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&
Strategy ANALYSIS&Strategy ANALYSIS
CHOICECHOICE
UROOSHA NAEEM
UROOSHA NAEEM
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Strategy FormulationStrategy Formulation
FrameworkFramework
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Input StageInput Stage
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Matching StageMatching Stage
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Decision StageDecision Stage
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Stage 2: Matching StageStage 2: Matching Stage Matching Stage focuses upon feasible
alternative strategies by aligning keyinternal and external factors.
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SWOT MatrixSWOT Matrix
A SWOT Analysis is a strategicplanning tool used to evaluate theStrengths, weakness, Opportunities
and Threats involved in a business.Four types of strategies: 1:SO Strategies
2:WO Strategies 3:ST Strategies 4:WT Strategies
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SWOT Matrix DevelopingSWOT Matrix Developing
StepsSteps1. Rank external opportunities2. Rank external threats3. Rank internal strength4. Rank internal weaknesses.5. Match internal strengths with external
opportunities and mention the result in the SOStrategies cell.
6. Match internal weaknesses with externalopportunities and mention the result in the WOStrategies cell..
7. Match internal strengths with external threatsand mention the result in the ST Strategies cell.8. Match internal weaknesses with external threats
and mention the result in the WT strategies cell.
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SWOT MatrixSWOT MatrixLeave Blank Strengths S
List Strengths
Weaknesses W
List Weaknesses
Opportunities O
List Opportunities
SOStrategies
Use strengths to takeadvantage ofopportunities
WOStrategies
Overcoming weaknessesby taking advantage ofopportunities
Threats T
List Threats
STStrategiesUse strengths to avoidthreats
WTStrategiesMinimize weaknessesand avoid threats
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Space MatrixSpace Matrix Space Matrix explains that what is
our strategic position and whatpossible action can be taken.
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Space FactorsSpace Factorsn te rn a l S tra te g ic P o sitio n xte rn a l S tra te g ic P o sitio n
( )in a n cia l S tre n g th F SRisk involved in business
Return on investment
LeverageLiquidityWorking capital conditionCash flow
Debt to equity ratio
( )nvironmental Stability ESTechnological changesRate of inflation
Demand variabilityPrice range of competing productsCompetitive pressurePrice elasticity of demand
Political situationCompetitive pressure
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Space FactorsSpace Factorsnternal Strategic Position xternal Strategic Position
( )ompetitive Advantage CAMarket shareProduct life cycle
Customer loyaltyCapacity, location & layout
-Technological know how
( )ndustry Strength ISGrowth potentialProfit potential
Financial stability,Productivity capacity utilization
Ease of entry into marketResource utilization
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Space Matrix Preparation StepSpace Matrix Preparation Step1. Select a set of variables to relating to financial strength, competitive
advantage, environmental stability, and industry strength.2. Assign a numerical value ranging from +1 (worst) to +6 (best) to
each of the variables that make up the financial strength andindustry strength dimensions. Assign a numerical value ranging from-1 (best) to -6 (worst) to each of the variables that make up theenvironmental stability and competitive advantage dimensions.
3. Compute an average score and dividing by the number of variables4. Plot the average scores in the SPACE Matrix.5. Add the two scores on the x-axis and plot the resultant point on X.
Add the two scores on the y axis and plot the resultant point on Y.Plot the intersection of the new x y point.
6. Draw a directional vector from the origin of the SPACE Matrixthrough the new intersection point. This vector reveals the type ofstrategies recommended for the organization: aggressive,competitive, defensive, or conservative.
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BCG MatrixBCG Matrix The BCG matrix is a well-known
portfolio management tool used inproduct life cycle theory.
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BCG MatrixBCG Matrix
Question marks Units with lowmarket share in a fast-growingindustry. Require large amounts of
cash to grow their market share. Thecorporate goal must be to grow thebusiness. fall down into the dogscategory.
Stars Units with a high market sharein a fast-growing industry. Stars arethe leaders in the business but stillneed a lot of support for promotion aplacement.
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BCG MatrixBCG Matrix
Cash cows Units with high marketshare in a slow-growing industry.Because of the low growth,
promotion and placementinvestments are low. Generate cashin excess of the amount of cash
needed.Dogs Units with low market share in a
slow-growing industry. Dogs shouldbe avoided and minimized.Expensive turn-around plans usually
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IE MatrixIE Matrix
IE Matrix is strategic management toolused to analyze working conditionsand strategic position of a business.
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IE Matrix DevelopmentIE Matrix Development
StepsSteps1. Based on two key dimensions IFE and EFE.2. Plot IFE total weighted scores on thex-axis and
the EFE total weighted scores on the y axis3. On thex-axis of the IE Matrix, an IFE total
weighted score of 1.0 to 1.99 represents a weakinternal position; a score of 2.0 to 2.99 isconsidered average; and a score of 3.0 to 4.0 isstrong.
