MGT 3830 Test 3 Chapter 6
Decision Stage
Stage 3 of the strategy formulation analytical framework that involves development of the quantitative strategic planning matrix (QSPM). A QSPM uses input information from stage 1 to objectively evaluate feasible alternative strategies identified in stage 2. A QSPM reveals the relative attractiveness of alternative strategies and thus provides objective basis for selecting specific strategies
Strategy analysis and choice largety involve making _______ decisions based on ______ information.
Subjective, objective
Both IE and BCG Matrices are called portfolio matrices. (T/F)
T
Business Week recommends the entire board of directors be up for election annually. (T/F)
T
By continuously chatting and informally questioning, successful CEOs stay abreast of how things are progressing and know when to step in to intervene. (T/F)
T
Culture is the unique way an organization does business. (T/F)
T
The CP and IP dimension variables in a SPACE Matrix are assigned a numerical value changing from -1 (best) to -7 (worst). (T/F)
T
A SWOT Matrix is composed of four cells for four types of strategies it creates. (T/F)
F
Business Week recommends board members retire at age 65. (T/F)
F
Product quality is an important consideration in the BCG Matrix (T/F)
F
Attractiveness Scores (AS)
In a QSPM, the numerical value (rating) that indicates the relative attractiveness of each strategy given a single internal or external factor
QSPM Matrix format
Left column: key external and internal factors (Stage 1) Top Column: feasible alternative strategies (Stage 2)
Who should be involved in identifying and evaluating alternative strategies?
Many of the managers and employees who previously assembled the organizational vision and mission statements, performed the external audit, and conducted the internal audit
What is the step after all of the feasible strategies are identified by participants?
Rank in order of attractiveness
Strategy-formulation framework
Stage 1 in the strategic-management process; includes developing a vision/mission, identifying an organization's external opportunities/threats, determining internal strengths/weaknesses, establishing loong-term objectives, generating alternative strategies, and choosing particular strategies to pursue
Matching Stage
Stage 2 of the strategy-formulation analytical framework that focuses upon generating feasible alternative strategies by aligning internal with external factors by utilizing five matrices: BCG, IE, SWOT, GRAND, SPACE
Aggressive quadrant
Upper-right quandrant in a SPACE matrix analysis, when the firm's directional vector in this quadrant, the firm should pursue aggressive strategies--the firm is in excellent position to use its internal strengths
Input Stage
stage 1 of the strategy-formulation analytical framework that summarizes the basic input information needed to formulate strategies; consists of an EFEM, CPM, and IFEM
governance
the act of oversight and direction, especially in association with the duties of a board of directors
Limitations of the QSPM
1. Always requires intuitive judgement and educated assumptions 2. it can only be as good as the prerequisite information and matching analysis upon which it is based
2 Major differences between the BCG Matrix and the IE Matrix:
1. Axes are different 2. IE Matrix requires more information
Tactics to Aid Strategists when it comes to the politics of strategy choice
1. Choose methods that afford employee commitment 2. Achieve satisfactory results with a popular strategy 3. Shift from specific to general issues 4. Focus on long-term issues and concerns 5. Involve middle level managers in decisions
Board of director duties and responsibilities
1. Control and oversight over management 2. Adherence to legal prescriptions 3. Consideration of stakeholders' interests 4. Advancement of Stockholders' rights
Quadrant I of Grand Strategy Matrix
1. Firm is in excellent strategic position 2. Continue concentration on current markets (market development, market penetration) and products (product development) 3. If firm has excessive resources, backward, forward and horizontal integration may be effective strategies
Three Major regions of the IE Matrix
1. Grow and build: I, II, IV 2. Hold and Maintain strategies: III, V, VII 3. Harvest or divest: VI, VIII, IX
Best strategies for Quadrant II of Grand Strategy Matrix
1. Intensive strategy should be first option considered 2. If lacking a distinctive competence or competitive advantage: horizontal integration 3. Last resort should be divestiture or liquidation
8 Steps involved in constructing a SWOT Matrix:
