1st step: 1st page how am I going to answer the exam

2nd step: 2nd page blank (later introduction about the firm and financial analysis
conclusion)
3rd step: Financial analysis and conclusion
4th step: external threats and opportunities and conclusion
List opportunities and EFE: Include the most
threats while ranking them important
high, Moderate, Low

5th step: internal strengths and weaknesses and conclusion

List strengths and IFE: Include the most
weaknesses while ranking important
them high, moderate, Low

6th step: strategies adopted by the firm

7th step: Matching tools
 IE and limitations of To be left blank FOR TOWS
BCG and conclusion in
one page

 Space Matrix in two pages

Space Matrix Continued with conclusion

8th step: recommendations and conclusion of all strategic part

9th step: Marketing and marketing recommendations

Page 1 of 23
 Steps thatwill be followed to answer the exam

1-Introduction
 Corporate name
 Type of business
 Geographic domain
 Culture of senior management
 Competitive situation
 challenges·
 competitive advantage
 Products
 Vision and mission

2-Financial Analysis:that will give me a good indicator about the company's financial
position.And financial conclusion

3- External Factors Analysis (external audit):opportunities and threats then

EFEAnd EFE Conclusion
4- Internal Factors Analysis (Internal audit):strengths and weakness then IFEAnd
IFE Conclusion
5-Strategies Adopted by the Firm (Not important)
6- Matching tools ( IE matrix and SPACE matrix)

5- Strategies and recommendations:CONCLUSION FOR THE STRATEGIC PART

7 – Marketing and recommended marketing strategies.

I wish , I can cover all the previously mentioned steps.

Page 2 of 23
 1-Introduction
 Corporate name
 Type of business
 Geographic domain
 Culture of senior management
 Competitive situation
 challenges·
 competitive advantage
 Products
 Vision and mission(if mentioned explicitly should be evaluated)
Introduction:
(Co. name) (Web site) is a comprehensive business policy and strategic
management case that includes the company's fiscal year- end October 2007
financial statements, competitor information and more. The case setting is the
year 2008. Sufficient internal and external data are provided to enable students
to evaluate current strategies and recommend a three-year strategic plan for the
co. headquartered in (place), (co. name)common stock is publicly – traded on the
new York exchange under the ticker symbol HPQ.

(Co. name) operates in five segments: enterprise storage and servers, services,
software, personal systems, imagining and printing, and financial services. The
co. has over 170000, employees, and is led by CEO Mark Hurd whose base pay
was $14 million in 2007. The firms major competitors include -----------------------.

Mission (9 components):
1- Who are customers you are serving? 1- Customers
2- What are you providing, in terms of 2- products and services
products and services? 3- Market
3- In which market are you competing? 4- Technology
4- Technology updating 5- Survival , growth and
5- Does the organization Concern with profitability
survive, growth or making profit 6- Philosophy
6- Organization's Believes, values, 7- Self-concept
ethical priority 8- Public image
7- What is the competitive advantage of (environmental
the organization? concerns)
8- Does it concern with the environment 9- Employees
concern
9- Employees as a valuable assets or not

Page 3 of 23
 Proposed visions:
1- Be everywhere.
2- Connecting people.
3- To be the market leader.
4- Growing globally.
5- The sky is my limit.
6- To be the most creative organization in the world.
7- The world high satisfaction.
8- To become recognized as the number one computer company in the
world (HP)
9- To become the leading provider of online book and auction sells in the
world (amazon)
Proposed mission:
1- (HP-Co. name) is committed to being the best technology solutions provider
to consumers, businesses and institutions globally by providing superior
products and services for businesses and personal consumers (1,2). Our
emphasis is based on domestic and global markets (3). We provide
information technology systems to serve our customers more efficiently
(4). We are dedicated to quality and consistency to maintain and gain
customer loyalty (6). We are dedicated to growth and profitability (5) by
treating employees (9) in ways that create extraordinary products for our
customers, and that create high shareholder value, while maintaining a
valued name throughout the computer and technology industry (8). (co.) is
synonyms with quality products and high customer satisfaction in every
product and service that we provide (7).
1- Customer 2- products or service 3- markets
4- Technology 5- concern for survival, profitability, growth
6- Philosophy 7- self- concept
8- Concern for public image 9- concern for employees
2- our mission at (co.- orange) is propelled by the "growth 2012", (5,6)
strategy of entering new market segments (3) to secure a leading position
as a managed service provider (4), with integrated telecom operations
across the Middle East (3), a strong broadband strategy for (co. name) and
the region, and utilizing Jordan as the regional backbone(7,8) for high-
capacity telecommunication networks (4). With its dedicated employees
(9), (co. name) offers customers (1) a diversified range of fixed, mobile, and
internet services (2) in the home and business markets (3).
1- Customer 2- products or service 3- markets
4- Technology 5- concern for survival, profitability, growth
6- Philosophy 7- self- concept
8- concern for public image 9- concern for employees

