Strategy Selection Report

7/23/2019 Strategy Selection Report

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1.Describe a three-stage framework for

choosing among alternative strategies.

2.Explain how to develop a SWO !atrix"S#$%E !atrix" &%' !atrix" (E !atrix" and

)S#!.

*.(dentif+ important behavioral" political"

ethical" and social responsibilit+considerations in strateg+ anal+sis and

choice.

Copyright 2013 Pearson Education, Inc.ublishin as Prentice Hall

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4. Discuss the role of intuition in strategicanalysis and choice.

5. Discuss the role of organizational culture in

strategic analysis and choice.6. Discuss the role of a board of directors in

choosing among alternative strategies.


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A manageable set of the most attractive

alternative strategies must be developed

The advantages, disadvantages, trade-offs,

costs, and benefits of these strategiesshouldbe determined


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dentifying and evaluating alternativestrategies should involve many of the

managers and employees !ho earlierassembledthe organizational vision andmission statements, performedthe e"ternalaudit, and conductedthe internal audit.


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Alternative strategies proposed byparticipants should be considered anddiscussed in a series of meetings.

#roposed strategies should be listed in!riting.

$hen all feasible strategies identifiedby participants are given andunderstood, the strategies should beran%ed in order of attractiveness.


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Stage 1 - Input Stage

summarizes the basic input information

needed to formulate strategiesconsists of the &'& (atri", the '&

(atri", and the )ompetitive #rofile (atri"

*)#(+


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Stage 2 - Matching Stage

focuses on generating feasible alternative

strategies by aligning %ey e"ternal andinternal factors

techniues include the $T (atri", thetrategic #osition and Action &valuation*#A)&+ (atri", the /oston )onsulting0roup */)0+ (atri", the nternal-&"ternal*&+ (atri", and the 0rand trategy (atri"


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Stage 3 - Decision Stage

involves the 1uantitative trategic

#lanning (atri" *1#(+

reveals the relative attractiveness ofalternative strategies and thus provides

ob2ective basis for selecting specificstrategies


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The Strengths-Weaknesses-Opportunities-

Threats (SWOT) Matrix helps managers

develop four types of strategies3

*strengths-opportunities+ trategies$ *!ea%nesses-opportunities+ trategies

T *strengths-threats+ trategies

$T *!ea%nesses-threats+ trategies


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SOStrategiesuse a firms internal

strengths to ta%eadvantage of

e"ternalopportunities

WOStrategiesaim at improving

internal !ea%nessesby ta%ing advantage

of e"ternalopportunities


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STStrategiesuse a firms

strengths to avoid orreduce the impact of

e"ternal threats

WTStrategiesdefensive tactics

directed at reducinginternal !ea%ness

and avoidinge"ternal threats


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. ist the firms %ey e"ternal opportunities

7. ist the firms %ey e"ternal threats

8. ist the firms %ey internal strengths

4. ist the firms %ey internal !ea%nesses5. (atch internal strengths !ith e"ternal

opportunities


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,. !atch internal weaknesses withexternal opportnities" and recordthe resltant WO Strategies

. !atch internal strengths withexternal threats" and record theresltant S Strategies

/. !atch internal weaknesses withexternal threats" and record theresltant W Strategies


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Strategic Position and ction !"a#uation

(SP$!) Matrix four-uadrant frame!or% indicates !hether

aggressive, conservative, defensive, or

competitive strategies are most appropriate for a

given organization


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T!o internal dimensions *financial position9'#: and competitive position 9)#:+

T!o e"ternal dimensions *stability position9#: and industry position 9#:+

(ost important determinants of anorganizations overall strategic position


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1. Select a set of variables to define financial

position 0#" competitive position 0%#"

stabilit+ position 0S#" and indstr+ position

0(#


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7. Assign a numerical value ranging from ;*!orst+ to ;< *best+ to each of the variablesthat ma%e up the '# and # dimensions.Assign a numerical value ranging from =

*best+ to =< *!orst+ to each of the variablesthat ma%e up the # and )# dimensions


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*. %ompte an average score for #" %#" (#"and S#

3. #lot the average scores for #" (#" S#" and

%# on the appropriate axis in the S#$%E!atrix

4. $dd the two scores on thex-axis andplot the resltant point onX. $dd the

two scores on the y-axis and plot theresltant point on Y. #lot theintersection of the newxy point


