Strategy Analysis

and Choice
3BAM6D | GROUP 5
 The Strategy Analysis and Choice Process
The Strategy Analysis and Choice Process is a important
part of strategic management, involving assessing internal and
external factors influencing an organization's performance and
making strategic choices. It involves environmental analysis,
SWOT analysis, strategic intent, setting objectives, generating
strategic options, evaluating options, selecting the most
appropriate one, implementing the strategy, monitoring
progress, and continuously learning from the process. This
dynamic and iterative process helps organizations adapt to
changing environments and achieve long-term objectives.
 The Process of Generating and Selecting
Strategies
• The following steps are involved in generating and selecting
strategies;
 The Process of Generating and Selecting
Strategies
It takes in as input data from the internal and external audit
processes, as well as the company's goals and mission
statement. Managers and, if possible, staff members who were
involved in the previous decisions (internal, external, vision, and
mission) evaluate the data and, through a series of meetings,
suggest a number of alternative approaches to pick from; Once
the suggested strategies have been determined, they need to be
ranked in order of attractiveness. Table 1 lists these rankings and
the meanings that correspond to them. A "prioritized list of best
strategies that reflects the collective wisdom of the group" is the
result of this process.
Table illustrating the ranks of the strategies by their order of
attractiveness.
 The Strategy-Formulation Analytical
Framework
The Strategy-Formulation Analytical Framework is an
organized procedure that helps companies create
strategies that work. It's basically a three-stages
procedure that helps in situation assessment, strategy
identification, and optimal decision-making.

Stage 1: The INPUT Stage

Stage 2: The MATCHING Stage
Stage 3: The DECISION Stage
Important strategy-formulation techniques.
 Stage 1: The Input Stage
In Input stage the information required from the
following matrices provide basic input information’s
for the matching and decision state matrix. the input
tools require strategies to quantify subjectivity during
early stage of the strategy formulation process
making small decision in the input matrices regarding
the relative importance of the external and internal
factors allow strategies to more effectively generate
and evaluate alternative strategies.
 External Factor Evaluation (EFE) Matrix
This tool used to evaluate firms external
environment and to reveal its strength as well as
its weaknesses. EFE identifies the key external
opportunities and threats that are affecting or
might affect a company by analyzing the external
environment with the tools like pastel analysis
quarter five forces or Profit Matrix the key external
factors can be identified
Example of
EFE
Matrix of
High-tech
Company
 Competitive Profile Matrix (CPM)
This a tool that compares the firm and its
rivals and reveals their relative strength and
weaknesses. In order to better understand the
external environment and the competition in a
vertical industry film uses. CPM identify enthereum
key competitors and compares them using the
industry's critical success factors.
Example of Competitive Matrix
 Internal factor Evaluation (IFE) Matrix
IFE Matrix is strategy formulation tool that
summarize and evaluates the major strength and
weaknesses in the functional areas of a business.
It also provide basis for identifying and re-
evaluating relationships among those areas.
Example of
IFE Matrix
of High-tech
Company
 Stage 2: The Matching Stage
In Matching stage defined as the match an organization
makes between its internal resources and skills and the
opportunities and risk created by its external factors the
matching stage of the strategy formulation framework
consists the five techniques that can be used in any
sequence the SWOT, SPACE, BCG, IE and Grand Strategy
this tools rely upon information deployed from the input stage
to match external opportunities and threats with internal
strength and weaknesses. matching external and internal
critical success factors is the key to effectively generating
feasible alternative strategies stage.
The Strength, Weaknesses, Opportunities, and
Threats (SWOT) Analysis
This matrix assists in the identification of important
variables for strategic planning for both individuals and
organizations. After the SWOT analysis is finished, it
can be used to create strategies that take advantage of
opportunities, address weaknesses, leverage strengths,
and reduce threats. SWOT analysis is a popular tool
used in marketing, business, and strategic planning
processes to understand the internal and external
variables that can affect a project's or decision's
success.
• Strengths- Internal elements that offer a business a favorable position or
a competitive edge. These may consist of elements like a well-known
brand, a knowledgeable workforce, distinctive goods, or effective
procedures.
• Weaknesses- Internal elements that could work against the organization
or impair its effectiveness. Lack of resources, antiquated technology,
subpar management, or other internal issues could all be considered
weaknesses.
• Opportunities- External elements that an organization can take
advantage of. Market trends, technology developments, regulatory
changes, and other outside variables may present opportunities for the
company.
• Threats- External elements that might endanger the organization.
Threats to the organization could originate from rivals, economic
downturns, shifting consumer preferences, or other external issues.
Example
 Strategic Position and Action Evaluation
(SPACE) Matrix
The SPACE matrix which is also known as the strategic
position and action evaluation is a four- dimension framework that
illustrates whether an organization's strategies are forceful,
conventional, defensive or competitive. The SPACE matrix
normally has two axes where one axis represents the two internal
dimensions of an organization financial and competitive position
while the other axis represents two external dimensions - stability
and industry position. By analyzing these four positions,
companies can develop a more comprehensive understanding of
their strategic position and make informed decisions to improve
their overall competitiveness and sustainability in the market.
• Financial position- refers to a company's financial health and
performance, analyzing balance sheets, income statements,
and cash flow. Key aspects include liquidity, profitability,
liquidity, and efficiency. A strong financial position is crucial for
operational activities and economic stability.

