Formulation Framework TOWS Matrix SPACE Matrix Stage 2

Formulation Framework TOWS Matrix SPACE Matrix Stage 2: The Matching Stage BCG Matrix IE Matrix Grand Strategy Matrix Fred R. David Prentice Hall 1

Grand Strategy Matrix • Popular tool formulating alternative strategies • All organizations (or divisions) can be positioned in one of four quadrants • Based on two evaluative dimensions: Competitive position – Market growth – 2

RAPID MARKET GROWTH 1. 2. 3. 4. 5. 6. WEAK COMPETITIVE POSITION 1. 2. 3. 4. 5. Quadrant II Market development Market penetration Product development Horizontal integration Divestiture Liquidation 1. 2. 3. 4. 5. 6. 7. Quadrant I Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric diversification Quadrant III Quadrant IV Retrenchment 1. Concentric diversification 2. Horizontal diversification 3. Conglomerate diversification 4. Joint ventures Liquidation SLOW MARKET GROWTH STRONG COMPETITIVE POSITION 3

Grand Strategy Matrix Quadrant I Excellent strategic position • Concentration on current markets and products • Take risks aggressively when necessary • 4

Grand Strategy Matrix Quadrant II Evaluate present approach seriously • How to change to improve competitiveness • Rapid market growth requires intensive strategy • 5

Grand Strategy Matrix Quadrant III Compete in slow-growth industries • Weak competitive position • Drastic changes quickly • Cost and asset reduction indicated (retrenchment) • 6

Grand Strategy Matrix Quadrant IV Strong competitive position • Slow-growth industry • Diversification indicated to more promising growth areas • 7

Formulation Framework Quantitative Strategic Planning Matrix (QSPM) Stage 3: The Decision Stage Fred R. David Prentice Hall 8

QSPM Quantitative Strategic Planning Matrix • Only technique designed to determine the relative attractiveness of feasible alternative actions 9

QSPM Quantitative Strategic Planning Matrix • • • Tool for objective evaluation of alternative strategies Based on identified external and internal crucial success factors Requires good intuitive judgment 10

QSPM Quantitative Strategic Planning Matrix • List the firm’s key external opportunities & threats; list the firm’s key internal strengths and weaknesses • Assign weights to each external and internal critical success factor 11

QSPM Quantitative Strategic Planning Matrix • Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing • Determine the Attractiveness Scores (AS) 12

QSPM Quantitative Strategic Planning Matrix • Compute the total Attractiveness Scores • Compute the Sum Total Attractiveness Score 13

QSPM Key External Factors Economy Political/Legal/Governmental Social/Cultural/Demographic/ Environmental Technological Competitive Strategic Alternatives Weight Strategy 1 Strategy 2 Strategy 3 Key Internal Factors Management Marketing Finance/Accounting Production/Operations Research and Development Computer Information Systems 14

QSPM Limitations: • Requires intuitive judgments and educated assumptions • Only as good as the prerequisite inputs 15

QSPM Positives: • Sets of strategies examined simultaneously or sequentially • Requires the integration of pertinent external and internal factors in the decision-making process 16