Final Strategic Manangement Assignment

8/9/2019 Final Strategic Manangement Assignment

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Strategic Management case study of IBM 201

1

Table of Contents

PageTopics

2Introduction and brief history of IBM

3Vision, Mission, Value

4Porter’s Five Forces Framework

5External udit5Matrix External Factor Evaluation !EFE" Matrix

7#PM$#om%etitive Profile

10Internal udit

11Internal Factor Evaluation !IFE" Matrix

14&'() Matrix

17&P#E Matrix

21*rand &trate+y Matrix

23)he Boston #onsultin+ *rou% !B#*" Matrix

25)he Internal$External !IE" Matrix

25)he uantitative &trate+ic Plannin+ Matrix !&PM"

29

-eferences

Introduction:




1

In .//0 1erman 1ollerith, a statistician for the 2& Bureau of #ensus formed the )abulatin+

Machine #om%any and )homas 34 'atson became its leader in .5.6 and made the com%any

slo+an 7)hink84 It chan+ed its name to International Business Machines !IBM" in .59:4 It

was taken by the 2& +overnment at the be+innin+ of 'orld 'ar II in the war effort and

+iven a one %ercent %rofit, which it used to fund war victims and or%hans4

;urin+ the %eriod between .5.< and .50<, it develo%ed %roducts from %unch$card

tabulatin+ machines to room$si=ed calculators to mainframe com%utin+ systems for lar+e

enter%rises and chan+ed the nature of accountin+, calculation and basic back$office business

%rocesses4

In the .5><s and /<s, IBM %roduct lines ex%anded from its traditional mainframes to

minicom%uter and %ersonal com%uters and a%%lications moved from backend o%erations to

de%artmental o%eration4 In .5/., the com%any introduced the IBM Personal #om%uter or

P#, allowin+ the use of com%uters in schools, homes and businesses4 #om%onents for the

com%uter were sourced from outside the com%any4 )he %rocessor chi% came from Intel and

the o%eratin+ system, called ;(& !;isk (%eratin+ &ystem", came from Microsoft4

IBM introduced the )hinkPad in .559, the first in a series of notebook com%uters to be

manufactured by the com%any4 In .556, IBM ac?uired @otus ;evelo%ment #or%oration and

)ivoli &ystems4 In .55>, IBM demonstrated com%utin+ %otential with ;ee% Blue, a A9$node

IBM -&0<<< &P com%uter %ro+rammed to %lay chess on a world class level4

;urin+ the nineties, with the Internet and o%en standards, IBM embraced the network

com%utin+ model and coined 7e$business8 to describe how network com%utin+ can

transform core businesses and transactions4

In (ctober 9<<9, IBM ac?uired Pw# #onsultin+, the +lobal mana+ement consultin+ and

technolo+y services unit of Price 'aterhouse #oo%ers4 IBM sold most of its hard disk drive

o%erations to 1itachi in ;ecember 9<<94 )he sale involved the creation of a Coint venture

called 1itachi *lobal &tora+e )echnolo+ies, which was ><D$owned by 1itachi4




1

In 9<<A, IBM -esearch launched (n ;emand Innovation services, which teamed customers

with a team of researchers who s%eciali=e in business transformation and technolo+y

consultin+4 (ver one billion will be s%ent over the next three years and will be staffed with

9<< IBM research consultants4

)oday, IBM is by far the lar+est information technolo+y in the world and the ei+hth lar+est

com%any in the world4 In 9<<A, it had revenues of 2& /54. billion, a net income of :4A9,

more than A00,<<< em%loyees in .>< countries with a%%roximately sixty %ercent of

revenues +enerated outside the 2nited &tates4

Vision

Breakthrou+h micro%rocessor architecture that %uts broadband communications ri+ht on the

chi%4

ission

t IBM, we strive to o%erate in the invention, develo%ment and manufacture of the

industrys most advanced information technolo+ies, includin+ com%uter systems, software,

stora+e systems and microelectronics4

Values

'e translate these advanced technolo+ies into value for our customers throu+h our

%rofessional solutions, services and consultin+ businesses worldwide4

Porter!s "i#e "orces "ra$e%or&:




1

T'e T'reat of (ntrants:

)he threat of entry is low because the costs of -G;, su%%ort %roducts and services,

manufacturin+, and distribution are very hi+h4

)argaining Po%er of )u*ers:

)he %ower of buyers is hi+h because the switchin+ costs for buyers are lowH there are also

many %roduct choices for the buyers4

)argaining po%er of suppliers:

)here are two bi++est %rocessor su%%liers in the world who have very stron+ %ower on the

chi% su%%lyin+4 1owever, the %ower of su%%lier for other low re?uired materials and %arts is

lower than the main su%%liers4

T'reat of +ubstitutes

)he web hostin+ business of other com%anies and some advanced devices and com%uters

could cause threat of substitutes4

Co$petiti#e ,i#alr*:

)he stren+th of com%etition in this industry is very hi+hH the main rivals are 1P,

Microsoft, ;ell, and FuCitsu &iemens #om%uters, they com%ete with international, national,

re+ional, and local4

(-ternal .udit of I)

Opportunities Threats




1

.4 Video +ame console market

revenue is %roCected to reach .9

billion in 9<</ and 00 billion in

9<.9494 )he I) market in -ussia, India,

Bra=il, and #hina are ex%ected to

+row twice as fast as in the rest of

the world4A4 Mobile %hone markets are

ex%ected to +row by 5D in 9<</4:4 1andheld com%uters markets are

ex%ected to +row by A9D in 9<</4

1. #om%etitors are stron+42. Economic fluctuation could crim%

consumers’ s%endin+4A4 &mall G Medium business

demand fails to accelerate4

(-ternal "actor (#aluation /("( atri-

External Factor Evaluation !EFE" matrix method is a strate+ic$mana+ement tool often used

for assessment of current business conditions4 )he EFE matrix is a +ood tool to visuali=e

and %rioriti=e the o%%ortunities and threats that a business is facin+4

)he EFE matrix is very similar to the IFE matrix4 )he maCor difference between the EFE

matrix and the IFE matrix is the ty%e of factors that are included in the model4 'hile the

IFE matrix deals with internal factors, the EFE matrix is concerned solely with external

factors4

External factors assessed in the EFE matrix are the ones that are subCected to the will of

social, economic, %olitical, le+al, and other external forces4

Followin+ are the ste%s of External factor evaluationJ

ist factorsJ )he first ste% is to +ather a list of external factors4 ;ivide factors into two

+rou%sJ o%%ortunities and threats4

.ssign %eig'ts: ssi+n a wei+ht to each factor4 )he value of each wei+ht should be

between < and . !or alternatively between .< and .<< if you use the .< to .<< scale"4 Kero

means the factor is not im%ortant4 (ne or hundred means that the factor is the most

influential and critical one4 )he total value of all wei+hts to+ether should e?ual . or .<<4




1

2. conomic uctuationcould crim consumers

sending

%.1% 2 %.2%

3. Small Medium$usiness demand fails toaccelerate

%.1% 3 %.3%

Total 1.00 2.80

CPCo$petiti#e Profile atri-

)he strate+ic rationale of com%etitor %rofilin+ is %owerfully sim%le4 &u%erior knowled+e of rivals offers a le+itimate source of com%etitive advanta+e4 )he raw material of com%etitive

advanta+e consists of offerin+ su%erior customer value in the firm’s chosen market4 )he

definitive characteristic of customer value is the adCective, su%erior4 #ustomer value is

defined relative to rival offerin+s makin+ com%etitor knowled+e an intrinsic com%onent of

cor%orate strate+y4 Profilin+ facilitates this strate+ic obCective in three im%ortant ways4 First,

%rofilin+ can reveal strate+ic weaknesses in rivals that the firm may ex%loit4 &econd, the

%roactive stance of com%etitor %rofilin+ will allow the firm to antici%ate the strate+ic

res%onse of their rivals to the firm’s %lanned strate+ies, the strate+ies of other com%etin+

firms, and chan+es in the environment4 )hird, this %roactive knowled+e will +ive the firms

strate+ic a+ility4 (ffensive strate+y can be im%lemented more ?uickly in order to ex%loit

o%%ortunities and ca%itali=e on stren+ths4 &imilarly, defensive strate+y can be em%loyed

more deftly in order to counter the threat of rival firms from ex%loitin+ the firm’s own

weaknesses4

#learly, those firms %racticin+ systematic and advanced com%etitor %rofilin+ have a

si+nificant advanta+e4 s such, a com%rehensive %rofilin+ ca%ability is ra%idly becomin+ a

core com%etence re?uired for successful com%etition4 n a%%ro%riate analo+y is to consider

this advanta+e as akin to havin+ a +ood idea of the next move that your o%%onent in a chess

match will make4 By stayin+ one move ahead, checkmate is one ste% closer4 Indeed, as in

chess, a +ood offense is the best defense in the +ame of business as well4

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common techni?ue is to create detailed %rofiles on each of your maCor com%etitors4 )hese

