lecture 15 strategy analysis and choice
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Lecture 15 Strategy Analysis And Choice. Grand Strategy Matrix. Popular tool for formulating alternative strategies All organizations (or divisions) can be positioned in one of four quadrants Based on two evaluative dimensions: Competitive position Market growth. RAPID MARKET GROWTH. - PowerPoint PPT PresentationTRANSCRIPT
Lecture 15 Strategy Analysis And Choice
Grand Strategy Matrix
• Popular tool for formulating alternative strategies
• All organizations (or divisions) can be positioned in one of four quadrants
• Based on two evaluative dimensions:– Competitive position– Market growth
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
Quadrant I
• Excellent strategic position• Concentration on current markets and
products• Take risks aggressively when necessary
Grand Strategy Matrix
Quadrant II
• Evaluate present approach seriously• How to change to improve competitiveness• Rapid market growth requires intensive
strategy
Grand Strategy Matrix
Quadrant III
• Compete in slow-growth industries• Weak competitive position• Drastic changes quickly• Cost and asset reduction indicated
(retrenchment)
Grand Strategy Matrix
Quadrant IV
• Strong competitive position• Slow-growth industry• Diversification indicated to more promising
growth areas
Formulation Framework
Quantitative Strategic Planning Matrix
(QSPM)
Stage 3:The Decision Stage
QSPM
Quantitative Strategic Planning Matrix
• Only technique designed to determine the relative attractiveness of feasible alternative actions
QSPM
Quantitative Strategic Planning Matrix
• Tool for objective evaluation of alternative strategies
• Based on identified external and internal crucial success factors
• Requires good intuitive judgment
QSPM
Quantitative Strategic Planning Matrix
• List the firm’s key external opportunities & threats; list the firm’s key internal strengths and weaknesses
• Assign weights to each external and internal critical success factor
QSPM
Quantitative Strategic Planning Matrix
• Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing
• Determine the Attractiveness Scores (AS)
QSPM
Quantitative Strategic Planning Matrix
• Compute the total Attractiveness Scores
• Compute the Sum Total Attractiveness Score
QSPM
Key Internal FactorsManagementMarketingFinance/AccountingProduction/OperationsResearch and DevelopmentComputer Information Systems
Strategy 3Strategy 2
Strategy 1
WeightKey External FactorsEconomyPolitical/Legal/GovernmentalSocial/Cultural/Demographic/EnvironmentalTechnologicalCompetitive
Strategic Alternatives
QSPM
Limitations:
• Requires intuitive judgments and educated assumptions
• Only as good as the prerequisite inputs
QSPM
Positives:
• Sets of strategies examined simultaneously or sequentially
• Requires the integration of pertinent external and internal factors in the decision-making process
Cultural Aspects of Strategy Choice
Culture:
• The set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm
Cultural Aspects of Strategy Choice
Culture:
• Successful strategies depend on degree of support from a firm’s culture
Politics of Strategy Choice
Politics in organizations:
• Management hierarchy• Career aspirations• Allocation of scarce resources
Politics of Strategy Choice
Political tactics for strategists:
• Equifinality• Satisfying• Generalization• Focus on Higher-Order Issues• Provide Political Access on Important Issues
Role of A Board of Directors
Duties and Responsibilities:
1. Control and oversight over management2. Adherence to legal prescriptions3. Consideration of stakeholder interests4. Advancement of stockholders’ rights
Key Terms
• Aggressive quadrant• Attractiveness Scores (AS)• Board of Directors• Boston Consulting Group (BCG) Matrix• Business portfolio• Cash cows• Champions• Competitive Advantage (CA)
Key Terms
• Competitive quadrant• Conservative quadrant• Culture• Decision stage• Defensive quadrant• Directional vector• Dogs• Environmental Stability (ES)• Financial Strength (FS)
Key Terms
• Grand Strategy Matrix• Halo error• Industry Strength (IS)• Input stage• Internal-External (IE) Matrix• Long-term objectives• Matching• Matching stage• Quantitative Strategic Planning Matrix (QSPM)
Key Terms
• Question marks• Relative market share position• SO strategies• ST strategies• Stars• Strategic Position and Action Evaluation
(SPACE) Matrix• Strategy-formulation framework
Key Terms
• Sum total attractiveness scores• Threats-Opportunities-Weaknesses-
Strengths (TOWS) Matrix• Total Attractiveness Scores (TAS)• WO strategies• WT strategies
Thank You