1. List the firm's key external opportunities 2. List the firm's key external threats 3. List the firm's key internal strengths 4. List the firm's key internal weaknesses 5. Match internal strengths with external opportuities, and record the resultant SO strategies in the appropriate cell 6. Match internal weaknesses with external opportunities, and record the resultant WO stratagies 7. Match internal strengths with external threats, and record the resultant ST Strategies 8. Match internal weaknesses with external threats, and record the resultant WT strategies
6 Steps to develop a QSPM
1. Make a list of the firm's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM 2. Assign weights to each key external and internal factor 3. Examine the stage 2 (matching) matrices, and identify alternative strategies that the organization should consider implementing 4. Determine the Attractiveness Scores (AS) 5. Compute the Total Attractiveness Scores (TAS) 6. Compute the Sum Total Attractive Score (STAS)
Principles of Good Governance
1. Never have more than two of the firm's executives (current or past) on the board 2. Never allow a firm's executives to be the board's audit, compensation, or nominating committees 3. Require all board members to own a large amount of the firm's equity 4. Require all board members to attend at least 75 percent of all meetings 5. Require the board to meet annually to evaluate its own performance, without the CEO, COO, or top management in attendance 6. Never allow the CEO to be Chairperson of the board 7. Never allow interlocking directorships (where a director or CEO sits on another director's board)
Star, question mark, cash cow and dogs are the four quadrants exhibited by the SPACE Matrix. (T/F)
F
Step 1 of a QSPM assigns weights to each key external and internal factor. (T/F)
F
Strategic analysis and choice largely involves making objective decisions based on subjective information. (T/F)
F
Successful top managers keep a low political profile on acceptable proposals. (T/F)
F
The Grand Strategy Matrix is based on two evaluative dimensions, market share and market growth. (T/F)
F
The Internal Factor Evaluation matrix and the External Factor Evaluation Matrix are part of the final stage of the Strategy Formulation framework. (T/F)
F
The SPACE matrix axes are labeled aggressive, conservative, defensive, and competitive. (T/F)
F
The Sum Total Attractiveness Scores are defined by the product of multiplying the weights (step 2) by the attractiveness scores (step 4) in each row of the QSPM (T/F)
F
The appropriate strategies are intensive, integration, defensive and diversification when a firm's directional vector is located in the aggressive quadrant of the SPACE Matrix. (T/F)
F
The company's total sales and number of employees are key considerations in the Boston Consulting Group Matrix. (T/F)
F
The firm should pursue conservative strategies if the coordinates of a SPACE directional vector are (1,4). (T/F)
F
The four strategies of the SPACE matrix are aggressive, conservative, offensive and defensive. (T/F)
F
The midpoint on the x-axis of a BCG Matrix, which corresponds to a division that has half the market share of the leading firm in the industry, is typically set at 0.05. (T/F)
F
The number of internal and external factors in the matching stage is reduced to generate feasible strategies (T/F)
F
The relative desirability of one strategy over another is indicated by the magnitude of the difference between the total attractiveness scores in a given set of strategic alternatives. (T/F)
F
There are on average five times more outsiders on the board than insiders at American firms. (T/F)
F
To effectively formulate competitive strategies, an organization should match its external opportunities and threats. (T/F)
F
To objectively evaluate feasible alternative strategies identified in Stage 2, the QSPM uses input information derived from Stage 1. (T/F)
F
Total attractiveness scores are defined as the sum of the attractiveness scores in a given column of the QSPM. (T/F)
F
Two limitations of the Quantitative Strategic Planning Matrix are weights and ratings (T/F)
F
Cultural aspects of strategy choice
Success often rests on the degree of support that strategies recieve from a firms's culture and those that require fewer cultural changes may be more attractive because extensive changes can take a considerable amount of time
According to the Grand Strategy Matrix, when a Quadrant I firm is too heavily committed to a single product, then concentric diversification may reduce the risks associated with a narrow product line(T/F)
T
An organization's present strategies, objectives and mission provide a basis for generating and evaluating feasible alternative strategies, coupled with the external and internal audit information. (T/F)
T
Any number of sets of alternative strategies can be included in the QSPM, and any number of strategies can comprise a given set. (T/F)