4. On they-axis, an EFE total weighted score of 1.0to 1.99 is considered low; a score of 2.0 to 2.99 is
medium; and a score of 3.0 to 4.0 is high.5. IE Matrix divided into three major regions. Grow and build Cells I, II, or IV Hold and maintain Cells III, V, or VII Harvest or divest Cells VI, VIII, or IX
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Grand Strategy MatrixGrand Strategy Matrix Grand strategy matrix it is popular
tool for formulating alternativestrategies. It is based on two major
dimensions
1. Market growth
2. Competitive position
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u a d ra n t I V.1 Concentric diversification
.2 Horizontal diversification
.3
Conglomeratediversification
.4 Joint ventures
u a dr an t I I I.1 Retrenchment
.2 Concentric diversification
.3
Horizontal diversification
.4 Conglomeratediversification
.5 Liquidation
u a d r an t I.1 Market development
.2 Market penetration
.3 Product development
.4 Forward integration
.5 Backward integration
.6 Horizontal integration
.7 Concentric diversification
u a dr a n t I I.1 Market development
.2 Market penetration
.3 Product development
.4 Horizontal integration
.5 Divestiture
.6 Liquidation
APID MARKET GROWTH
LOW MARKET GROWTH
EAK OMPETITIVEPOSITIONSTRONG OMPETITIVEPOSITION
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Grand Strategy MatrixGrand Strategy Matrix
Qurdant-1 Matrix are in an excellentstrategic position. These firms mustfocus on current market.Take risks
aggressively when necessary.Quadrant II need to evaluate their
present approach to the
marketplace. Rapid market growthrequires intensive strategy.
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Grand Strategy MatrixGrand Strategy Matrix Quadrant III The firms fall in this
quadrant compete in slow-growthindustries and have weak competitive
positions. These firms must make somedrastic changes quickly to avoidpossible liquidation.
Quadrant IV have a strong competitive
position but are in a slow-growthindustry. It have the strength to launchdiversified programs into morepromising growth areas.
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-trategy Formulation Framework
:tage 3he DecisionStage
uantitativeStrategiclanning Matrix( )SPM
Technique designed to determine therelative attractiveness of feasible
alternative actions
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QSMP Matrix Developing StepsQSMP Matrix Developing Steps
1.Make a list of the firms key externalopportunities/threats and internalstrengths/weaknesses in the left column
2.Assign weights to each key external and
internal factor3. Examine the Stage 2 (matching)
matrices, and identify alternativestrategies that the organization should
consider implementing4. Determine the Attractiveness Scores(A.S)
5. Compare the Total AttractivenessScores
6. Compute the Sum Total Attractiveness
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QSPM : information from IFEQSPM : information from IFEand EFEand EFE
e y In te rn al Facto rsM a n a g e m e n t
M a rke tin g
/Fin a n ce A cco u n tin g
/Pro d u ctio n O p e ra tio n s
R esearch a nd
D ev elop m en t
C o m p u te r In fo rm a tio n
System s . .u m to ta l A S
Strategy 3Strategy
2
Strategy
1
W e ig h tey Ex tern al Facto rsE c o n o m y
/ /Po litica l Le g a l G o v e rn m e nta l
/ /S o cia l C u ltu ra l D e m o g ra p
/h ic E n viro n m e n ta l
Te ch n o lo g ica l
C om p e titiv e
trategic Alternatives
: =AS 1 to 4 and blank if factor does not effect strategy TAS Weight x AS
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Q S P M
. &1 Requires intuitive judgments educatedassumptions
.2 Only as good as the prerequisite inputs
Limitations
Advantages.1 Sets of strategies considered
simultaneously or sequentially. &2 Integration of pertinent external
internal factors in the decision makingprocess
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Cultural Aspects Of StrategyCultural Aspects Of StrategyChoiceChoice
All organization have a culture.Culture include the set of shared values,
believes, attitudes, customs, norms,
personalities that describe a firm.Success often rests upon the supportthat strategies receive from a firmsculture.
Strategies that require fewer culturalchanges may be more attractivebecause
Extensive can take time and effect.
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Politics of Strategy ChoicePolitics of Strategy Choice
All organization are political .Following tactics use by politician can
aid strategists. 1.equifinality 2.satisfy 3.generalization
4.focusnon higher-order issues 5.provide political access onimportant
issues
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Corporate Governance IssuesCorporate Governance Issues
. o more than 2 directors current or former companyexecutives. o directors do business with the company. , ,udit compensation and nominating committees madeup f outside directors. %ach director attends at lest 75 of all meetings. udit committee meets at least four times a year. EO is not also the Chairperson of the Board
. hareholders have considerable power and informationo &hoose replace directors. tock options are considered a corporate expense. o interlocking directorships
usiness Week s principles of good governance
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THE ENDTHE END