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
1.
2.
3.
4.
5.
6.
WEAK
COMPETITIVE
POSITION
1.
2.
3.
4.
5.
Quadrant II
Market development
Market penetration
Product development
Horizontal integration
Divestiture
Liquidation
1.
2.
3.
4.
5.
6.
7.
Quadrant III
Retrenchment
1.
Concentric diversification
2.
Horizontal diversification
3.
Conglomerate
diversification
4.
Liquidation
SLOW MARKET
Quadrant I
Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Concentric diversification
Quadrant IV
Concentric diversification
Horizontal diversification
Conglomerate
diversification
Joint ventures
GROWTH
STRONG
COMPETITIVE
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
Stage 3:
The Decision Stage
Quantitative Strategic
Planning Matrix
(QSPM)
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 External Factors
Economy
Political/Legal/Governmental
Social/Cultural/Demographic/
Environmental
Technological
Competitive
Key Internal Factors
Management
Marketing
Finance/Accounting
Production/Operations
Research and Development
Computer Information
Systems
Strategic Alternatives
Weight
Strategy 1
Strategy 2
Strategy 3
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.
2.
3.
4.
Control and oversight over management
Adherence to legal prescriptions
Consideration of stakeholder interests
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-WeaknessesStrengths (TOWS) Matrix
Total Attractiveness Scores (TAS)
WO strategies
WT strategies
Thank You