group 5
DESCRIPTION
STRATEGIC MANAGEMENT BCG, SPACETRANSCRIPT
Strategic Management
Analytical ToolsStrategic Management
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SPACE Matrix
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SPACE Matrix
The Strategic Position and ACtion Evaluation (SPACE) matrix focuses on strategy formulation especially as related to the competitive position of an organization.
The SPACE matrix is based on 4 areas of analysis:
Financial Strength (FS)
Competitive Advantage (CA)
Environmental Stability (ES)
Industry Strength (IS)
Internal strategic dimension
External strategic dimension
Source: http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method
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SPACE Matrix
There are four (4) quadrants where each quadrant suggests a different type or a nature of a strategy:
Aggressive
Conservation
Defensive
Competitive
There are 7 steps to develop a SPACE matrix.
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Step to develop SPACE Matrix
1. Select a set of variables to define FS, CA, ES, & IS2. Assign a numerical value:
1. From +1 to +6 to each FS & IS dimension2. From -6 to -1 to each ES & CA dimension
3. Compute an average score for each FS, CA, ES, & IS4. Plot the average score on the appropriate axis.5. Add the average scores of CA and IS on the x-axis and plot the
point. 6. Add the average scores of ES and FS on the y-axis and plot the
point. 7. Draw a directional vector from the origin through the new
intersection point.
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Sample of SPACE Matrix
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A completed SPACE matrix look like…
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BCG Matrix
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BOSTON CONSULTING GROUP (BCG)
High Low
Relative position (Market Share)
Low
High
Bu
sin
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gro
wth
rat
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The Boston Consulting Group (BCG), founded in
1963, was a pioneering consulting that introduced
influential concepts such as the ‘experience
curve’ and the ‘growth-share matrix’
The key purpose of portfolio models was to assist a company in achieving a balanced portfolio of
business
Helped companies answer that question by providing them a way to analyze product lines in search of
growth opportunities
Imbalance, for example, could be caused either by excessive cash generation with too few growth
opportunities or by insufficient cash generation to fund the growth requirements
This consisted of businesses whose profitability, growth and cash flow characteristics would
complement each other
WHY BCG ??
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• Leaders in the business
• Require heavy investment to maintain market share
• Consume large amounts of cash and generates large amount of cash
• Generate more cash than required
• Keep profits high• invest to maintain
current level• Foundation of a
company
• Will absorb great amount of cash if market share remain low
• Potential to become cash cow or star but also dog
• Investment remain constantly high
• Avoid and minimize the number of dogs in a company
• Beware of expensive ‘turn around plans’
•Do not have potential to bring in much cash
High growth, Low market share
High growth, High market share
Low growth,High market share
Low growth,low market share
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BCG Matrix NESTLE
• High in research and development (R&D) cost
• coffee market is still growing
• Market share is still growing
• Brand name has been embedded into customer’s heart
• concept of packaging is not welcomed
• Weak in market, difficult to make profit
• remained strong brand leader in the market.
• Rise of competitors and start lose the grip in the market.
Nescafe Chocolate
Maggi Noodle, Milo Mineral Water
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Value Chain
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Value Chain Analysis
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Primary activities
• Inbound Logistics - involve relationships withsuppliers and include all the activities requiredto receive, store, and disseminate inputs.
• Operations - are all the activities required totransform inputs into outputs (products andservices).
• Outbound Logistics - include all the activitiesrequired to collect, store, and distribute theoutput.
• Marketing and Sales - activities inform buyersabout products and services, induce buyers topurchase them, and facilitate their purchase.
• Service - includes all the activities required tokeep the product or service working effectivelyfor the buyer after it is sold and delivered.
Secondary activities
• Procurement - is the acquisition of inputs, orresources, for the firm.
• Human Resource management - consists ofall activities involved in recruiting, hiring,training, developing, compensating and (ifnecessary) dismissing or laying off personnel.
• Technological Development - pertains to theequipment, hardware, software, proceduresand technical knowledge brought to bear inthe firm's transformation of inputs intooutputs.
• Infrastructure - serves the company's needsand ties its various parts together, it consistsof functions or departments such asaccounting, legal, finance, planning, publicaffairs, government relations, qualityassurance and general management.
Why Value Chain Analysis;• Understand the key activities within an industry or company• Determine whether there is any backward or forward integration in an industry• Map key players at each stage of an industry’s value chain• Map the customer’s experience at each stage in a company’s value chain
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Strategy Maps
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