%rofiles +ive an in$de%th descri%tion of the com%etitors back+round, finances, %roducts,

markets, facilities, %ersonnel, and strate+ies4 )his involvesJ

)ac&ground

location of offices, %lants, and online %resences

history $ key %ersonalities, dates, events, and trends

ownershi%, cor%orate +overnance, and or+ani=ational structure

"inancials

P$E ratios, dividend %olicy, and %rofitability

various financial ratios, li?uidity, and cash flow

Profit +rowth %rofileH method of +rowth !or+anic or ac?uisitive"

Products

%roducts offered, de%th and breadth of %roduct line, and %roduct %ortfolio balance

new %roducts develo%ed, new %roduct success rate, and -G; stren+ths

brands, stren+th of brand %ortfolio, brand loyalty and brand awareness

%atents and licenses

?uality control conformance

reverse en+ineerin+

ar&eting

Page &




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se+ments served, market shares, customer base, +rowth rate, and customer loyalty

%romotional mix, %romotional bud+ets, advertisin+ themes, ad a+ency used, sales

force success rate, online %romotional strate+y

distribution channels used !direct G indirect", exclusivity a+reements, alliances, and

+eo+ra%hical covera+e

%ricin+, discounts, and allowances

"acilities

%lant ca%acity, ca%acity utili=ation rate, a+e of %lant, %lant efficiency, ca%ital

investment

location, shi%%in+ lo+istics, and %roduct mix by %lant

Personnel

number of em%loyees, key em%loyees, and skill sets

stren+th of mana+ement, and mana+ement style

com%ensation, benefits, and em%loyee morale G retention rates

Corporate and $ar&eting strategies

obCectives, mission statement, +rowth %lans, ac?uisitions, and divestitures

marketin+ strate+ies

Co$petiti#e Profile atri- of I)

Page /




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IBM MSFT HPQ EDS

Critical

Success

Factors

7eig

"t

)ati

ng

7eig"t

ed

Score

)ati

ng

7eig"t

ed

Score

)ati

ng

7eig"t

ed

Score

)ati

ng

7eig"t

ed

Score

Price %.12 3 %.3' 3 %.3' 4 %.4& 3 %.3'

Financial

Position

%.15 3 %.45 3 %.45 2 %.3% 2 %.3%

Advertisi

ng

%.%/ 2 %.2% 3 %.3% 4 %.4% 2 %.2%

Innovatio

n

%.22 4 %.&& 3 %.'' 3 %.'' 2 %.44

Market

Share

%. 22 3 %.'' 4 %.&& 2 %.44 2 %.44

Managem

ent

%.1% 4 %.4% 4 %.4% 3 %.3% 3 %.3%

lo!alE"#ansio

n

%.1% 3 %.3% 3 %.3% 3 %.3% 3 %.3%

Total 1.00 3.25 3.35 2.88 2.34

Internal .udit of I)

Strength Weakness

.4 IBM revenues increased > %ercent

to 054594billion in 9<<0494 uni?ue a%%roach to en+a+e their

em%loyees in an online intranet

usin+ its 3am technolo+y4A4 &tron+ strate+ic %lannin+ to be an

innovation$centric +lobally

inte+rated cor%oration4

.4 ;eclinin+ in revenues of services

and systems se+ments in 9<<04

94 ;ecline in revenue of %ublic,

industrial, small and medium

business industries in 9<<0 by

540D4

A4 ;ecline in revenues in sia

Pacific area by 64>D4

Page 1%




1

:4 IBM o%erates in .>< countries

with about 0< %ercent of its

revenues bein+ +enerated outside

the 2&464 IBM concentrated on becomin+

stron+er in hi+h value added

businesses404 IBM ranked number . hosted

service %rovider in 'estern

Euro%e4>4 IBM is su%ercom%utin+ leader as

%rovider of A6 of the worlds .<<

most %owerful su%ercom%uters4

:4 )otal assets are +radually

decreasin+ from .<5M to .<AM in

9<<04

Internal "actor (#aluation /I"( atri-

Internal Factor Evaluation !IFE" matrix is a strate+ic mana+ement tool for auditin+ or

evaluatin+ maCor stren+ths and weaknesses in functional areas of a business4

IFE matrix also %rovides a basis for identifyin+ and evaluatin+ relationshi%s amon+ those

areas4 )he Internal Factor Evaluation matrix or short IFE matrix is used in strate+y

formulation4

)he IFE matrix com%rises factors i4e4 stren+ths and weaknesses4

Followin+ are the ste%s of internal factor evaluationJ

ist factorsJ )he first ste% is to +ather a list of internal factors4 ;ivide factors into two

