Strategic Management: Strategy Analysis & Choice

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases

• The book is the seventeenth edition
• The chapter is about strategy analysis and choice
• Learning objectives include describing the strategy analysis and choice process, and diagramming and explaining the three-stage strategy-formulation analytical framework
• Constructing and applying the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Strategic Position and Action Evaluation (SPACE) Matrix, and Boston Consulting Group (BCG) Matrix are also learning objectives
• Other learning objectives include constructing and applying the Internal-External (IE) Matrix, the Grand Strategy Matrix, and the Quantitative Strategic Planning Matrix (QSPM)
• Estimating costs associated with recommendations is another learning objective
• The role of organizational culture in strategic analysis and choice, and identifying and discussing important political considerations in strategy analysis and choice are also covered
• A comprehensive, integrative strategic-management model demonstrates the interrelationships between different stages of the strategic management process
• The process of generating and selecting strategies involves developing a manageable set of attractive alternatives, determining advantages, disadvantages, trade-offs, costs, and benefits of the strategies.
• Identifying and evaluating alternative strategies should involve managers and employees who've previously performed external and internal audits.

The Strategy-Formulation Analytical Framework

• The framework includes three stages: input, matching, and decision
• Input stage summarizes basic data needed for formulating strategies, including EFE Matrix, IFE Matrix, and Competitive Profile Matrix (CPM)
• Matching stage focuses on generating strategies by aligning key external and internal factors. Techniques include SWOT, SPACE, BCG, IE, and Grand Strategy Matrices
• Decision stage involves using the Quantitative Strategic Planning Matrix (QSPM) to objectively assess the attractiveness of alternative strategies to choose the best option.

SWOT Matrix

• The SWOT matrix helps develop four types of strategies: SO (strengths-opportunities) Strategies, WO (weaknesses-opportunities) Strategies, ST (strengths-threats) Strategies, and WT (weaknesses-threats) Strategies
• SO strategies use a firm's internal strengths to take advantage of external opportunities
• WO strategies aim at improving internal weaknesses by taking advantage of external opportunities
• ST strategies use a firm's strengths to avoid or reduce the impact of external threats
• WT strategies use defensive tactics for reducing internal weakness and avoiding external threats

SPACE Matrix

• The SPACE matrix is a four-quadrant framework that determines whether an organization should use aggressive, conservative, defensive, or competitive strategies
• It is based on two internal dimensions (financial position [FP] and competitive position [CP]) and two external dimensions (stability position [SP] and industry position [IP])

BCG Matrix

• The BCG Matrix graphically shows differences in divisions in terms of relative market share position and industry growth rate
• It allows multidivisional organizations to manage their business portfolio by analyzing relative market share position and industry growth rate of each division relative to all other divisions in the organization
• The matrix has four quadrants: Stars, Question Marks, Cash Cows, and Dogs

Internal-External (IE) Matrix

• The IE Matrix is based on the IFE total weighted scores (x-axis) and EFE total weighted scores (y-axis)
• The matrix contains three major regions: Grow and build, Hold and maintain, and Harvest or divest

Quantitative Strategic Planning Matrix (QSPM)

• Objectively indicates which of the alternative strategies is the best one
• uses inputs from analyses in stages 1 and 2
• objectively decides among various alternative strategies

Costs Associated with Recommendations:

• Some strategies require monetary or non-monetary constraints , QSPM and expert judgment are used to select specific strategies

Culture and Politics of Strategy Choice:

• Strategies requiring less cultural change may be more appealing
• Political maneuverings may slow the process and create loss of valuable employees
• Political biases and personal preferences might influence decisions

Explore the critical concepts in strategy analysis and choice, focusing on the frameworks essential for strategic formulation. This quiz covers tools like the SWOT Matrix, SPACE Matrix, BCG Matrix, and more, emphasizing practical application and costing. Understand the influence of organizational culture and political factors in strategic decision-making.