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6. Dra! a directional vector from the origin ofthe #A)& (atri" through the ne!intersection point

This vector reveals the type of strategies

recommended for the organization3 aggressive,competitive, defensive, or conservative


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%$& Matrixgraphically portrays differences among divisions

in terms of relative mar%et share position andindustry gro!th rate

allo!s a multidivisional organization to manage itsportfolio of businesses by e"amining the relativemar%et share position and the industry gro!th rateof each division relative to all other divisions in theorganization


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'uestion arks 'uadrant Irganization must decide !hether to strengthen

them by pursuing an intensive strategy *mar%etpenetration, mar%et development, or product

development+ or to sell them Stars 'uadrant II

represent the organizations best long-runopportunities for gro!th and profitability


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$ash $o*s 'uadrant IIIgenerate cash in e"cess of their needs

should be managed to maintain their strongposition for as long as possible

Dogs 'uadrant I+compete in a slo!- or no-mar%et-gro!th industry

businesses are often liuidated, divested, ortrimmed do!n through retrenchment


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The ma2or benefit of the /)0 (atri" is that itdra!s attention to the cash flo!, investmentcharacteristics, and needs of anorganizations variousdivisions


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The I! Matrix is based on t!o %eydimensions3 the '& total !eighted scores onthe "-a"is and the &'& total !eighted scoreson the y-a"is

Three a,or regions0ro! and build

>old and maintain

>arvest or divest


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&rand Strateg Matrixbased on t!o evaluative dimensions3 competitive

position and mar%et *industry+ gro!th


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'uadrant I

continued concentration on current mar%ets*mar%et penetration and mar%etdevelopment+ and products *productdevelopment+ is an appropriate strategy

'uadrant II

unable to compete effectively

need to determine !hy the firms currentapproach is ineffective and ho! thecompany can best change to improve itscompetitiveness


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'uadrant III

must ma%e some drastic changes uic%ly toavoid further decline and possible liuidation

&"tensive cost and asset reduction*retrenchment+ should be pursued first

'uadrant I+

have characteristically high cash-flo! levels

and limited internal gro!th needs and oftencan pursue related or unrelateddiversification successfully


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'uantitati"e Strategic P#anning Matrix

('SPM)ob2ectively indicates !hich alternative strategies

are best

uses input from tage analyses and matching

results from tage 7 analyses to decide

ob2ectively among alternative strategies


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. (a%e a list of the firms %ey e"ternalopportunities?threats and internalstrengths?!ea%nesses in the left columnof the 1#(

7. Assign !eights to each %ey e"ternal andinternal factor

8. &"amine the tage 7 *matching+

matrices, and identify alternativestrategies that the organization shouldconsider implementing


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3. Determine the $ttractiveness Scores 0$S

4. %ompte the otal $ttractiveness Scores

,. %ompte the Sm otal $ttractiveness

Score


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ets of strategies can be e"aminedseuentially or simultaneously

@euires strategists to integrate pertinente"ternal and internal factors into the decisionprocess

)an be adapted for use by small and largefor-profit and nonprofit organizations


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Al!ays reuires intuitive 2udgments andeducated assumptions

nly as good as the prereuisite informationand matching analyses upon !hich it is based


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#olitical maneuvering consumes valuable

time, subverts organizational ob2ectives,

diverts human energy, and results in the loss

of some valuable employees

#olitical biases and personal preferences get

unduly embedded in strategy choice decisions


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The hierarchy of command in an organization,combined !ith the career aspirations ofdifferent people and the need to allocatescarceresources, guarantees the formation of

coalitionsof individuals !ho strive to ta%ecare of themselvesfirst and the organizationsecond, third, or fourth


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%oard o. directorsa group of individuals !ho are elected by the

o!nership of a corporation to have oversight andguidance over management and !ho loo% out for

shareholders interests


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1. 5o more than two directors arecrrent or former compan+ exectives

2. he adit" compensation" and

nominating committees are made psolel+ of otside directors

*. Each director owns a large e6it+stake in the compan+" exclding stock

options3. Each director attends at least 4

percent of all meetings


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5. The board meets regularly !ithoutmanagement present and evaluates itso!n performance annually

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The )& is not also the chairperson ofthe board


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Strategy Selection Report

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