Professional Documents
Culture Documents
Analysis and
Choice
Chapter Six
Chapter Objectives
6-3
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A Comprehensive Strategic-
Management Model
6-4
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The Process of Generating and
Selecting Strategies
A manageable set of the most attractive
alternative strategies must be developed
The advantages, disadvantages, trade-
offs, costs, and benefits of these
strategies should be determined
6-5
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The Process of Generating and
Selecting Strategies
Identifying and evaluating alternative
strategies should involve many of the
managers and employees who earlier
assembled the organizational vision and
mission statements, performed the
external audit, and conducted the internal
audit.
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The Process of Generating and
Selecting Strategies
Alternative strategies proposed by
participants should be considered and
discussed in a series of meetings.
Proposed strategies should be listed in
writing.
When all feasible strategies identified by
participants are given and understood, the
strategies should be ranked in order of
attractiveness.
6-7
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The Strategy-Formulation
Analytical Framework
6-8
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A Comprehensive Strategy-
Formulation Framework
Stage 1 - Input Stage
summarizes the basic input information
needed to formulate strategies
consists of the EFE Matrix, the IFE Matrix,
and the Competitive Profile Matrix (CPM)
6-9
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A Comprehensive Strategy-
Formulation Framework
Stage 2 - Matching Stage
focuses on generating feasible alternative
strategies by aligning key external and internal
factors
techniques include the Strengths-Weaknesses-
Opportunities-Threats (SWOT) Matrix, the
Strategic Position and Action Evaluation
(SPACE) Matrix, the Boston Consulting Group
(BCG) Matrix, the Internal-External (IE) Matrix,
and the Grand Strategy Matrix
6-10
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A Comprehensive Strategy-
Formulation Framework
Stage 3 - Decision Stage
involves the Quantitative Strategic Planning
Matrix (QSPM)
reveals the relative attractiveness of
alternative strategies and thus provides
objective basis for selecting specific
strategies
6-11
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Matching Key External and Internal Factors
to Formulate Alternative Strategies
6-12
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The Matching Stage
The Strengths-Weaknesses-
Opportunities-Threats (SWOT) Matrix
helps managers develop four types of
strategies:
SO (strengths-opportunities) Strategies
WO (weaknesses-opportunities) Strategies
ST (strengths-threats) Strategies
WT (weaknesses-threats) Strategies
6-13
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The Matching Stage
SO Strategies WO Strategies
use a firm’s aim at improving
internal strengths internal
to take advantage weaknesses by
of external taking advantage
opportunities of external
opportunities
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The Matching Stage
ST Strategies WT Strategies
use a firm’s defensive tactics
strengths to avoid directed at
or reduce the reducing internal
impact of external weakness and
threats avoiding external
threats
6-15
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SWOT Matrix
6-16
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SWOT Matrix (cont.)
6-18
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A SWOT Matrix for a Retail
Computer Store
6-19
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The SPACE Matrix
6-20
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The Strategic Position and Action
Evaluation (SPACE) Matrix
Strategic Position and Action
Evaluation (SPACE) Matrix
four-quadrant framework indicates whether
aggressive, conservative, defensive, or
competitive strategies are most appropriate
for a given organization
6-21
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The Strategic Position and Action
Evaluation (SPACE) Matrix
Two internal dimensions (financial
position [FP] and competitive position
[CP])
Two external dimensions (stability
position [SP] and industry position [IP])
Most important determinants of an
organization’s overall strategic position
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Factors That Make Up the
SPACE Matrix Axes
6-23
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Steps to Develop a SPACE Matrix
6-24
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Steps to Develop a SPACE Matrix
6-25
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Steps to Develop a SPACE Matrix
6-26
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Steps to Develop a SPACE Matrix
6-27
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Example Strategy Profiles
6-28
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Example Strategy Profiles
6-29
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The Boston Consulting Group
(BCG) Matrix
BCG Matrix
graphically portrays differences among
divisions in terms of relative market share
position and industry growth rate
allows a multidivisional organization to
manage its portfolio of businesses by
examining the relative market share position
and the industry growth rate of each division
relative to all other divisions in the
organization
6-30
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The BCG Matrix
6-31
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The BCG Matrix
6-34
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The Internal-External (IE) Matrix
6-35
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The Internal-External (IE) Matrix
6-36
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The IE Matrix
6-37
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The Grand Strategy Matrix
6-38
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The Grand Strategy Matrix
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The Grand Strategy Matrix
Quadrant I
continued concentration on current markets
(market penetration and market development)
and products (product development) is an
appropriate strategy
Quadrant II
unable to compete effectively
need to determine why the firm’s current
approach is ineffective and how the company can
best change to improve its competitiveness
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The Grand Strategy Matrix
Quadrant III
must make some drastic changes quickly to avoid
further decline and possible liquidation
Extensive cost and asset reduction
(retrenchment) should be pursued first
Quadrant IV
have characteristically high cash-flow levels and
limited internal growth needs and often can
pursue related or unrelated diversification
successfully
6-41
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The Quantitative Strategic
Planning Matrix (QSPM)
Quantitative Strategic Planning Matrix
(QSPM)
objectively indicates which alternative
strategies are best
uses input from Stage 1 analyses and
matching results from Stage 2 analyses to
decide objectively among alternative
strategies
6-42
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The Quantitative Strategic
Planning Matrix (QSPM)
6-43
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Steps in a QSPM
6-44
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Steps in a QSPM (cont.)
6-45
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Positive Features of the QSPM
6-46
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Limitations of the QSPM
6-47
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A QSPM for a Retail
Computer Store
6-48
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A QSPM for a Retail
Computer Store
6-49
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The Politics of Strategy Choice
6-50
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The Politics of Strategy Choice
6-51
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Tactics to Aid Strategists
6-52
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Governance Issues
Board of directors
a group of individuals who are elected by the
ownership of a corporation to have oversight
and guidance over management and who
look out for shareholders’ interests
6-53
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Board of Director Duties and
Responsibilities
6-54
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Principles of Good Governance
6-56
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6-57
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