Page 4 of 23
 3- Our mission is to continue to offer quality products and services using the
best technology available (4). We strive to keep product prices low (2). We
seek and aim to keep highly loyal customers, while maintaining high
shareholder's interest and company profits (1, 5). We aim to do business
worldwide, increasing the number of customers and continually enhancing
our competitive advantage and infrastructure (3, 7). By working hard and
having fun. We seek to offer the best working environment to our
employees promoting career opportunities and ethical behavior. We
continually aim to increase our responsiveness towards the environment
and society (6, 8, and 9). Amazon
2-Financial Analysis:
That will give me a good indicator about the company's financial position. Here I
am doing ratio analysis for maximum 2 years and compare them to evaluate the
company's financial performance also I can compare them to the industry
average if I have it. I am going to calculate the most important ratios that will help
us selecting strategies, which I believe, are the following ratios.
Ratio Case year Previous year

 Conclusion about the co.'s financial position: after finishing ratios and the
strategies that can be used that are aligned with the co's financial position.
Financial audit check list
1. Where is the firm financially strong and weak as indicating by financial ratio
analysis?
2. Can the firm raise needed short-term capital?
3. Can the firm raise needed long-term capital through debt and/or equity?
4. Does the firm have sufficient working capital?
5. Are the firm’s financial managers experienced and well trained?

Page 5 of 23
3- External Factors Analysis (external audit):opportunities and threats then EFE
 Use PESTEL ( Political , Economic , Socio-cultural , Technological , Environmental
, Legal)·

Political, Governmental, and Legal forces:

 Political stability,
 Government regulations & deregulations.
 Changes in tax laws.
 Level of government subsidies
 Country to other countries relationships
 Trading policies& Import-export regulations
 Political conditions in foreign countries
 Facilities for the entrance for new foreign investment,
 Size of government budgets
 The relations with other countries

Economic forces
 Availability of credit and saving
 Level of disposable income
 Interest rates
 Inflation rates
 Unemployment
 Stock Market trend
 Foreign countries’ economic conditions
 Monetary policies
 investment laws and regulations,
 The GDP and income level (which directly reflects on consumer
spending power)
 The currency depreciation or appreciation
 Wages level
 price elasticity of demand

Page 6 of 23
 Social, Cultural, Demographic, and Environmental forces:
 Number of marriages, divorces, births, and deaths.
 Social security programs
 Per capita Income
 Lifestyle
 Traffic congestion
 Trust in government
 Average level of education
 Population changes by race, age, and sex
 Air pollution
 size, structure, and regional distribution of the population
 Cultural fear or freedom level
 Cultural symbol (status)
 What’s socially acceptable?
 The attitudinal changes towards business ( product / services)
produced

Technological forces
 Internet availability and usage
 E-commerce
 The rate of development
 The presence of skilled persons
 Presence of technological capabilities.
 Substitute might replace the organization’s product.

Competitors
 The structure, bases and intensity of competition.
 The existing major competitors and any competitive advantage.
 The major strengths and relative position of each competitor.
 The objectives, strategies and the level of profitability of each
competitors.
 The market share level.

