You are on page 1of 18

Chapter 6

Strategy Analysis & Choice


Strategic Management: Concepts & Cases

Course coordinator
Prof. Begum Khaleda Khanam
Ch 6 -1

Strategy Analysis & Choice


Nature of Strategy Analysis & Choice
-- Establishing long-term objectives
-- Generating alternative strategies
-- Selecting strategies to pursue
-- Best alternative - achieve mission & objectives

Ch 6 -2

Comprehensive Strategy-Formulation
Framework
Stage 1:
The Input Stage

Stage 2:
The Matching Stage

Stage 3:
The Decision Stage

Ch 6 -3

Strategy-Formulation Analytical
Framework
Internal Factor Evaluation
Matrix (IFE)

Stage 1:
The Input Stage

External Factor Evaluation


Matrix (EFE)

Competitive Profile Matrix


(CPM)

Ch 6 -4

Strategy-Formulation Analytical
Framework

SWOT Matrix

SPACE Matrix

Stage 2:
The Matching Stage

BCG Matrix

IE Matrix

Grand Strategy Matrix

Ch 6 -5

SWOT Matrix
Four Types of Strategies
Strengths-Opportunities (SO)
Weaknesses-Opportunities (WO)
Strengths-Threats (ST)
Weaknesses-Threats (WT)

Ch 6 -6

SO Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

SO
Strategies

Use a firms
internal strengths
to take advantage
of external
opportunities

Ch 6 -7

WO Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

WO
Strategies

Improving internal
weaknesses by
taking advantage
of external
opportunities

Ch 6 -8

ST Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

ST
Strategies

Use a firms
strengths
to avoid or
reduce the impact
of external
threats

Ch 6 -9

WT Strategies
Strengths
Weaknesses
Opportunities
Threats
SWOT

WT
Strategies

Defensive tactics
aimed at reducing
internal
weaknesses &
avoiding
environmental
threats

Ch 6 -10

SWOT Matrix
Strengths S

Weaknesses W

Leave Blank

List Strengths

List Weaknesses

Opportunities O

SO Strategies

WO Strategies

List Opportunities

Use strengths to take


advantage of
opportunities

Overcoming weaknesses
by taking advantage of
opportunities

Threats T

ST Strategies

WT Strategies

List Threats

Use strengths to avoid


threats

Minimize weaknesses and


avoid threats

Ch 6 -11

Matching Key Factors to Formulate Alternative Strategies


Key Internal Factor

Key External Factor

Resultant Strategy

Ch 6 -12

The BCG Growth-Share Matrix


Cash Generation (market share)
High

Cash Use
(growth
rate)

High

Low

Low

Grand Strategy Selection Matrix


Overcome Weakness

Internal
(redirected
resources
within the
firm)

Turnaround or
retrenchment
Divesture
Liquidation

Vertical integration
Conglomerate
diversification
I
II
IV III

Concentrated growth
Market development
Product development
Innovation

Horizontal integration
Concentric diversification
Joint venture

Maximize Strengths

External
(acquisition or
merger for
resource
capability)

Ch 6 -14

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 I
Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Concentric diversification

Quadrant III
Quadrant IV
Retrenchment
1.
Concentric diversification
Concentric diversification
2.
Horizontal diversification
Horizontal diversification
3.
Conglomerate
diversification
Conglomerate
diversification
4.
Joint ventures
Liquidation
SLOW MARKET GROWTH

STRONG
COMPETITIVE
POSITION

Ch 6 -15

Industry Attractiveness-Business Strength


Matrix
Industry Attractiveness
High

Medium

Low

Business Strength

High

Medium

Low

Ch 6 -16

Strategy-Formulation Analytical
Framework

Stage 3:
The Decision Stage

Quantitative Strategic
Planning Matrix
(QSPM)

Ch 6 -17

Strategic Alternatives

QSPM
Key External Factors
Economy
Political/Legal/Governmental
Social/Cultural/Demographic/
Environmental
Technological
Competitive

Weight

Strategy 1

Strategy 2

Strategy 3

Key Internal Factors


Management
Marketing
Finance/Accounting
Production/Operations
Research and Development
Computer Information
Systems
Ch 6 -18

You might also like