Group Members

Farah Amjad 07
Raazia Jarral 22
Um-e-Roman 29
Maham Malik 39
Anam Attique 52


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

Nature of Strategy Analysis & Choice
Strategy Analysis & Choice
Vision
Mission
Objectives

External audit
Internal audit

Past successful strategies
Strategy Analysis & Choice
Alternative Strategies Derive From
Comprehensive Strategy-Formulation
Framework
Stage 1:
The Input Stage
Stage 2:
The Matching Stage
Stage 3:
The Decision Stage
Strategy-Formulation Analytical
Framework
Internal Factor Evaluation
Matrix (IFE)
External Factor Evaluation
Matrix (EFE)
Stage 1:
The Input Stage
Competitive Profile Matrix
(CPM)
Note: EFE and CPM form external and IFE from internal (assessment)
Stage 1: The Input Stage

Basic input information for the matching &
decision stage matrices
Requires strategists to quantify subjectivity
early in the process
Good intuitive judgment always needed

Strategy-Formulation Analytical
Framework
SWOT Matrix
BCG Matrix
Grand Strategy Matrix
Stage 2:
The Matching Stage
Stage 2: The Matching Stage

Match between organizations internal
resources & skills and the opportunities & risks
created by its external factors
E.g. internal: strong R and D function
External changing demographics
(population getting older)
Strategy: Develop new products for older
adults (related to long term objectives
financial or strategic)

Stage 2: The Matching Stage: SWOT Matrix
Four Types of Strategies

Strengths-Opportunities (SO):
Use a firms internal strengths to take advantage of external
opportunities

Weaknesses-Opportunities (WO):
Improving internal weaknesses by taking advantage
of external opportunities

Strengths-Threats (ST):
Use a firms strengths to avoid or reduce the impact of external
threats.

Weaknesses-Threats (WT):
Defensive tactics aimed at reducing internal weaknesses and
avoiding external threats
SWOT Matrix
Leave Blank
Strengths S

List Strengths
Weaknesses
W

List Weaknesses
Opportunities
O

List Opportunities
SO Strategies

Use strengths to take
advantage of
opportunities
WO Strategies

Overcoming
weaknesses by taking
advantage of
opportunities
Threats T

List Threats
ST Strategies

Use strengths to avoid
threats
WT Strategies

Minimize weaknesses
and avoid threats
Key Strategies
1. Accelerate product launches by strengthening R and D
team
2. Extend links with key technology centres
3. Raise additional venture capital
4. Expand senior management team in sales/marketing
5. Recruit non-executive directors
6. Strengthen human resources function and introduce
share options for staff
7. Appoint advisers for intellectual property and finance
8. Seek new market segments/applications for products

Limitations with SWOT Matrix
Does not show how to achieve a
competitive advantage
Provides a static assessment in time
May lead the firm to overemphasize a
single internal or external factor in
formulating strategies


BCG Matrix
Boston Consulting Group Matrix
Enhances multi-divisional firm in formulating
strategies
Autonomous divisions = business portfolio
Divisions may compete in different industries
Focus on market-share position & industry
growth rate
BCG Matrix
Relative Market Share Position
Ratio of a divisions own market share in an
industry to the market share held by the largest
rival firm in that industry
18
BCG Matrix
Dogs
IV
Cash Cows
III
Question Marks
I
Stars
II
Relative Market Share Position
High
1.0
Medium
.50
Low
0.0
I
n
d
u
s
t
r
y

S
a
l
e
s

G
r
o
w
t
h

R
a
t
e

High
+20
Low
-20
Medium
0
BCG Matrix
Question Marks
Low relative market share compete in high-
growth industry
Cash needs are high
Cash generation is low

Decision to strengthen (intensive strategies)
or divest
BCG Matrix
Stars
High relative market share and high growth rate
Best long-run opportunities for growth & profitability

Substantial investment to maintain or
strengthen dominant position
Integration strategies, intensive strategies, joint
ventures
BCG Matrix
Cash Cows
High relative market share, competes in low-
growth industry
Generate cash in excess of their needs
Milked for other purposes
Maintain strong position as long as possible
Product development, concentric diversification
If weakensretrenchment or divestiture
BCG Matrix
Dogs
Low relative market share & compete in slow or
no market growth
Weak internal & external position

Liquidation, divestiture, retrenchment
Grand Strategy Matrix
Tool for formulating alternative strategies
Based on two dimensions
Competitive position
Market growth
24
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
STRONG
COMPETITIVE
POSITION
Grand Strategy Matrix
Excellent strategic position
Concentration on current markets/products
Take risks aggressively when necessary
Which type of strategy would you suggest?
Quadrant I
Grand Strategy Matrix
Evaluate present approach
How to improve competitiveness
Rapid market growth requires intensive
strategy
Quadrant II
Grand Strategy Matrix
Compete in slow-growth industries
Weak competitive position
Drastic changes quickly
Cost & asset reduction (retrenchment)
Quadrant III
Grand Strategy Matrix
Strong competitive position
Slow-growth industry
Diversification to more promising growth areas
Quadrant IV
Strategy-Formulation Analytical
Framework
Stage 3:
The Decision Stage
Quantitative Strategic
Planning Matrix
(QSPM)
Technique designed to determine the relative
attractiveness of feasible alternative actions
Steps to Develop a QSPM
1. Make a list of the firms key external
opportunities/threats and internal
strengths/weaknesses in the left column
2. Assign weights to each key external and
internal factor
3. Examine the Stage 2 (matching) matrices, and
identify alternative strategies that the
organization should consider implementing
4. Determine the Attractiveness Scores (A.S)
5. Compare the Total Attractiveness Scores
6. Compute the Sum Total Attractiveness Score
31
QSPM : information from IFE and
EFE
Key Internal Factors
Management
Marketing
Finance/Accounting
Production/Operations
Research and Development
Computer Information
Systems
Sum total A.S.
Strategy 3 Strategy 2 Strategy 1 Weight Key External Factors
Economy
Political/Legal/Governmental
Social/Cultural/Demographic/
Environmental
Technological
Competitive
Strategic Alternatives
AS 1 to 4 and blank if factor does not effect strategy: TAS = Weight x AS
QSPM
Requires intuitive judgments & educated
assumptions
Only as good as the prerequisite inputs
Limitations
Advantages
Sets of strategies considered simultaneously or
sequentially
Integration of pertinent external & internal
factors in the decision making process
Example of a QSPM for Dell