+rou%sJ &tren+ths and weaknesses4

.ssign %eig'ts: ssi+n a wei+ht to each factor4 )he value of each wei+ht should be

between < and . !or alternatively between .< and .<< if you use the .< to .<< scale"4 Kero

means the factor is not im%ortant4 (ne or hundred means that the factor is the most

influential and critical one4 )he total value of all wei+hts to+ether should e?ual . or .<<4




1

,ate factors: ssi+n a ratin+ to each factor4 -atin+ should be between . and :4 -atin+

indicates how effective the firm’s current strate+ies res%ond to the factor4 . L the res%onse is

%oor4 9 L the res%onse is below avera+e4 A L above avera+e4 : L su%erior4 'ei+hts are

industry$s%ecific4 -atin+s are com%any$s%ecific4

ultipl* %eig'ts b* ratings: Multi%ly each factor wei+ht with its ratin+4 )his will

calculate the wei+hted score for each factor4

Total all %eig'ted scores: dd all wei+hted scores for each factor4 )his will calculate the

total wei+hted score for the com%any4

Internal "actor (#aluation /I"( atri- of I)

Key Internal Factors Weight Rating Weighted Score

Strengths

.4 IBM revenues increased > %ercent

to 054594billion

%.1% 4 %.4%

94 uni?ue a%%roach to en+a+e

their em%loyees in an online

intranet usin+ its 3am technolo+y

%.%' 3 %.1&

A4 &tron+ strate+ic %lannin+ to be an

innovation$centric +lobally

inte+rated cor%oration

%.%' 3 %.1&

:4 IBM o%erates in .>< countries

with about 0< %ercent of its

revenues bein+ +enerated outside

the 2&

%.1% 4 %.4%

64 IBM concentrated on becomin+

stron+er in hi+h value added

businesses

%.1% 4 %.4%

04 IBM ranked number . hosted


%.1% 4 %.4%




1

Euro%e

6. IBM is su%ercom%utin+ leader as %rovider of A6 of the worlds .<<

most %owerful su%ercom%uters

%.12 4 %.4&

Weaknesses

1. 8eclining in revenues of

services and systems

segments in 2%%'

%.%& 2 %.1'

2. 8ecline in revenue of

u$lic* industrial* small

and medium $usiness

industries in 2%%' $y /.'0

%.%& 2 %.1'

3. 8ecline in revenues in 9sia

Paci:c area $y 5.60

%.1% 2 %.2%

4. (otal assets are gradually

decreasing from 1%/M to

1%3M in 2%%'

%.1% 2 %.2%

Total 1.00 3.16

+T atri-

&'() analysis, method, or model is a way to analy=e com%etitive %osition of your

com%any4 &'() analysis uses so$called &'() matrix to assess both internal and external

as%ects of doin+ your business4 )he &'() framework is a tool for auditin+ an or+ani=ation

and its environment4

&'() is the first sta+e of %lannin+ and hel%s decision makers to focus on key issues4

&'() method is a key tool for com%any to% officials to formulate strate+ic %lans4 Each

letter in the word &'() re%resents one stron+ wordJ

& L stren+ths,

' L weaknesses,




1

( L o%%ortunities,

) L threats4

&'() model analy=es factors that are internal to your business and also factors that affect

your com%any from outside4 &tren+ths and weaknesses in the &'() matrix are internal

factors4 (%%ortunities and threats are external factors4

&'() can be used in conCunction with other tools for strate+ic %lannin+, such as the

Porters Five$Forces analysis or the Balanced &corecard framework4 &'() is a very

%o%ular tool in marketin+ because it is ?uick, easy, and intuitive4

+T atri- of I)

Strengths $eaknesses

.4 IBM revenues increased >

%ercent to 054594billion in

9<<0494 uni?ue a%%roach to en+a+e

their em%loyees in an online

intranet usin+ its 3am

technolo+y4A4 &tron+ strate+ic %lannin+ to

be an innovation$centric

+lobally inte+rated

cor%oration4

:4 IBM o%erates in .><countries with about 0<

%ercent of its revenues bein+

+enerated outside the 2&464 IBM concentrated on

becomin+ stron+er in hi+h

value added businesses404 IBM ranked number . hosted


5. 8eclining in

revenues of services

and systems

segments in 2%%'.

'. 8ecline in revenue

of u$lic* industrial*

small and medium

$usiness industries

in 2%%' $y /.'0.

6. 8ecline in revenues

in 9sia Paci:c area

$y 5.60.

&. (otal assets are

gradually

decreasing from

1%/M to 1%3M in

2%%'.




1

Euro%e4>4 IBM is su%ercom%utin+

leader as %rovider of A6 of

the worlds .<< most

%owerful su%ercom%uters4

Opportunities S-O Strategies W-O Strategies

1. Video game

console market

revenue is

ro!ected to reac"

#12 $illion in 2%%&

and #'' $illion in

2%12.