T
Boards of directors are composed mostly of outsiders who are becoming more involved in an organization's strategic management. (T/F)
T
Boards of directors today are composed mostly of outsiders who are becoming more involved in the company's strategic-management activities. (T/F)
T
By examining the relative market share and industry growth rate of each division relative to all other divisions with the BCG matrix, a multidivisional organization is allowed to manage its portfolio of businesses. (T/F)
T
Conservative strategies in a SPACE matrix often include intensive strategies and concentric diversification. (T/F)
T
Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes and heroines that describe a firm. (T/F)
T
Divisions with a low relative market share position and a high industry growth are called question marks in the BCG Matrix. (T/F)
T
Equifinality means it is often possible to achieve similar results using different means or paths. (T/F)
T
Generally, the BCG Matrix and the IE Matrix are used only in formulating strategies in multidivisional firms. (T/F)
T
Good intuitive judgement is always needed to determine approporiate weights in the input stage matrices. (T/F)
T
Having no temporal qualities, the BCG Matrix is a snapshot of an organization at a given point in time. (T/F)
T
In the SPACE Matrix, growth potential, profit potential and financial stability could all fall under the category of Stability Position (SP). (T/F)
T
Matching techniques include both the SPACE Matrix and the TOWS Matrix
T
Only to get into a situation where they can work from strengths to take advantage of opportunities, organizations generally will pursue the other three types of strategies (WO, ST, or WT) (T/F)
T
Rather than just react to management initiatives, board directors must assume a more activist stance in management development. (T/F)
T
Relative market share position is given on the x-axis of the BCG Matrix. (T/F)
T
Shifting focus from specific issues to more general ones may increase strategists' options for gaining organizational commitment. (T/F)
T
Strategists themselves, not analytical tools, are always responsible for strategic decisions. (T/F)
T
Successful strategists establish additional hurdles or tests for strongly supported ideas that are considered unacceptable, but which are best not opposed openly. (T/F)
T
Successful strategists minimize their own political exposure on issues that are highly controversial and in circumstances where opposition from major power centers was likely (T/F)
T
Technical know-how, market share and product life cycle are some examples of areas to consider when evaluating a company's competitive position (T/F)
T
The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time. (T/F)
T
The Boston Consulting Group Matrix is good for firms with many "profit centers." (T/F)
T
The IE Matrix can be divided into three major regions that have different strategy implications: grow and build, hold and maintain and harvest or divest. (T/F)
T
The Quantitative Strategic Planning Matrix is an excellent decision stage analytical tool (T/F)
T
Input stage
The information derived from the EFE, CPM, and IFE provides the basic input information for the matching and decision stage matrices
Two key dimensions in the IE Matrix
1. The IFE total weighted scores x-axis 2. The EFE total weighted scores y-axis
Rudin's Law
"When a crisis forces choosing among alternatives, most people choose the worst possible one"
Cash Cows
A quadrant in the BCG Matrix for divisions that have a high relative market share position but compete in a low-growth industry; they generate cash in excess of their needs, they are often milked, this is the lower left quadrant--product development, diversification, retrenchment, divestiture
Stars
A quadrant int he BCG matrix for divisions that have a high relative market share position and compete in high-growth industry; this is the upper left quadrant--backward, forward, or horizontal integration, market penetration, market development, product development
Internal-External (IE) Matrix
A strategy formulation tool that summarizes and evaluates a firm's major strengths and weaknesses in the functional areas of a business, and provides a basis for identifying and evaluating relationships among those areas
The most ideal situation for a company to be in on the TOWS Matrix would be if they had all A. SO Strategies B. WO Strategies C. ST strategies D. WT stategies
A. SO stategies
The __________ stage includes an Internal Factor Evaluation Matrix and a Competitive Profile Matrix. A. Input B. matching C. decision D. penetration E. research
A. inpus
Which strategies proposed by participants should be considered and discussed in a series of meetings?