Page 7 of 23
  Use Porter Five Competitive Forces ( Bargain Power of suppliers ,Bargain Power
of customers , potential entrance of new competitor , potential development of
competitive product , Rivalry between competitors)

Barriers to entry:
- economies of scale (mass production- lowest costs)
- product differentiation (unique features in my product)
- entry deterring prices
- assets specificity
- monopoly
- patents knowledge
buyers’ power (high) Suppliers’ power (high)
- concentrated number of
- fragmented buyers
buyers
- few suppliers
- many suppliers
- high switching costs
- low switching costs
- low storage costs
- high storage costs
- unique products
- standardized products
- no substitutes
- availability of substitutes

Page 8 of 23
 Construct the EFE Matrix

Rating
in what extend the current
strategy in your organization
response to this factor) rating
Weighted
Key External Factors Weight from 1- 4,
Score
1:poor response
2: average response
3: above average response
4: superior or outstanding
response.
Opportunities
0.1
0.07
0.09
0.07
0.08
0.1
0.1
0.07
Threats
0.05
0.1
0.1
0.07
Total 1
EFE Conclusion:

 If EFE= 2.5 - 4 means that your organization is in a good external position, i.e.
your organization is able to capitalize all its external opportunities and avoid all
its external threats.
 Less than 2.5 to 1 it means that your organization is in a weak external position,
that many opportunities your organization is not able to capitalize on or take
advantage of and many threats you cannot avoid.
 Explain what 2.98 means to that organization? It means this organization is
hardly ina good position; it has the capability to invest in the new opportunities
and avoidthreats, but it still needs to develop some strategy to move on in a more
efficient way.
The EFE has to do with intuition and analytical skills more than subjectivity.

Page 9 of 23
3- Internal Factors Analysis (Internal audit):strengths and weakness then IFE
Define the following Factors:-
a- Finance/accounting ( Cost of capital, Availability of capital, Profitability, Financial
stability, Margins) {use the already Calculated Ratios}
b- Marketing : (Relative market share, product quality, unique selling preposition,
customer base, customer loyalty, geographical coverage, after sales service)
c- Production/operation( Production facilities, Economies of scales, Flexibility,
Workforce, Technical skills ,Delivery capabilities ,Supplier sourcing flexibility)
d- Organizational Factors (Culture ,Leadership Style , Managerial capabilities,
Workforce Flexibility , Adaptability)E- Management / HR (Planning , Organizing ,
Motivating , Staffing , Controlling)F- MIS/R&D (Adequate R&D facilities, Cost
effective, Qualified people, Resources allocated , Is there MIS , Is there CIO , Web
site ,Technology training )

 Conduct IFE Matrix

Rank
(What does each figure stands
For? Major or minor S &W)
rating from 1- 4,
Key Internal Factors Weight Weighted score
1:major weakness
2: minor weakness
3: minor strength
4: major strength
Strengths
0.09
0.09
0.08
0.06
0.07
0.07
0.1
0.08
0.08
0.08
Weaknesses
0.06
0.06
0.08
Total 1

Page 10 of 23
 IFE Conclusion:

 If IFE= 2.5-4means that your organization is in a good internal position, i.e.

yourorganization is able to capitalize or take advantage of the external
opportunities andavoid the external threats.
 Less than 2.5 to 1 it means that your organization is in a weak internal position,
whichthe organization needs to work on its internal strength to help capture the
externalopportunities and work on the internal weaknesses to help avoid the
external threats.
 The IFE has to do with intuition and analytical skills more than subjectivity.

4-Strategies Adopted by the Firm (Not important)

5- Matching tools (TWOS Matrix) & IE matrix SPACE matrix

Matching Phase· Usetwo or more of the following matching tools (depending on
available data & time) ·
 SWOT Matrix (TOWS) (use Strengths , Weaknesses from Step 3 &
Opportunities , Threats from Step 2)·

Strengths Weaknesses
List strengths List weaknesses
Opportunities SO WO
List (1,2,3,4,5) Use Opportunities to
Opportunities Use strengths to take overcome
advantage of weaknesses
Opportunities (Defensive
(growth strategies) strategies)
Threats ST WT
List threats Use strengths to Overcome
avoid threats weaknesses and
(Intensive strategies) avoid threats
(Intensive or
Defensive)

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 IE Matrix {Using EFE results (Step 2) & IFE results (Step 3)}·

• Why IE not BCG Matrix? BCG Matrix has limitations, for example: What if a
certain business unit is allocated let's say in between the question marks and
the stars quadrants.What if a certain business unit is allocated between the
question marks and the stars quadrants? The problem here is that each
quadrant has its own set of strategies to deal with and in that situation we
won’t be able to decide which set of strategies are more fit.
• Another limitation is that the BCG matrix is based on an assumed
relationship that says:
• High market share generates high cash and vice versa.
• Highly growing market means high cash consumption and vice versa
• This is an assumed relationship and not a real one as some businesses that
have low market share and yet are very profitable, example Jaguar cars.