2. ("e I( market in

)ussia* India*

Bra+il* and ,"ina

are e-ected to

gro tice as fast

as in t"e rest of

t"e orld.

1. ntering t"e video

game console market

$y roduce video game

console* ;S5* <1=.2. ntering t"e mo$ile

"one market* ;S5*

<3=.3. ntering t"e and"eld

comuters market* ;S5*

<4=.

1. Increasingmarketing e>ortsinto 9sia Paci:c*;73* <3=.




1

3. Mo$ile "one

markets are

e-ected to gro

$y /0 in 2%%&.

4. and"eld

comuters

markets are

e-ected to gro

$y 320 in 2%%&.

Threats S-T Strategies W-T Strategies

.4 #om%etitors are stron+494 Economic fluctuation

could crim%consumers’ s%endin+4

A4 &mall G Medium business demand failsto accelerate4

1. edge t"reats from ?Scomanies $yincreasing marketinge>orts into 9sia anduroe* ;S4* (1=.

.4 (ffer discounts on %roducts for &mall GMedium business, !'9,)A"4

+P.C( atri-

)he &P#E matrix is a mana+ement tool used to analy=e a com%any4 It is used to determine

what ty%e of a strate+y a com%any should undertake4

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)he &trate+ic Position G ction Evaluation matrix or short a &P#E matrix is a strate+ic

mana+ement tool that focuses on strate+y formulation es%ecially as related to the

com%etitive %osition of an or+ani=ation4

)he &P#E matrix can be used as a basis for other analyses, such as the &'() analysis,

B#* matrix model, industry analysis, or assessin+ strate+ic alternatives !IE matrix"4

)o ex%lain how the &P#E matrix works, it is best to reverse$en+ineer it4 First, lets take a

look at what the outcome of a &P#E matrix analysis can be, take a look at the %icture

below4 )he &P#E matrix is broken down to four ?uadrants where each ?uadrant su++ests

a different ty%e or a nature of a strate+yJ

++ressive

#onservative

;efensive

#om%etitive

)he %articular &P#E matrix tells us that our com%any should %ursue an a++ressive

strate+y4 (ur com%any has a stron+ com%etitive %osition it the market with ra%id +rowth4 It

needs to use its internal stren+ths to develo% a market %enetration and market develo%ment

strate+y4 )his can include %roduct develo%ment, inte+ration with other com%anies,

ac?uisition of com%etitors, and so on4

)he &P#E Matrix analysis functions u%on two internal and two external strate+ic

dimensions in order to determine the or+ani=ations strate+ic %osture in the industry4 )he

&P#E matrix is based on four areas of analysis4

Internal strategic di$ensions:

Financial stren+th !F&"

#om%etitive advanta+e !#"

(-ternal strategic di$ensions:

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Environmental stability !E&"

Industry stren+th !I&"

)here are many &P#E matrix factors under the internal strate+ic dimension4 )hese factors

analy=e a business internal strate+ic %osition4 )he financial stren+th factors often come

from com%any accountin+4 )hese &P#E matrix factors can include for exam%le return on

investment, levera+e, turnover, li?uidity, workin+ ca%ital, cash flow, and others4

#om%etitive advanta+e factors include for exam%le the s%eed of innovation by the

com%any, market niche %osition, customer loyalty, %roduct ?uality, market share, %roduct

life cycle, and others4

Every business is also affected by the environment in which it o%erates4 &P#E matrix

factors related to business external strate+ic dimension are for exam%le overall economic

condition, *;P +rowth, inflation, %rice elasticity, technolo+y, barriers to entry, com%etitive

%ressures, industry +rowth %otential, and others4 )hese factors can be well analy=ed usin+

the Michael Porters Five Forces model4

)he &P#E matrix calculates the im%ortance of each of these dimensions and %laces them

on a #artesian +ra%h with N and O coordinates4

T'e follo%ing are a fe% $odel tec'nical assu$ptions:

By definition, the # and I& values in the &P#E matrix are %lotted on the N axis4

# values can ran+e from $. to $04

I& values can take . to 04

)he F& and E& dimensions of the model are %lotted on the O axis4

E& values can be between $. and $04

F& values ran+e from . to 04

o% do I construct a +P.C( $atri-6

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)he &P#E matrix is constructed by %lottin+ calculated values for the com%etitive

advanta+e !#" and industry stren+th !I&" dimensions on the N axis4 )he O axis is based on

the environmental stability !E&" and financial stren+th !F&" dimensions4 )he &P#E matrix

can be created usin+ the followin+ seven ste%sJ

+tep 1J #hoose a set of variables to be used to +au+e the com%etitive advanta+e !#",

industry stren+th !I&", environmental stability !E&", and financial stren+th !F&"4