Alternative strategies
Quantitative Strategic Planning Matrix (QSPM)
An analytical technique designed to determine the relative attractiveness of feasible alternative actions. This technique compromises Stage 3 of the strategy-formulation analytical framework; it objectively indicates which alternative strategies are best
__________ is not a TOWS strategy. A. SO B. WO C. SW D. ST E. WT
C. SW
A SWOT Matrix is composed of __________ cells. A. four B. six C. nine D. eight E. two
C. nine
__________ reveals whether aggressive, conservative, defensive, or competitive strategies are most appropriate. a. Grand Strategy Matrix b. SPACE Matrix c. Competitive Profile Matrix d. SWOT Matrix e. QSPM
B. SPACE Matrix
Strategy analysis and choice largely involves making __________ decisions based on __________ information. a. long-term; short-term b. subjective; objective c.short-term; long-term d.subjective; short-term e. objective; subjective
B. Subjective; Objective
Which strategies aim at improving internal weaknesses by taking advantage of external opportunities? A. SO B. WO C. SW D. ST E. WT
B. WO
Poor product quality, coupled with reliable suppliers, would suggest A. WT Strategies B. WO Strategies C. ST Strategies D. SO strategies
B. WO strategies
The ______ Stage involves a single technique, QSPM. A. Stage 2 B. Decision C. Input D. Matching E. Stage 1
B. decision
The purpose of each Stage 2 matching tool is to A. identify the strengths, weaknesses, opportunities and threats of the firm B. generate the feasible alternative strategies for the firm C. pick the best strategy for the firm to carry out D. decide who the company's major competitors are
B. generate the feasible alternative strategies for the firm
__________ is not a Stage 2 matching technique. A. The SPACE matrix B. The Grand Matrix C. The Competitive profile matrix D. The business portfolio matrix E. The SWOT matrix
C. the competitive profile matrix
The two positive-rated dimensions on SPACE Matrix are a. FP and CP. b.CP and SP. c. FP and IP d. IP and SP. e. FP and SP.
C. FP and IP
Stage 1 consists of IFE, EFE, and CPM. What stage is this in the Strategy formulation framework? A. output B. decision C. Input D. Matching E. Functional
C. Input
A(n) _______ reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies. A. TOWS B. SPACE C. QSPM D. IFE E. CPM
C. QSPM
y-axis of the BCG matrix
represents the industry growth rate in sales, measured in percentage terms (-20 to +20 %) , midpoint 0.0
Defensive strategies
retrenchment, divestiture, liquidation, and related diversification
Which strategies use a firm's strengths to avoid or reduce the impact of external threats? A. SW B. WO C. SW D. ST E. WT
D. ST
Matching internal strengths with external opportunities is part of which section of the SWOT Matrix? A. The WT Cell B. The WO Cell C. The ST cell D. The SO Cell E. The center of four cells
D. The SO Cell
If an organization were to match high employee turnover with increased local competition, what type of strategies would be appropriate? A. SO strategies B. WO strategies C. ST strategies D. WT strategies
D. WT strategies
A firm located in the aggressive quadrant of the SPACE Matrix should use its internal strengths to a. take advantage of external opportunities. b. overcome internal weaknesses. c. avoid external threats. d. do all of the above.
D. do all of the above
Each of the nine techniques included in the strategy formulation framework rely on the use of A. strictly factual data B. luck C. financial formulas and and statistics D. intuition and analysis E. synergy
D. intuition and statistics
Which of the following is not a step of a TOWS Matrix? a. List the firm's key external threats b. Match strengths with external opportunities and record the resultant SO strategies in the appropriate cell c. Match internal weaknesses with external threats and record the resultant WT strategies d. List the firm's external weaknesses e. List the firm's external threats
D. list the firm's external weaknesses
Which of these is not a SPACE Matrix quadrant? a. Aggressive b. Defensive c.Competitive d. Offensive e. Conservative
D. offensive
Financial strengths are measured on the SPACE Matrix by variables such as investment, leverage, liquidity, working capital and a. ease of entry into the market. b. product quality. c. operations and facilities. d. working capital.