We can avoid all these limitations through the IE matrix

• IE (internal-external) matrix is based on the total internal weighted scores and

the total external weighted scores from IFE and EFE analysis.

Ch 7 -44 Copyright © 2011 Pearson Education

Page 12 of 23
 • We can deal with the nine cells as three bundles, as follows:

This first bundle that covers the cells (1, 2 and 4) is called: "Grow and Build", because
the weakest position in this bundle is average and the opposite position is strong. That
means if the business unit is located in one of these three cells, it is considered in the
"Grow and Build bundle". The strategies that fit this bundle are integration and
intensive strategies.

This second bundle that covers the cells (3, 5 and 7) is called: "Hold & maintain",
because the weakest position in this bundle is average and not weak, and to sustain this
average position and try to upgrade the situation is through the intensive strategies.

This third bundle that covers the cells (6, 8 and 9) is called: "Harvest or Divest". If the
co. has a sort of competitive edge in the business unit located in this bundle and will
invest in it, in order to be able to push this business unit/product line from this third
bundle to the second bundle, that's what we call to harvest in this business unit, if not
the firm will just go for the divestiture strategy, i.e. relying basically on defensive
strategies.

The IE matrix deals with the limitations of BCG matrix as it doesn't have any assumed
relationship or hypothesis, but relies on the TWS of the IFE and EFEwhich are facts that
have been calculated previously. Also, in the IE matrix if a business unit is located in a
middle of two cells, I can take a specific strategic decision, because I have specific
boundaries for each bundle.
 SPACE Matrix· BCG Matrix ( in case of having data about product portfolio)
Industry Position (IP) (+) Stability Position (SP) (-)
Growth potential, Profit Technological changes,
potential,Resource utilization, Inflationrate, Demand variability,
Productivity,capacity utilization Priceelasticity of demand,
Barriers toentry, Competitive
pressure, Riskinvolved.
Competitive Position (CP) (-) Financial Position (FP) (+)
Market share, Product Return on investment,
quality,Product life cycle, Leverage,Liquidity, Working
Customer loyalty,Capacity capital, Cash flow,Inventory
utilization, Control turnover, Earnings pershare,
oversuppliers/distributors Price earnings ratio, Internal
Strategic Position, External
Strategic Position

Page 13 of 23
Internal strategic dimension External strategic Dimension
(source: (source:
IFE Strength& Weakness) EFE opportunities& Threats)
Competitive position (CP) Industrial position (IP)\
-market share-1 -growth potential: 6
-product quality: -3 -profitability: 4
-customer loyalty: -2 -productivity: 5
Average score: -6/3=-2 Average score: 15/3=5
Internal financial
Internal financial External strategic Dimension
position(source: IFE (source:
Strength& Weakness) EFE opportunities& Threats)
Financial position (FP) Stability position (SP)
-return on investment (ROI):5 -demand elasticity: -2
-liquidity:4(medium liquidity -technological changes: -1
compared -inflation: -4
to major competitor) Average score: -7/3=-2.33
-leverage:6 Step
-cash flows:5 (high cash flow)
Average score: 20/4=5

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1-Aggressive strategic position: means that the organization has much internal
strength and many external opportunities. This situation means that the organization
has to take advantage of all the external opportunities using all its internalstrengths.
All the intensive strategies, integration strategies, and all diversification strategies.

2-Conservative strategic position: this means that the organization has many
internalStrengths and severe external threats. This situation means that I need to
stick to the basic competencies of my organization, stay conservative, so I need to
stabilize my position in this quadrant, which means the type of strategy I use is going
to be: intensive strategies, to avoid excessive risks and use what is currently in my
hand. In addition, if the organization has good competitive position (-1 or -2), it can
go for diversification strategy (related diversification)

3-Defensive strategic position: SP (environmental position) is totally beyond

theorganization's control. This position means that the organization has critical
internalweakness and severe external threats. The basic resort is defensive
techniques, but yet if the CP value is -1 and the SP -1 or -2 means I have a very good
competitive position and very stable external position why would I just lose it and go
for defensive strategies which are the easiest use why not to try related
diversification strategy to take advantage of my good CP. Then the action evaluation
for the defensive strategic position is related diversification if it does not work I go
for the defensive strategies.