+tep 2: -ate individual factors usin+ ratin+ system s%ecific to each dimension4 -ate

com%etitive advanta+e !#" and environmental stability !E&" usin+ ratin+ scale from $0

!worst" to $. !best"4 -ate industry stren+th !I&" and financial stren+th !F&" usin+ ratin+ scale

from . !worst" to 0 !best"4

+tep 3: Find the avera+e scores for com%etitive advanta+e !#", industry stren+th !I&",

environmental stability !E&", and financial stren+th !F&"4

+tep 4: Plot values from ste% A for each dimension on the &P#E matrix on the a%%ro%riate

axis4

+tep 5: dd the avera+e score for the com%etitive advanta+e !#" and industry stren+th

!I&" dimensions4 )his will be your final %oint on axis N on the &P#E matrix4

+tep : dd the avera+e score for the &P#E matrix environmental stability !E&" and

financial stren+th !F&" dimensions to find your final %oint on the axis O4

+tep 7: Find intersection of your N and O %oints4 ;raw a line from the center of the &P#E

matrix to your %oint4 )his line reveals the ty%e of strate+y the com%any should %ursue4

Financial Strength %ating Environmental

Sta!ilit&

%ating

)eturn on assets ' )ate of ination @3

Aeverage 5 (ec"nological

c"anges

@5

et Income 5 Price lasticity of

demand

@4

Page 1/




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PS 5 ,ometitive

ressure

@'

)< 5 Barriers to entry ne

markets

@3

,as" Clo ' )isk involved in

$usiness

@4

9verage 5.33 9verage 4.1'6

D@a-is 1.163

Competitive!vantage "ating #n!ustr$ Strength "ating

Market s"are @2 Erot" otential '

Product Fuality @2 Cinancial sta$ility 5

,ustomer Aoyalty @2 ase of entry ne

markets

5

,ontrol over ot"er

arties

@2 )esources utili+ation 4

(ec"nological kno@

"o

@2 Pro:t otential '

8emand varia$ility 5

9verage 2.% 9verage 5.1'6

G@a-is 3.16%

8irectional #ector point of I) ie/ 317 113

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;rand +trateg* atri-

Military historian B4 14 @iddell 1art says about +rand strate+yJ

Erand strategy comrises t"e Huroseful

emloyment of all instruments of oer availa$le to a security

communityH.

)he role of +rand strate+y Q hi+her strate+y Q is to co$ordinate and directs all the resources

of a nation, or band of nations, towards the attainment of the %olitical obCect of the war Q

the +oal defined by fundamental %olicy4

*rand strate+y should both calculate and develo% the economic resources and man$

%ower of nations in order to sustain the fi+htin+ services4 lso the moral resources Q for to

foster the %eo%les willin+ s%irit is often as im%ortant as to %ossess the more concrete forms

of %ower4 *rand strate+y, too, should re+ulate the distribution of %ower between the several

services, and between the services and industry4 Moreover, fi+htin+ %ower is but one of the

instruments of +rand strate+y Q which should take account of and a%%ly the %ower of

financial %ressure, and, not least of ethical %ressure, to weaken the o%%onents will4 444

Furthermore, while the hori=ons of strate+y is bounded by the war, +rand strate+y

looks beyond the war to the subse?uent %eace4 It should not only combine the various

,onservati

ve

9ggressive

,ometitiv

e

8efensive

&

S

#SC

'S




1

instruments, but so re+ulate their use as to avoid dama+e to the future state of %eace Q for its

security and %ros%erity4

Issues of +rand strate+y ty%ically include the choice of %rimary versus secondary theaters in

war, distribution of resources amon+ the various services, the +eneral ty%es of armaments

manufacturin+ to favor, and which international alliances best suit national +oals4 *rand

strate+y has considerable overla% with forei+n %olicy, but +rand strate+y focuses %rimarily

on the military im%lications of %olicy, and is ty%ically directed by the %olitical leadershi% of

a country, with in%ut from the most senior military officials4 )he develo%ment of a nations

+rand strate+y may extend across many years or even multi%le +enerations4

&ome have extended the conce%t of +rand strate+y to describe multi$tiered strate+ies in

+eneral, includin+ strate+ic thinkin+ at the level of cor%orations and %olitical %arties4

;rand +trateg* atri- of I)

Fuadrant

II

Fuadrant I

Fuadrant

IV

Fuadrant

III

)aid Market Erot"