D. working capital
The board of directors of Trans Union Corporation, according to a ruling by the Supreme Court of Delaware in 1985, violated the interests of shareholders when they hastily accepted a takeover bid from the Marmon Group. (T/F)
T
The divisions of an organization should utilize strategy-formulation analytical tools to develop their own strategies and objectives. (T/F)
T
The firm should pursue aggressive strategies if the coordinates of a SPACE directional vector are (5,4). (T/F)
T
The first stage of the strategy-formulation framework is the input stage, followed by the matching stage. (T/F)
T
The impact of increasing legal pressures on board members is that directors are demanding access to more financial performance information on a regular basis. (T/F)
T
The left column of a QSPM consists of information taken directly from the Internal Factor Evaluation Matrix and the External Factor Evaluation Matrix. (T/F)
T
WT strategies are defensive tactics (T/F)
T
The Grand Strategy Matrix
a four-quadrant, two axis tool for formulating alternative strategies. All organizations can be positioned in one of this matrix's four strategy quadrants, based on their position on two evaluative dimensions: competitive position and market (industry) growth. Strategy suggestions ensue depending on which quadrant the firm is located
Board of directors
a group of individuals above the CEO, who have oversight and guidance over management who care for shareholders' interests
Dogs
a quadrant in the BCG Matrix for divisions that have a low relative market position and compete in a low-growth industry, this is the lower right quadrant--retrenchment, divestiture, liquidation
Question marks
a quadrant in the BCG matrix for divisions that have a low relative market share position but compete in a high-growth industry; this is the upper right quadrant; firm's generally have to decide whether to strengthen such divisions or sell them (hence a question is at hand)--market penetration, market development, product development, divestiture
Strengths-Weaknesses-Opportunities-Threats Matrix (SWOT)
the most widely used of all strategic planning matrices; matches a firms internal strengths/weaknesses with its external opportunities/threats to generate four types of strategies: SO Strategies, WO Strategies, ST Strategies, and WT strategies
Size of circles in the IE Matrix
the percentage sales contribution of each division
Culture
the set of shared values, believes, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm. Strategists should strive to preserve, emphasize and build upon these strategies
SP Axis
the volatility of profits and revenues for firms in a given industry--based on the expected impact of changes in core external factors such as technology, economy, demographic, seasonality,etc
Matching
when an organization matches its internal strengths and weaknesses with its external opportunities and threats using, for example, the SWOT, SPACE, BCG, IE, or GRAND Matrices
Best Strategies for Quadrant III of Grand Strategy Matrix
1. Retrenchment should be pursued first 2. Shift resources away from the current business into different areas: diversify 3. If all else fails, divestiture or liquidation
Limitations of the SWOT matrix:
1. SWOT does not show how to achieve a competitive advantage, so it must not be an end in itself 2. SWOT is a static assessment (or snapshot) in time 3. SWOT analysis may lead the firm to over emphasize a single internal or external factor in formulating strategies
6 Steps to Develop a SPACE Matrix
1. Select a set of variables to define financial position (FP), competitive postition (CP), stability position (SP), an Industry position (IP). 2. Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the variables that make up the FB and IP dimensions. Assign a numerical value ranging from -1 (best) to -7 (worst) to each of the variables that make up the SP and CP dimensions. 3. Compute an average score for FP, CP, IP, and SP 4. Plot the average scores for FP, IP, SP, and CP on the appropriate axis in the SPACE matrix 5. Add the two scores on the x-axis and plot the resultant point on X. Add the two scores on the y-axis and plot the resultant point on Y. Plot the intersection of the new xy point. 6. Draw a directional vector from the origin of the SPACE matrix through the new intersection point
Positive Features of the QSPM
