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Strategy Analysis and Selecting

Chapter 7. Strategy Analysis and Selecting. Content. Introduction of strategy analysis Types of strategies analysis SWOT Matrix SPACE Matrix BCG Matrix IE Matrix Grand Strategy Matrix Conclusion. Introduction. Nature of Strategy Analysis & Choice. -- Establishing long-term objectives

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Strategy Analysis and Selecting

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  1. Chapter 7 Strategy Analysis and Selecting

  2. Content • Introduction of strategy analysis • Types of strategies analysis • SWOT Matrix • SPACE Matrix • BCG Matrix • IE Matrix • Grand Strategy Matrix • Conclusion

  3. Introduction Nature of Strategy Analysis & Choice --Establishing long-term objectives -- Generating alternative strategies -- Selecting strategies to pursue -- Best alternative - achieve mission & objectives Source: http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid=110148

  4. SWOT Matrix • SWOT matrix is a way to analyze competitive position, both internal and external aspects of doing your business. • SWOT method is a key tool for company top officials to formulate strategic plans. • Each letter in SWOT matrix stands for: • S: Strengths • W: Weaknesses • O: Opportunities • T: Threats Internal factors External factors http://www.maxi-pedia.com/SWOT+analysis+matrix+method+model

  5. SWOT Matrix Developing the SWOT There are 8 steps to develop a SWOT Matrix.

  6. SWOT Matrix

  7. SPACE Matrix • The Strategic Position and ACtion Evaluation matrix or short a SPACE Matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization. • The SPACE matrix is based on 4 areas of analysis: • Financial Strength (FS) • Competitive Advantage (CA) • Environmental Stability (ES) • Industry Strength (IS) Internal strategic dimension External strategic dimension http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

  8. SPACE Matrix • The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy: • Aggressive • Conservation • Defensive • Competitive • There are 7 steps to develop a SPACE matrix. http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

  9. SPACE Matrix Steps to develop a SPACE matrix • Select a set of variables to define FS, CA, ES, & IS • Assign a numerical value: • From +1 to +6 to each FS & IS dimension • From -6 to -1 to each ES & CA dimension • Compute an average score for each FS, CA, ES, & IS http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

  10. Steps to Developing a SPACE Matrix Steps to develop a SPACE matrix (cont’d) • Plot the average score on the appropriate axis. • Add the average scores of CA and IS on the x-axis and plot the point. • Add the average scores of ES and FS on the y-axis and plot the point. • Draw a directional vector from the origin through the new intersection point. http://www.maxi-pedia.com/SPACE+matrix+model+strategic+management+method

  11. Sample of a SPACE matrix

  12. A completed SPACE matrix look like

  13. BCG Matrix • The BCGmatrix model is a portfolioplanning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's. • BCG matrix is often used to prioritize which products within company product mix get more funding and attention. • The BCG model is based on classification of products into four categories, which focus on market-share position & industry growth rate. http://www.maxi-pedia.com/BCG+matrix+model

  14. BCG Matrix

  15. BCG Matrix • BCG STARS • High relative market share and high growth rate • Best long-run opportunities for growth & profitability • Substantial investment to maintain or strengthen dominant position • Integration strategies, intensive strategies, joint ventures http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

  16. BCG Matrix • BCG Question mark • Low relative market share – compete in high-growth industry • Cash needs are high • Case generation is low • Decision to strengthen (intensive strategies) or divest http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

  17. BCG Matrix • CASH COWS • High relative market share, competes in low-growth industry • Generate cash in excess of their needs • Milked for other purposes • Maintain strong position as long as possible • Product development, concentric diversification • If weakens—retrenchment or divestiture http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

  18. BCG Matrix • DOGS • Low relative market share & compete in slow or no market growth • Weak internal & external position • Liquidation, divestiture, retrenchment http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

  19. IE Matrix • The Internal-External (IE) matrix, is another strategic management tool used to analyze working conditions and strategic position of a business, which is based on an analysis of internal and external business factors that are combined into one suggestive model. • The IE matrix is based on the following two criteria: • Score from the EFE matrix -- this score is plotted on the y-axis. • Score from the IFE matrix -- plotted on the x-axis. http://www.maxi-pedia.com/internal+external+IE+matrix

  20. IE Matrix • Steps to develop IE matrix • Record your organization’s IFE total score on the X-axis. (Chapter 5) • Record your organization’s EFE total score on the Y-axis. (Chapter 4) • Plot the location of your company in the appropriate sector from quadrant I to IX.

  21. IE Matrix • Quadrant I,II,IV: Grow and Build: Market penetration, market development, product development. • Quadrant III,V,VII: Hold and Maintain: Market penetration, product development. • Quadrant VI,VIII,IX: Harvest or Divest: Retrenchment, divestiture, liquidation. http://www.kulzick.com/stu/IEmatrix.htm

  22. Grand Strategy Matrix • Tool for formulating alternative strategies • Based on two dimensions • Competitive position (X-axis): can be either strong or weak, depending on such factors as market share, ability of the firm to compete on price and quality, customer recognition, etc. • Market growth (Y-axis): can be considered as either rapid or slow depending on the annual growth rate (sales) within the particular market/ industry in which the firm competes. http://faculty.utep.edu/LinkClick.aspx?fileticket=5QiypiXvRI4%3D&tabid=50620&mid =110148

  23. Grand Strategy Matrix Rapid Market Grow Weak Competitive Position Strong Competitive Position Slow Market Grow

  24. Grand Strategy Matrix http://faculty.utep.edu/LinkClick.aspx? fileticket=5QiypiXvRI4%3D&tabid=50620 &mid=110148

  25. Conclusion • Strategy Analysis is really important for developing the company against the economic crisis or the competitors. • There are lots of strategies which created by the entrepreneur who face to the problem. • Although it has many choices, but we should consider about its limited. • Efficient strategy while in the right condition, and environment.

  26. Thanks for your Attention !!!

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