4-Competitve strategic position:This position means critical internal weaknesses and

many external opportunities. This means the organization is competing in a very
changing environment. Intensive strategies (if it is a stable environment -1 or -2) and
depending on my situation may be go for integration (get acquired or joint venture
or alliance) and the last resort defensive strategy.

Page 15 of 23
5- Strategies and recommendations: CONCLUSION FOR THE STRATEGIC PART and
I can talk about HR if there are recommendations
 Strategies and recommendations from my point of view:
a- Where am I in space?
b- Which strategies I will choose from the set of strategies resulted from the
matching tools and why.
For IT we can recommend diversification, different chips for computers

 Balance score card:

Financial customers
Internal processes Employee learning and growth

Reach one or more of the following Management Strategies·

A- Integration Strategies ( Forward , Backward , Horizontal)·
B- Intensive Strategies (Market Penetration , Market Development , Product
Development)·
C- Diversification Strategies ( Related , Unrelated)·
D- Defensive Strategies ( Retrenchment , Divestiture , Liquidation)

 QSPM if needed:

Page 16 of 23
 Strategy Strategy
Strategy 1
2 3
Key Factors Weight AS TAS AS TAS AS TAS
Opportunities

Threats

Total (O + T) 1
Strengths

Weaknesses

Total (S + W) 1
Total Attractiveness Score (S + W +
O + T)

6 – Marketing:

a- Introduction to the Marketing Plan inside the co.

 Production Concept ( Make to Order, Make to Stock)
 Product Concept ( ‫)شكل المنتج‬
 Selling Concept (wholesaler, end user)
 Marketing Concept
 Marketing strategies already used by the firm

b- Situational Analysis·
SWOT (already done in Part I , Step4)
Strengths weaknesses

Opportunities Threats

c- Company Goals & Objectives·

From the given case(but we have to mention that they have to be smart)

d- Marketing Strategies(starting from here it is my marketing

recommendations that must be aligned with Management Strategy which
was previously recommended)
 Competitive strategies:
-Cost Leadership (highdemand, Economy of Scale)
-Differentiation (Using Competitive Advantage)
-Focus (Niche) (Localized Differentiation)
Page 17 of 23
 Growth strategies (Ansoff)
-Market Penetration (Convert non user to users, Increase the consumption of
actual users)
-Partial or complete development of new product
-New Market Development (New Geographic coverage, Globalization)
-Diversification (Related or unrelated)

e- Segmentation:
 Demographic (Age, Gender , Income, Job , Religion, Family Size,
Income/Occupation, Education, Religion, Race/Nationality)
High speed microprocessors for heavy users, teen agers and gamers

 Geographic( Region, County size, City size, Density, Climate, Climate)

Market development offering water resistant chips for humid countries

 Physiographic (Lifestyle ,Personality, Social Class)

 Behavioral (Use occasion, Benefits sought, User status, Usage rate, Loyalty
status, Readiness stage, Attitude toward product.

- Effective segmentation should have multiple factors

- Segments should be measurable, accessible, substantial
- Good segmentation offers best allocation of investment due to better
understanding of customer needs and offers competitive advantage.

Page 18 of 23
 f- Targeting
- evaluate attractiveness of each segment
- select the target segment(s)
 Undifferentiated (One Product to all segments)
 Differentiated (Different products to different segments)
 Concentrated (One product to one segment)

g- Positioning:
 How to position the product in the mind of the customers.
-It should deliver advertising message "reaching the sky"
-Product features: faster processor- durability for example
Product in the eyes of the customers it should be (Product Features)
 User Best quality
 Best performance
 Most reliable
 Most durable
 Safest
 Fastest
 Best value for the money
 Least expensive
 Most prestigious
 Best designed or styled
 Easiest to use
 Most convenient

 Positioning map
- here we place the co. and competitors
- Where the co. is and where we want to be

High quality

Cheap (low sales) expensive (high sales)