• Environmental stability position- assesses external factors

affecting a company's operations, including regulatory
environment, technological changes, economic conditions, and
social and cultural factors. Understanding this position helps
anticipate challenges and opportunities, enabling effective
strategic planning and risk management.
• Competitive position- it evaluates a company's
competitiveness in its industry, focusing on factors like market
share, brand strength, pricing strategies, and differentiation.
Key aspects include brand recognition, product differentiation,
and customer loyalty. A strong position allows a company to
attract and retain customers.

• Industry position- it evaluates a company's competitiveness

and attractiveness, considering factors like growth potential,
entry barriers, industry concentration, and profitability.
Understanding this helps companies make informed decisions
about resource allocation, market entry, and strategic
partnerships.
Example of SPACE Matrix of Apple Inc.
Y-axis= FS – ES = 5.4 – 3.4 = 2
X-axis= – CA + IS = – 1.8 + 4.8 = 3
∴ (x , y) = (2 , 3)
The Boston Consulting Group (BCG) Matrix
The Boston Consulting Group (BCG) Matrix is a
strategic management tool that evaluates and prioritizes a
company's portfolio of businesses or products based on
market growth rate and relative market share.

It divides businesses and goods into four categories:

• Stars (high growth, high market share)
Example: Apple's iPhone when it was first introduced,
experiencing high growth and capturing a significant market
share.
• Question Marks (high growth, low market share)
Example: A new line of smartwatches introduced by a
technology company, experiencing high growth potential but
still establishing market share.
• Cash Cows (low growth, high market share)
Example: Coca-Cola's core carbonated beverages, which
have a large market share but limited growth prospects in
mature markets.
• Dogs (low growth, low market share)
Example: A declining product line of VHS tapes in a company
that primarily produces DVDs and streaming services, with low
market share and growth potential.
 The Internal - External (IE) Matrix
The Internal-External (IE) Matrix is a strategic
management tool that assesses and prioritizes a company's
strategic position based on internal strengths and
weaknesses, as well as external opportunities and threats. It
integrates the findings of the SWOT analysis (Strengths,
Weaknesses, Opportunities, and Threats) to provide strategic
guidance. The vertical axis represents the Internal Factors
(IF) which are the strengths and weaknesses of the company.
The horizontal axis represents the External Factors (EF)
which are the opportunities and threats in the external
environment.
The matrix divides the strategic position of a company into nine cells, each
suggesting a different set of strategies. Here are the definitions of the cells:

• Grow and Build Strategies- Strong internal position to capitalize on

external opportunities.
Example: Google leveraging its strong internal capabilities in technology
and innovation to expand into new markets like cloud computing and
artificial intelligence.