1. Sets of strategies can be examined sequentially or simultaneously 2. Requires strategists to integrate pertinent external and internal factors into the decision process 3. Can be adapted for use by small and large for-profit and non profit organizations
______ is not an input stage matrix. A. IFE B. IE C. CPM D. EFE
B. IE
__________ strategies are defensive tactics directed at reducing internal weaknesses and avoiding environmental threats. A. SO B. WO C. SW D. ST E. WT
E. WT
Which stage of the strategy-formulation framework focuses on generating feasible alternative strategies? A. Input B. output C. decsion D. stage 3 E. matching
E. matching
A firm should pursue competitive strategies if the coordinates of a SPACE directional vector are (4,6). (T/F)
F
A firm should pursue defensive strategies if the coordinates of a SPACE directional vector are (2,3). (T/F)
F
A positive feature of QSPM is that sets of strategies can be examined sequentially or simultaneously. (T/F)
F
Alternative strategies derived from the TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix and Competitive Profile Matrix are included in the QSPM's top row. (T/F)
F
BCG Matrix requires more information about the divisions than the IE Matrix. (T/F)
F
Basic input information for the matching and decision stage matrices is provided by the information dervied from SPACE, TOWS, and BCG matrices. (T/F)
F
Cash cows represent the organization's best long-run opportunities for growth and profitability. (T/F)
F
Divisions in Quadrant IV are called dogs because the organization must decide whether to strengthen them by pursuing intensive strategies or engaging in joint venture (T/F)
F
Dogs on the BCG Matrix usually become stars after market penetration. (T/F)
F
Form matching an internal weakness with an external threat, a WT strategy in the SWOT matrix could result (T/F)
F
Generally, small organizations have a business plan whereas large organizations have culture. (T/F)
F
Identifying and evaluating alternative strategies shouldn't involve the managers and employees who earlier assembled the organizational vision and mission statements, performed the external audit, and conducted the internal audits. (T/F)
F
In performing SPACE analysis, barriers to entry into market are best categorized as a competitive position (CP) variable. (T/F)
F
Integration and diversification strategies are most often included in competitive strategies in a SPACE Matrix. (T/F)
F
Matching strengths with weaknesses is how SW strategies are created (T/F)
F
Now averaging 18 members rather than 12 as they did a few years ago, the trend in America is toward larger boards. (T/F)
F
On the x-axis of the IE Matrix, an internal factor evaluation score of 2.5 represents a weak internal position (T/F)
F
One positive feature of QSPM is that it does not require intuitive judgments and educated assumptions. (T/F)
F
Positioned in or around cell IX in the IE Matrix, successful organizations are able to achieve a portfolio of businesses. (T/F)
F
Quadrant III organizations compete in rapid-growth industries and have weak competitive positions, according to the Grand Strategy Matrix. (T/F)
F
SO strategies are based on using a firm's internal strengths to take advantage of external opportunities and threats. (T/F)
F
Satisficing means it is often possible to achieve similar results using different means or paths. (T/F)
F
Small companies could skip Stages 1 and 2 of the strategy-formulation framework and develop a QSPM. (T/F)
F
Stage 2 in the strategy-formulation framework involves a single technique, the Quantitative Strategic planning matrix. (T/F)
F
Total attractiveness scores (TAS)
In a QSPM, the product of multiplying the weights by the attractiveness socres in each row. The values indicate the relative attractiveness of each alternative strategy, considering only the impact of the adjacent external or internal critical success factor
Sum Total Attractiveness Score (STAS)
In a QSPM, this is the sum of the total attractiveness scores in each strategy column; value reveals which strategy is most attractive in each set of alternatives
Defensive quadrent
In a SPACE matrix analysis, when the firm's directional vector into the lower left quadrant it suggests that the firm should pursue defensive strategies such as retrenchment
Competitive quadrent
In a SPACE matrix analysis, when the firm's directional vector pointws in the lower right quadrant it suggests that the firm should pursue competitive stratiges such as horizontal integration
What are two things that get unduly embedded in strategy choice and decisions?