Strong

,ometitiv

e

Position

7eak

,ometitiv

e

Position

Slo Market Erot"




1

T'e )oston Consulting ;roup /)C; atri-

)he B#* matrix !Boston #onsultin+ *rou% matrix" is a chart that had been created byBruce 1enderson for the Boston #onsultin+ *rou% in .50/ to hel% cor%orations with

analy=in+ their business units or %roduct lines4 )his hel%s the com%any allocate resources

and is used as an analytical tool in brand marketin+, %roduct mana+ement, strate+ic

mana+ement, and %ortfolio analysis4

)o use the chart, analysts %lot a scatter +ra%h to rank the business units !or %roducts" on the

basis of their relative market shares and +rowth rates4

Cas' co%s are units with hi+h market share in a slow$+rowin+ industry4 )hese unitsty%ically +enerate cash in excess of the amount of cash needed to maintain the business4

)hey are re+arded as staid and borin+, in a RmatureR market, and every cor%oration would

be thrilled to own as many as %ossible4 )hey are to be RmilkedR continuously with as little

investment as %ossible, since such investment would be wasted in an industry with low

+rowth4

8ogs, or more charitably called %ets, are units with low market share in a mature, slow$

+rowin+ industry4 )hese units ty%ically Rbreak evenR, +eneratin+ barely enou+h cash to

maintain the businesss market share4 )hou+h ownin+ a break$even unit %rovides the social

benefit of %rovidin+ Cobs and %ossible syner+ies that assist other business units, from anaccountin+ %oint of view such a unit is worthless, not +eneratin+ cash for the com%any4

)hey de%ress a %rofitable com%anys return on assets ratio, used by many investors to Cud+e

how well a com%any is bein+ mana+ed4 ;o+s, it is thou+ht, should be sold off4

<uestion $ar&s !also known as %roblem child" are +rowin+ ra%idly and thus consume

lar+e amounts of cash, but because they have low market shares they do not +enerate much

cash4 )he result is lar+e net cash consum%tion4 ?uestion mark has the %otential to +ain

market share and become a star, and eventually a cash cow when the market +rowth slows4

If the ?uestion mark does not succeed in becomin+ the market leader, then after %erha%s

years of cash consum%tion it will de+enerate into a do+ when the market +rowth declines4uestion marks must be analy=ed carefully in order to determine whether they are worth

the investment re?uired to +row market share4

+tars are units with a hi+h market share in a fast$+rowin+ industry4 )he ho%e is that stars

become the next cash cows4 &ustainin+ the business units market leadershi% may re?uire

extra cash, but this is worthwhile if thats what it takes for the unit to remain a leader4 'hen

+rowth slows, stars become cash cows if they have been able to maintain their cate+ory

leadershi%, or they move from brief stardom to do+dom




1

)C; atri- of I)

T'e Internal(-ternal /I( atri- of I)

<uestion ar&s

8ogsCas' Ca%

I)Industr*

+ales ;ro%t'

,ate

ar&et s'are position

+tars




1

&tron+ A4< to A455 Medium 94< to 9455 @ow .4< to .455

ig"

3.% to 3.//

Medium

2.% to

2.//

Ao

1.% to 1.//

T'e <uantitati#e +trategic Planning atri- /<+P

uantitative &trate+ic Plannin+ Matrix !&PM" is a hi+h$level strate+ic mana+ement

a%%roach for evaluatin+ %ossible strate+ies4 uantitative &trate+ic Plannin+ Matrix or a

&PM %rovides an analytical method for com%arin+ feasible alternative actions4 )he &PMmethod falls within so$called sta+e A of the strate+y formulation analytical framework4

'hen com%any executives think about what to do, and which way to +o, they usually have

a %rioriti=ed list of strate+ies4 If they like one strate+y over another one, they move it u% on

the list4 )his %rocess is very much intuitive and subCective4 )he &PM method introduces

some numbers into this a%%roach makin+ it a little more Rex%ertR techni?ue4

IV V VI

VII VIII IG

#()

The '&'

Total

Weighte!

