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Unit 5 : Strategy Analysis and Choice - Coggle Diagram
Unit 5 : Strategy Analysis and Choice
Stage 2 : The Matching Stage
Boston Consulting Group (BCG) Matrix
Stars - Quadrant 2
Relative Market Share : High
Market Growth : High
Cash Cows - Quadrant 3
Relative Market Share : High
Market Growth : Low
Question Marks - Quadrant 1
Market Growth : High
Relative Market Share : Low
Dogs / Animal - Quadrant 4
Relative Market Share : Low
Market Growth : Low
The Internal-External (IE) Matrix
IE Matrix based on 2 dimensions
IFE total weighted scores on the x-axis
EFE total weighted scores on the y-axis
Three Major Regions
Growth and Build
Hold and Maintain
Harvest or Divest
Based on Two Evaluation Dimension : Competitive Position & Market (Industry) Growth
Quadrant 2
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
Quadrant 3
Must make some drastic changes quickly to avoid further decline and possible liquidation. Extensive cost and asset reduction (retrenchment) should be pursued first
Quadrant 1
Continued concentration on current market ( market penetration and market development ) and product ( product development ) is an appropriate strategy
Quadrant 4
High cash-flow levels and limited internal growth needs and often can pursue related or unrelated diversification successfully.
The SPACE Matrix
Four-Quadrant Framework
Defensive ( CP & SP )
Retrenchment
Liquidation
Divestiture
Competitive ( SP & IP )
Market Penetration
Market & Product Development
Backward, Forward, Horizontal Integration
Aggressive ( FP & IP )
Market Penetration
Market & Product Development
Backward, Forward & Horizontal Integration
Related & Unrelated Diversification
Conservative ( CP & FP )
Market & Product Development
Market Penetration
Related Diversification
Two Internal Dimension
Financial Position [FP]
Working Capital
Liquidity
Cash Flow
Inventory Turnover
Leverage
Earnings Per Share
Return on Investment
Price Earning Ratio
Competitive Position [CP]
Product Life Cycle
Customer Loyalty
Product Quality
Capacity Utilisation
Market Share
Technological Know - How
Control Over Suppliers and Distributors
Two External Dimension
Stability Position [SP]
Price Range of Competing Products
Barriers To Entry Into Market
Demand Variability
Competitive Pressure
Rate of Inflation
Price Elasticity of Demand
Risk Involved In Business
Technological Changes
Industry Position [IP]
Resource Utilisation
Ease of Entry Into Market
Profit Potential
Productivity, Capacity Utilisation
Growth Potential
SPACE Matrix Steps
Compute an average score for FP, CP, IP & SP
Plot the average score for FP, IP, SP and CP on the appropriate axis.
Assign a numerical value ranging from +1 (best) to +7 (worst) to each of the variables that makes up the SP and CP dimensions
Add the two scores on the x-axis and plot
Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the variables that make up the FP and IP dimensions
Add the two score on the y-axis and plot
Select a set of variable to define FP, CP, SP & IP
Plot the intersection of the new XY point
Draw a directional vector from the origin of the SPACE Matrix through the new intersection point
The SWOT Matrix
WO (Weaknesses-Opportunities) Strategies
Improving internal W by
taking advantage
of external O
ST (Strength-Threats) Strategies
Use a firm's S to
avoid or reduce
the impact of external T
SO (Strength-Opportunities) Strategies
Use a firm's internal S to
take advantage
of external O
WT (Weaknesses-Threats) Strategies
Defensive tactics directed at
reducing
internal W and
avoiding
external T
SWOT Matrix Steps
Match the internal W with external O, and record the resultant WO strategies
Match in internal S with external T, and record the resultant ST Strategies
Match the internal S with external O, and record the resultant SO Strategies
Match the internal W with external T, and record the resultant WT strategies
List the firm's key external O & T and key internal S & W
Stage 1 : The Input Stage
Internal Factors Evaluation Matrix (IFE Matrix)
Competitive Profile Matrix (CP Matrix)
External Factors Evaluation Matrix (EFE Matrix)
Stage 3 : The Decision Stage
Quantitative Strategic Planning Matrix (QSPM)
Uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies
QSPM 7 Steps
Make a list of the firm's key external O & T and Internal S & W in the left column
Assign weight to each key external and internal factors
Examine the Stage 2 (matching) matrices, and identify alternative strategies that the organisation should consider implementing
Determine the Attractiveness Score (AS)
Compute the total AS
Compute the sum total AS
Choose the highest sum total AS
Positive Features of the QSPM
Sets of strategies can be examined sequentially or simultaneously
Requires strategist to integrate pertinent external and internal factors the decision process
Can be adapted for use by small and large for-profit and non-profit organization