Political biases and personal preferences
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Business portfolio Matrix, the Internal-External (IE) Business portfolio matrix and the Grand Strategy Matrix are included in Stage 2 of the strategy-formulation framework. (T/F)
T
The major overall benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics and needs of an organization's various divisions. (T/F)
T
The most important determinants of an organization's overall strategic position are considered to be the two internal dimensions, Financial position [FP] and competitive position [CP], and the two external dimensions, stability position [SP] and industry position [IP]. (T/F)
T
The purpose of each stage 2 matching tool is to generate feasible alternative strategies, not to select or determine which strategies are best. (T/F)
T
The purpose of matching key factors is to generate feasible alternative strategies. (T/F)
T
The size of the circle in a BCG Matrix corresponds to the proportion of corporate revenue generated by that business unit. The pie slice indicates the proportion of corporate profits generated by that division. (T/F)
T
Viewing businesses as star, cash cow, dog, or question mark is an oversimplification (T/F)
T
Whenever two firms merge, it becomes especially important to evaluate and consider culture-strategies linkages. (T/F)
T
Quadrant II of Grand Strategy Matrix
These firms need to evaluate their present approach to the market place. -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
Strategy analysis and choice seek to determine:
alternative courses of action that could best enable the firm to achieve its mission and objectives
What the QSPM allows strategists to evaluate:
alternative strategies objectively based on previously identified external and internal key success factors
Business portfolio
autonomous divisions (or profit centers or segments) of an organization as represented by circles in a BCG and IE matrices
Competitive strategies
backward, forward, and horizontal integration, market penetration, market development, and product development
Quadrant III of Grand Strategy Matrix
compete in slow-growth industries and have weak competitive positions and must make some drastic changes quickly to avoid further decline and possible liquidation
Matching stage
consists of 5 techniques that can be used in any sequence (SWOT, SPACE, BCG, IE, and Grand Strategy matrix) which match external opportunities and threats to internal strengths and weaknesses
Political maneuvering
consumes valueable time, subverts organizational objectives, diverts human energy, and results in the loss of some valueable employees
The __________ of the strategy formulation framework contains the SWOT Matrix, the SPACE Matrix, the Grand Strategy Matrix and the Competitive Profile Matrix. A. input stage B. matching stage C. decision stage D. output stage E. none of the above
e
Boston Consulting Group (BCG) Matrix
graphically portrays differences among divisions in terms of relative market share position and industry growth rate
Quadrant IV of Grand Strategy Matrix
have strong competitive positions but are in a slow-growth industry, and have characteristically high cash-flow levels and limited internal growth needs and often can pursue related or unrelated diversification successfully
Directional Vector
in a SPACE matrix analysis, this line begins at the origin and goes into one of four quadrants, revealing the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative
Conservative quadrent
in a SPACE matrix analysis, when the firm's directional vector is in the upper left quadrant it suggests that the firm should pursue conservative strategies such as market penetration
How should the the proposed strategies be listed?
in writing
Strategic Position and Action Evaluation (SPACE) Matrix
indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization. The axis of this matrix represent two internal dimensions (Financial position [FP] and competitive position [CP]) and two external dimensions (stability position [SP] and industry position [IP] ). These four factors are perhaps the most important determinants of an organization's overall strategic position
Champions
individuals most strongly identified with a firm's new idea/product/service, and whose features are linked to its success
Relative market share position
it is the horizontal axisin a BCG matrix, which is the firm's particular segment's market share (or revenues or number stores) divided by the industry leader's analogous number
A ________ set of the most _________ strategies must be developed.
manageable, attractive
Conservative strategies
market penetration, market development, product development and related diversification
Aggressive strategies
market penetration, market development, product development, diversification, backward integration, forward integration, and horizontal integration
What is the most difficult part of developing a SWOT matrix?
matching key external and internal factors which requires good judgement
x-axis of the BCG matrix
relative market share position, midpoint set at .50
Size of pie slice in the IE matrix
reveals the percentage profit contribution of each division
WO strategies
strategies that result from matching a firm's internal weaknesses with its external opportunities
WT Strategies
strategies that result from matching a firm's internal weaknesses with its external threats
SO Strategies
strategies that result from matching a firms internal strengths with external opportunities
ST Strategies
strategies that result from matching a firms internal strengths with its external threats