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Chapter 6 - Strategy Analysis & Choice

Chapter 6 Strategy Analysis and Choice why are clear objectives needed? to provide direction to allow synergy to establish priorities to minimize conflicts to provide purpose To Allocate Resources To Design Jobs to motivate managers and employees.

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Himangee Gupta
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452 views

Chapter 6 - Strategy Analysis & Choice

Chapter 6 Strategy Analysis and Choice why are clear objectives needed? to provide direction to allow synergy to establish priorities to minimize conflicts to provide purpose To Allocate Resources To Design Jobs to motivate managers and employees.

Uploaded by

Himangee Gupta
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Chapter 6 Strategy Analysis and Choice

Why Are Clear Objectives Needed?


To Provide Direction To Allow Synergy To Establish Priorities To Minimize Conflicts To Provide Purpose To Aid in Evaluations To Reduce Uncertainty To Stimulate Exertion

To Allocate Resources

To Design Jobs

To Motivate Managers & Employees

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1999 Prentice Hall

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)

The TOWS Matrix (Figure 6-3)


STRENGTHS - S WEAKNESSES - W

List strengths

List weaknesses

OPPORTUNITIES - O

SO STRATEGIES

WO STRATEGIES

List opportunities

Use strengths to take advantage of opportunities


ST STRATEGIES Use strengths to avoid threats
1999 Prentice Hall

Overcome weaknesses by taking advantage of opportunities


WT STRATEGIES

THREATS - T

List threats

Minimize weaknesses and avoid threats


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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 divisions own market share to the market share held by the largest rival.
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The BCG Matrix


Relative Market Share Position in the Industry High 1.0 High Industry Sales Growth Rate (Percent) +20 Medium .50 Low 0.0

Stars (II)

Question Marks (I)

?
Medium 0

Cash Cows (III)

Dogs (IV)

Low

-20
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1999 Prentice Hall

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.

The Internal-external Matrix and Strategic Direction


Positions an organizations 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.

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.

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.

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