Governmental
Social/Cultural/Demographic/Environmental
Technological
Competitive

15. QSPM
Limitations:
Requires intuitive judgments and educated assumptions
Only as good as the prerequisite inputs

16. QSPM
Positives:
Sets of strategies examined simultaneously or sequentially
Requires the integration of pertinent external and internal factors in the decision-making process

17. Cultural Aspects of Strategy Choice
Culture:
The set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm

18. Cultural Aspects of Strategy Choice
Culture:
Successful strategies depend on degree of support from a firm’s culture

19. Politics of Strategy Choice
Politics in organizations:
Management hierarchy
Career aspirations
Allocation of scarce resources

20. Politics of Strategy Choice
Political tactics for strategists:
Equifinality
Satisfying
Generalization
Focus on Higher-Order Issues
Provide Political Access on Important Issues

21. Role of A Board of Directors
Duties and Responsibilities:
Control and oversight over management
Adherence to legal prescriptions
Consideration of stakeholder interests
Advancement of stockholders’ rights

22. Key Terms Aggressive quadrant Attractiveness Scores (AS)
Board of Directors
Boston Consulting Group (BCG) Matrix
Business portfolio
Cash cows
Champions
Competitive Advantage (CA)

23. Key Terms Competitive quadrant Conservative quadrant Culture
Decision stage
Defensive quadrant
Directional vector
Dogs
Environmental Stability (ES)
Financial Strength (FS)

24. Key Terms Grand Strategy Matrix Halo error Industry Strength (IS)
Input stage
Internal-External (IE) Matrix
Long-term objectives
Matching
Matching stage
Quantitative Strategic Planning Matrix (QSPM)

25. Key Terms Question marks Relative market share position SO strategies
ST strategies
Stars
Strategic Position and Action Evaluation (SPACE) Matrix
Strategy-formulation framework

26. Key Terms Sum total attractiveness scores
Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
Total Attractiveness Scores (TAS)
WO strategies
WT strategies

27. Thank You