• Hold and Maintain Strategies- Strong internal position but facing limited
external opportunities.
Example: Toyota maintaining its strong internal position in manufacturing
efficiency and quality while facing limited external opportunities for
significant growth in mature markets.
• Harvest or Divest Strategies- Weak internal position, yet facing
favorable external opportunities.
Example: A company with strong external opportunities in emerging
markets but lacking internal capabilities decides to divest from
certain underperforming product lines.

• Defensive Strategies- Weak internal position and limited external

opportunities.
Example: A traditional brick-and-mortar retailer facing both internal
challenges like outdated infrastructure and external threats like
online competition may adopt defensive strategies such as cost-
cutting or restructuring.
 The Grand Strategy Matrix
The Grand Strategy Matrix is a tool used in strategic management
to evaluate different strategic options based on two key dimensions:
competitive position (strong or weak) and market growth rate (high or
low). It helps organizations determine which strategy to pursue based
on their current position in the market and the external environment.

Example: Realme smartphones could be positioned in the GS Matrix

based on market growth rate and competitive position. For instance, if
Realme is in a rapidly growing market segment (high market growth
rate) and has a strong competitive position (strong competitive
advantage), it would fall into the "grow and build" quadrant. This
means Realme would focus on investing in its current products while
also exploring opportunities for expansion.
 Stage 3: The Decision Stage
In decision stage focuses on making
informed and effective decisions based on the
analysis conducted during the earlier stages of the
framework. The decision stage analysis and
intuition provide a basis for making strategy
formulation decisions.
 The Quantitative Strategic Planning Matrix
(QSPM)
The Quantitative Strategic Planning Matrix
(QSPM) is a strategic management tool used during the
design stage of the strategic planning process. It helps
organizations evaluate and prioritize strategic alternatives
based on various internal and external factors. The
QSPM involves identifying key strategic factors, assigning
weights to those factors based on their importance,
evaluating alternative strategies against those factors,
and calculating a numerical score for each strategy to
determine the most viable course of action.
Example of QSPM of Puregold
A retail company like Puregold is considering three
strategic alternatives: expanding into online sales, opening
new brick-and-mortar stores in different regions, and
launching a new loyalty program. The company identifies
several key factors critical for success, such as:

• Market expansion opportunities

• Competitive pricing strategy
• Product quality and variety
• Customer service excellence
• Expansion into new geographic markets
• Technological innovation in operations.
 Cultural Aspects of Strategy Analysis and
Choice
Cultural aspects refer to the values, beliefs, norms, and
behaviors within an organization that influence strategic decision-
making processes.

Example: Jollibee is a popular Filipino fast-food chain in the

Philippines . In its expansion strategy, cultural aspects play a
significant role. Jollibee's menu incorporates Filipino tastes and
preferences, such as sweet-style spaghetti and fried chicken with a
distinct flavor. These cultural elements reflect the company's
understanding of its target market's values and preferences,
influencing its strategic decision-making processes, including menu
development, marketing strategies, and store locations.
 Boards of Directors: Governance Issues
Governance issues pertaining to boards of directors involve
the structures, processes, and responsibilities within corporate
governance frameworks that affect decision-making and oversight.

Example: In the case of Jollibee, governance issues related to its

board of directors could include matters such as board composition,
independence of directors, and decision-making processes. For
instance, Jollibee's board composition might be diverse, with
members possessing expertise in various areas relevant to the
company's operations, such as food industry experience, finance,
and marketing. The independence of directors ensures that decisions
are made in the best interest of shareholders and stakeholders rather
than being influenced by personal interests or conflicts of interest.
 Thank you
for listening!
ASUNCION, KATHLENE
CORBITO, JIMMY IV.
IGLIANE, JUSTINE CARL
MORANTE, JOBELLE
SANTOS, LALYNE