Low Quality

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  Look for vacant niche
 Avoid sub optimization
 Don’s serve 2 segments w/ same strategy
 Don’t position in the middle of the map

h- Marketing Mix (4P’s)

Product Place Promotion Price

Distribution
Quality Advertising Level
channels
Distribution Discounts &
Features Personal selling
coverage allowances
Sales
Style Outlet location Payment terms
promotion
Brand name Sales territories Publicity
Inventory
Packaging
Level/Locations
Transportation
Product line
carriers
Warranty

Service level

Recommended strategies:
a- Product
Consumer Product (Convenience- clothes, Shopping - Coca, specialty – Rolex-
IT,Unsought - insurance)
Product Lifecycle (Intro, Growth (IT), Maturity, Decline)
Branding Strategy (Line Extension, Brand Extension, Multi brands, Co-Branding)
1. Line extension:additional items in the same product under the same brand
i.g. android
Advantage:
 Saving cost
 Minimize risk in introducing new products
Disadvantage:
 Brand dilution
 Consumer confusion
 Cannibalization on original product

Page 20 of 23
 2. Brand extension: launching new product under the same brand
E.g. (I Phone 4, I Phone 4s, I Phone 5, 5s)
Advantage:
 Saving high advertising cost and build brand name
 Give new products instant recognition and faster acceptance
Disadvantage:
 Consumer confusion about the brand image and may lose its positioning
 may harm consumer attitude toward other product under the same brand
3. Multi branding: new brand name in the same product (e.g. galaxy s2, s3)
Advantage:
 establish different features
 appeal to different buying motives
Disadvantage:
 multi branding might gain only small market share
 need resources on building different brands

Recommendations: - develop products that resist high humidity

 High speed for gamers

b- Price
 Recommended Pricing Strategies :
1. Market penetraion pricing:set low prices to ensure high level of sales used
when:
 market is highly price sensitive
 low price simulate market growth
 production and distribution cost fall within accumulated production
experience
2. skimming: initial prices are set high and gradually reduced to capture greet
number of market segments. ‫ نرفع السعر فى البداية ثم نققللة‬Used when:
 sufficient number of buyers have a high current demand
 high price communicates the image of superior product
3. Product quality leadership : relative prices are set at a premium Used when:
 brands perceived relative high quality
4. Early cash recovery : Used when:
 Faced with problem of liquidity
 Belief that the product life is likely to be short
Can be delivered by:
 Mass distribution
 Rigorous credit control policy
 Special offers
 Discount to trigger immediate sales and prompt payment
Page 21 of 23
 5. Reflecting product differentiation: Used when: Target different segments it
different products
6.cost plus :
7. competitive pricing (cealed bids or going rates) :
8. psychological pricing ( prestige- odd,even) :
9. captive pricing :
10. loss leader :
11. special event pricing :
12. piggy bag :
13. price discrimination :

c- Place
 Distribution Channels (Wholesaler‫تاجر جملة‬, Retailer ‫تاجر تجزئة‬,Agent‫) الوكيل‬
 Distribution Strategies Intensive ( Huge # Of Retailers )
 Selective (Few # Of Retailers)
 Exclusive (Very Few # Retailers)
 Distribution Systems ( conventional, Vertical ,Horizontal )

Recommendations: (computer malls - hypermarkets-internet selling -

exhibitions-press release)

d- Promotion
 Tools
-Adv. (TV. Radio, Online, Press)
-Direct Marketing (Mail,email,phone)
-Sales Promotion (Discount, BOGOF, Sample, Gifts, Loyalty Cards)
-PR (Sponsorship, Exhibition, Press conference, CSR, events)
-Personal Selling

 Recommended promotion Strategies:

- Pull (Target End users)
- Push (Target Intermediates)
- Profile (Promoting Co. Name)

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 Push Pull
(don't deal with end user) (deals with end user)
-Bonus -BOG of (buy one get one free)
- Discount -Coupon (discount or service)
- Gift with purchase -Gift with purchase
-loyalty cards

 Market with high competition is called Red Ocean or bloody ocean market.
 Market with lower competition is called blue ocean market.
To make the market blue ocean instead of red ocean the co. should create and come up
with more valuable innovations. To make competition calm is by building key success
factors in my product- market

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