S*ore

The #&' Total Weighte! S*ore

I II III




1

)he uantitative &trate+ic Plannin+ Matrix or a &PM a%%roach attem%ts to obCectively

select the best strate+y usin+ in%ut from other mana+ement techni?ues and some easy

com%utations4 In other words, the &PM method uses in%uts from sta+e . analyses,

matches them with results from sta+e 9 analyses, and then decides obCectively amon+

alternative strate+ies4

+tage 1 strategic $anage$ent tools

)he first ste% in the overall strate+ic mana+ement analysis is used to identify key strate+ic

factors4 )his can be done usin+, for exam%le, the EFE matrix and IFE matrix4


fter we identify and analy=e key strate+ic factors as in%uts for &PM, we can formulate

the ty%e of the strate+y we would like to %ursue4 )his can be done usin+ the sta+e 9

strate+ic mana+ement tools, for exam%le the &'() analysis !or )('&", &P#E matrix

analysis, B#* matrix model, or the IE matrix model4


)he sta+e . strate+ic mana+ement methods %rovided us with key strate+ic factors4 Based on

their analysis, we formulated %ossible strate+ies in sta+e 94 Sow, the task is to com%are in

&PM alternative strate+ies and decide which one is the most suitable for our +oals4

)he &PM method allows us to evaluate alternative strate+ies obCectively4

#once%tually, the &PM in sta+e A determines the relative attractiveness of various

strate+ies based on the extent to which key external and internal critical success factors are

ca%itali=ed u%on or im%roved4 )he relative attractiveness of each strate+y is com%uted by

determinin+ the cumulative im%act of each external and internal critical success factor4

<uantitati#e +trategic Planning atri- /<+P of I)

Page 2'




1

Strategy 1

Enter video

game console

market

Strategy 2

Increasing

marketing eorts

into !sia and

Europe

+e$ #nternal &a*tors Weight S TS S TS

+trengt'sIBM revenues increased > %ercent to

054594billion in 9<<0

0.10 4 0.40 2 0.20

uni?ue a%%roach to en+a+e their em%loyees

in an online intranet usin+ its 3am technolo+y

0.06 - - - -

&tron+ strate+ic %lannin+ to be an innovation$

centric +lobally inte+rated cor%oration

0.06 - - - -

IBM o%erates in .>< countries with about 0<

%ercent of its revenues bein+ +enerated outside

the 2&

0.10 3 0.30 4 0.40

IBM concentrated on becomin+ stron+er in

hi+h value added businesses

0.10 4 0.40 4 0.40

IBM ranked number . hosted service %rovider

in 'estern Euro%e

0.10 2 0.20 4 0.40

IBM is su%ercom%utin+ leader as %rovider of A6

of the worlds .<< most %owerful

su%ercom%uters

0.12 - - - -

ea&nesses

;eclinin+ in revenues of services and systems

se+ments in 9<<0

0.08 2 0.16 4 0.32

;ecline in revenue of %ublic, industrial, small

and medium business industries in 9<<0 by

540D

0.08 3 0.24 4 0.32

;ecline in revenues in sia Pacific area by

64>D

0.10 2 0.20 4 0.40

)otal assets are +radually decreasin+ from

.<5M to .<AM in 9<<0

0.10 3 0.30 3 0.30

S'BT(TA) *+,, -+-, -+.-

Page 26




1

Strategy 1

Enter video

game console

market

Strategy 2

Increasing

marketing eorts

into !sia and

Europe

+e$ #nternal &a*tors Weight S TS S TS

Opportunities

Video game console market revenue

is ro!ected to reac" #12 $illion in

2%%& and #'' $illion in 2%12

0.20 4 .80 2 0.60

("e I( market in )ussia* India* Bra+il*

and ,"ina are e-ected to gro tice

as fast as in t"e rest of t"e orld

0.10 1 0.10 3 0.30

Mo$ile "one markets are e-ected

to gro $y /0 in 2%%&

0.15 - - - -

and"eld comuters markets aree-ected to gro $y 320 in 2%%&

0.15 - - - -

Threats

#om%etitors are stron+ 0.20 4 0.80 4 0.80

Economic fluctuation could crim%

consumers’ s%endin+

0.10 1 0.10 3 0.30

&mall G Medium business demand fails to

accelerate

0.10 1 0.10 4 0.40

S'BT(TA) *+/, -+.,

,e#erences

Page 2&




1

1. .IBM.com

2 www4A<:4ibm4com

3 www4manonamission4blo+s%ot4com

4. . euromonitor.com

5. ,,,.mone$*entral.msn.*om

6. WWW.SC"#(.CO)

%. W,,.,iipe!ia.*om

8. ,,,.se*.gov

/. ,,,.hp.*om

10. ,,,.mi*rosot.*om

http://www.ibm.com/

http://www.euromonitor.com/



http://www.moneycentral.msn.com/

http://www.scribd.com/

http://www.wikipedia.com/

http://www.sec.gov/

http://www.hp.com/

http://www.microsoft.com/

http://www.ibm.com/


http://www.moneycentral.msn.com/

http://www.scribd.com/

http://www.wikipedia.com/

http://www.sec.gov/

http://www.hp.com/

http://www.microsoft.com/

Final Strategic Manangement Assignment

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