Bus 411

DAY 10

Agenda

Assignment #3 not corrected Still waiting for submissions

Assignment #4 assigned this class Templates available in WebCT Discussion on Mid-term will be after Spring Break

Chapters 1-9 Take home Intense

Finish Discussion on Strategy Analysis and choice

Strategy-Formulation Analytical Framework

SWOT Matrix

SPACE Matrix

BCG Matrix

IE Matrix

Grand Strategy Matrix

Stage 2:The Matching Stage

IE Matrix

The IE Matrix positions an organization’s various divisions in a nine-cell display illustrated in Figure 6-10.

The IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization divisions in a schematic diagram; this is why they are called portfolio matrices.

Differences between the IE Matrix and the BCG Matrix Axis are different. IE Matrix requires more information about divisions than

BCG. Strategic implications of each matrix are different.

IE Matrix

I II III

IV V VI

VII VIII IX

IFE ScoresStrong Average Weak3-4 2-2.99 1-1.99

High3-4

Medium2-2.99

Low1-1.99

EF

ES

core

s

Strategy-Formulation Analytical Framework

SWOT Matrix

SPACE Matrix

BCG Matrix

Grand Strategy Matrix

Stage 2:The Matching Stage

IE Matrix

Grand Strategy Matrix

Tool for formulating alternative strategies

Based on two dimensions

Competitive position

Market growth

Ch 6 -8

Quadrant IV

1. Concentric diversification

2. Horizontal diversification

3. Conglomerate diversification

4. Joint ventures

Quadrant III

1. Retrenchment

2. Concentric diversification

3. Horizontal diversification

4. Conglomerate diversification

5. Liquidation

Quadrant I

1. Market development

2. Market penetration

3. Product development

4. Forward integration

5. Backward integration

6. Horizontal integration

7. Concentric diversification

Quadrant II

1. Market development

2. Market penetration

3. Product development

4. Horizontal integration

5. Divestiture

6. Liquidation

RAPID MARKET GROWTH

SLOW MARKET GROWTH

WEAK COMPETITIVE

POSITION

STRONGCOMPETITIVE

POSITION

Grand Strategy Matrix

Excellent strategic position

Concentration on current markets/products

Take risks aggressively when necessary

Quadrant I

Grand Strategy Matrix

Evaluate present approach

How to improve competitiveness

Rapid market growth requires intensive strategy

Quadrant II

Grand Strategy Matrix

Compete in slow-growth industries

Weak competitive position

Drastic changes quickly

Cost & asset reduction (retrenchment)

Quadrant III

Grand Strategy Matrix

Strong competitive position

Slow-growth industry

Diversification to more promising growth areas

Quadrant IV

Strategy-Formulation Analytical Framework

Stage 3:The Decision Stage

Quantitative StrategicPlanning Matrix

(QSPM)

QSPM

Technique designed to determine the relative attractiveness of feasible alternative actions

Quantitative Strategic Planning Matrix

Six steps to developing a QSPM:1. Make a list of the firm’s key external opportunities/threats and

internal strengths/weaknesses in the left column of the QSPM.2. Assign weights to each key external and internal factor.

1. Weights for each category should add up to one

3. Examine the Stage 2 matrices and identify alternative strategies that the organization should consider implementing.

4. Determine the Attractiveness Scores (AS).5. Compute the total AS.

1. Weight * AS6. Compute the sum Total AS.

Ch 6 -16

QSPM

Key Internal Factors

Management

Marketing

Finance/Accounting

Production/Operations

Research and Development

Computer Information Systems

Strategy 3Strategy 2Strategy 1WeightKey External Factors

Economy

Political/Legal/Governmental

Social/Cultural/Demographic/Environmental

Technological

Competitive

Strategic Alternatives

QSPM

Requires intuitive judgments & educated assumptions

Only as good as the prerequisite inputs

Limitations

QSPM

Sets of strategies considered simultaneously or sequentially

Integration of pertinent external & internal factors in the decision making process

Advantages

Cultural Aspects of Strategy Choice

Successful strategies depend on the degree of consistency with the firm’s culture

Organization Culture

Politics of Strategy Choice

Management hierarchy

Career aspirations

Allocation of scarce resources

Politics in Organizations

Successful Strategists :

Were found to let weakly supported ideas and proposals die through inaction and to establish additional hurdles or tests for strongly supported ideas considered unacceptable but not openly opposed.

Politics of Strategy Choice

Equifinality

Same outcomes by different means

Satisfying

Good results with acceptable strategy is better than excellent results with an unpopular strategy

Generalization

Less detail

Higher-order issues

Take cars of the big stuff first

Political access on important issues

Agency and political avenues for redress

Political tactics for strategists

Governance Issues

Control & oversight over management

Adherence to legal prescriptions

Consideration of stakeholder interests

Advancement of stockholder rights

Board of Directors Roles & Responsibilities

Corporate Governance Issues

1. No more than 2 directors current or former company executives2. No directors do business with the company3. Audit, compensation, and nominating committees made up

of outside directors4. Each director attends at lest 75% of all meetings5. Audit committee meets at least four times a year6. CEO is not also the Chairperson of the Board7. Shareholders have considerable power and information to

choose & replace directors8. Stock options are considered a corporate expense9. No interlocking directorships

Business Week’s “principles of good governance”

Chapter 7Implementing Strategies: Management & Operations Issues

Strategic Management: Concepts & Cases

10th EditionFred David

PowerPoint Slides by

Anthony F. Chelte

Western New England College

Chapter Outline

The Nature of Strategy Implementation

Annual Objectives

Policies

Chapter Outline (cont’d)

Resource Allocation

Managing Conflict

Matching Structure with Strategy

Chapter Outline (cont’d)

Restructuring, Reengineering & E-Engineering

Linking Performance & Pay to Strategies

Managing Resistance to Change

Chapter Outline (cont’d)

Managing the Natural Environment

Creating a Strategy-Supportive Culture

Production/Operations Concerns When Implementing Strategies

Chapter Outline (cont’d)

Human Resource Concerns When Implementing Strategies

Pretend that every single person you meet has a sign around his or her neck that says, “Make me feel important” –

Mary Kay Ash, CEO of Mary Kay, Inc.

Implementing Strategies

-- Successful strategy formulation does not guarantee successful strategy implementation

The Nature of Strategy Implementation

Formulation positions forces before the action

Implementation manages forces during the action

Nature of Strategy Implementation

Formulation vs. Implementation

Formulation focuses on effectiveness

Implementation focuses on efficiency

Nature of Strategy Implementation

Formulation vs. Implementation

Formulation primarily an intellectual process

Implementation primarily an operational process

Nature of Strategy Implementation

Formulation vs. Implementation

Formulation requires good intuitive & analytical skills

Implementation requires special motivational & leadership skills

Nature of Strategy Implementation

Formulation vs. Implementation

Formulation requires coordination among a few individuals

Implementation requires coordination among many individuals

Nature of Strategy Implementation

Formulation vs. Implementation

Varies among different types & sizes of organizations

Nature of Strategy Implementation

Strategy Implementation

Assignment Four

Use templates provided in assignment and in WebCT

Due Before Spring Break In my possession prior to 3:30PM Friday,

February 25 20 points off for each day late and I will not be

checking during break so if I get it after break, it will be a zero.