1. Formulation Framework
TOWS Matrix
SPACE Matrix
Stage 2:
The Matching Stage
BCG Matrix
IE Matrix
Grand Strategy Matrix
Fred R. David
Prentice Hall

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
Fred R. David
Prentice Hall

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
Fred R. David
Prentice Hall

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

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

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

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

8. Formulation Framework
Stage 3:
The Decision Stage
Quantitative Strategic
Planning Matrix
(QSPM)
Fred R. David
Prentice Hall

9. QSPM Quantitative Strategic Planning Matrix
Only technique designed to determine the relative attractiveness of feasible alternative actions
Fred R. David
Prentice Hall

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
Fred R. David
Prentice Hall

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
Fred R. David
Prentice Hall

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)
Fred R. David
Prentice Hall

13. QSPM Quantitative Strategic Planning Matrix
Compute the total Attractiveness Scores
Compute the Sum Total Attractiveness Score
Fred R. David
Prentice Hall

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
Fred R. David
Prentice Hall

15. QSPM
Limitations:
Requires intuitive judgments and educated assumptions
Only as good as the prerequisite inputs
Fred R. David
Prentice Hall

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