swot analysis nd bcg matrix

Copyright © 2006 Thomson Business and Economics. All rights reserved. 5–1

Exhibit 5–6

Management by Objectives (MBO) Management by Objectives

Step 1. Set individual objectives and plans.

Step 2. Give feedback and evaluate performance.

Step 3. Reward according to performance. Sources of MBO Failures

Lack of top management commitment and follow-through on MBO.

Employees’ negative beliefs about management’s sincerity in its efforts to include them in the decision-making process.



Exhibit 5–10


Dimensions:

Long-term industry attractiveness

Business strength/Competitive position

SBUs plotted as circles with area proportional to the size of the industry, & a sector within each circle representing the SBUs market share in its industry


Strong Average Weak

H

M

L

GE 9-Cell MatrixGE 9-Cell MatrixBusiness Strength/Competitive Position

Long-Term Industry Attractiveness


SBUs in 3 upper left cells get top investment priority

SBUs in 3 middle diagonal cells merit steady investment to maintain & protect their industry positions

SBUs in 3 lower right cells are candidates for harvesting or divestiture


Advantages of G.E. 9-Cell MatrixAdvantages of G.E. 9-Cell Matrix

Allows for intermediate rankings between high & low and between strong & weak

Incorporates a wider variety of strategically relevant variables than the BCG matrix

Stresses the channeling of corporate resources to SBUs with the greatest potential for competitive advantage &

superior performance


Weaknesses of G.E. 9-Cell MatrixWeaknesses of G.E. 9-Cell Matrix

Provides no guidance on specifics of SBU strategy

Only suggests general strategic posture -- aggressive expansion, fortify-&-defend, or harvest/divest

Doesn’t address the issue of strategic coordination across related SBUs

Tends to obscure SBUs about to “take off” or “crash & burn” -- static, not dynamic


Life-Cycle Portfolio MatrixLife-Cycle Portfolio Matrix

Dimensions:

Industry stage in the life cycle

SBU’s competitive position

Area of each SBU circle is proportional to size of the industry; sectors denote SBU’s market share in its industry

This matrix displays the distribution of the firm’s businesses across the various stages of industry evolution


Strong Average Weak

SBUs Competitive Position

Life-Cycle Portfolio MatrixLife-Cycle Portfolio Matrix

Introduction

Growth

Early Maturity

Late Maturity

Decline

Life-Cycle Stages


15

Strategy Formulation vs. Implementation

• Strategy Formulation = stage of strategic management that involves planning and decision making that lead to the establishment of the organization’s goals and of a specific strategic plan

• Strategy Implementation = stage of strategic management that involves the use of managerial and organizational tools to direct resources toward achieving strategic outcomes

Experiential Exercise: Developing Strategy for a Small Business


16

Portfolio Strategy

• Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage

BCG Matrix


17

Three Levels of Strategy in Organizations

Corporate-Level Strategy: What business are we in?

Corporation

Business-Level Strategy: How do we compete?

Textiles Unit Chemicals Unit Auto Parts Unit

Functional-Level Strategy:

How do we support the business-level strategy?

Finance R&D Manufacturing Marketing

swot analysis nd bcg matrix

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