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

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases Seventeenth Edition Chapter 6 Strategy Analysis and Choice Copyright © 2020, 2017, 2015 Pearson Educa...

Strategic Management Concepts: A Competitive Advantage Approach, Concepts and Cases Seventeenth Edition Chapter 6 Strategy Analysis and Choice Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (1 of 2) 6.1 Describe the strategy analysis and choice process. 6.2 Diagram and explain the three-stage strategy-formulation analytical framework. 6.3 Construct and apply the Strengths-Weaknesses- Opportunities-Threats (SWOT) Matrix. 6.4 Construct and apply the Strategic Position and Action Evaluation (SPACE) Matrix. 6.5 Construct and apply the Boston Consulting Group (BCG) Matrix. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Learning Objectives (2 of 2) 6.6 Construct and apply the Internal-External (IE) Matrix. 6.7 Construct and apply the Grand Strategy Matrix. 6.8 Construct and apply the Quantitative Strategic Planning Matrix (QSPM). 6.9 Explain how to estimate costs associated with recommendations. 6.10 Discuss the role of organizational culture in strategic analysis and choice. 6.11 Identify and discuss important political considerations in strategy analysis and choice. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.1 The Comprehensive, Integrative Strategic-Management Model Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 1 (February 1989): 91. See also Anik Ratnaningsih, Nadjadji Anwar, Patdono Suwignjo, and Putu Artama Wiguna, “Balance Scorecard of David’s Strategic Modeling at Industrial Business for National Construction Contractor of Indonesia,” Journal of Mathematics and Technology, no. 4, (October 2010): 20. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Process of Generating and Selecting Strategies (1 of 3) A manageable set of the most attractive alternative strategies must be developed. The advantages, disadvantages, trade-offs, costs, and benefits of these strategies should be determined. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Process of Generating and Selecting Strategies (2 of 3) Identifying and evaluating alternative strategies should involve many of the managers and employees who earlier assembled the organizational vision and mission statements, performed the external audit, and conducted the internal audit. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Process of Generating and Selecting Strategies (3 of 3) Alternative strategies proposed by participants should be considered and discussed in a series of meetings. Proposed strategies should be listed in writing. When all feasible strategies identified by participants are given and understood, the strategies should be ranked in order of attractiveness. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.2 The Strategy-Formulation Analytical Framework Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved A Comprehensive Strategy- Formulation Framework (1 of 3) Stage 1 - Input Stage – summarizes the basic input information needed to formulate strategies – consists of the EFE Matrix, the IFE Matrix, and the Competitive Profile Matrix (CPM) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved A Comprehensive Strategy- Formulation Framework (2 of 3) Stage 2 - Matching Stage – focuses on generating feasible alternative strategies by aligning key external and internal factors – techniques include the Strengths-Weaknesses- - wajib buat ! Opportunities-Threats (SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting Group (BCG) Matrix, the Internal- External (IE) Matrix, and the Grand Strategy Matrix Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved A Comprehensive Strategy- Formulation Framework (3 of 3) Stage 3 - Decision Stage – involves the Quantitative Strategic Planning Matrix (QS PM) – reveals the relative attractiveness of alternative strategies and thus provides objective basis for selecting specific strategies Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Matching Stage (1 of 3) The Strengths-Weaknesses-Opportunities-Threats (SW OT) Matrix helps managers develop four types of strategies: – SO (strengths-opportunities) Strategies – WO (weaknesses-opportunities) Strategies – ST (strengths-threats) Strategies – WT (weaknesses-threats) Strategies Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  The Matching Stage (2 of 3) 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 swot Matrix 2 ke 3 daripada Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Matching Stage (3 of 3) ST Strategies – use a firm's strengths to avoid or reduce the impact of external threats WT Strategies – defensive tactics directed at reducing internal weakness and avoiding external threats Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Figure 6.3 A SWOT Matrix for a Retail Computer Store SNOT Kena ada AQCD ! ↓ kena being! Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved SWOT Matrix (1 of 2) 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 opportunities, and record the resultant SO strategies. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved SWOT Matrix (2 of 2) 6. Match internal weaknesses with external opportunities, and record the resultant WO strategies. 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. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  A Masuk final Figure 6.4 The SPACE Matrix (1 of 3) please explain strategy with and to downward arrow Source: Based on H. Rowe, R. Mason, and K. Dickel, Strategic Management and Business Policy: A Methodological Approach (Reading, MA: Addison-Wesley Publishing Co. Inc., © 1982), 155. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.4 The SPACE Matrix (2 of 3) Strategic Position and Action Evaluation (SPACE) Matrix – four-quadrant framework indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.4 The SPACE Matrix (3 of 3) Two internal dimensions (financial position [FP] and competitive position [CP]) Two external dimensions (stability position [SP] and industry position [IP]) Most important determinants of an organization’s overall strategic position Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 6.2 SPACE Matrix Axes (1 of 2) Internal Strategic Position External Strategic Position Financial Position (FP) Stability Position (SP) Return on investment Technological changes Leverage Rate of inflation Liquidity Demand variability Working capital Price range of competing products Cash flow Barriers to entry into market Inventory turnover Competitive pressure Earnings per share Ease of exit from market Price earnings ratio Risk involved in business Example Factors That Make Up the SPACE Matrix Axes Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 6.2 SPACE Matrix Axes (2 of 2) Internal Strategic Position External Strategic Position Competitive Position (CP) Industry Position (IP) Market share Growth potential Product quality Profit potential Product life cycle Financial stability Customer loyalty Extent leveraged Capacity utilization Resource utilization Technological know-how Ease of entry into market Control over suppliers and distributors Productivity, capacity utilization Source: Based on H. Rowe, R. Mason, & K. Dickel, Strategic Management and Business Policy: A Methodological Approach (Reading, MA: Addison-Wesley Publishing Co. Inc., 1982); 155-156. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Steps in Performing SPACE Analysis (1 of 4) 1. Select a set of variables to define financial position (FP), competitive position (CP), stability position (SP), and industry position (IP). Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Steps in Performing SPACE Analysis (2 of 4) 2. Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the variables that make up the FP and I P 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. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Steps in Performing SPACE Analysis (3 of 4) 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. 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. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Steps in Performing SPACE Analysis (4 of 4) 6. Draw a directional vector from the origin of the SPACE Matrix through the new intersection point. – This vector reveals the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.5 Example Strategy Profiles (1 of 2) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.5 Example Strategy Profiles (2 of 2) Source: Based on H. Rowe, R. Mason, and K. Dickel, Strategic Management and Business Policy: A Methodological Approach (Reading, MA: Addison-Wesley Publishing Co. Inc., © 1982), 155. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.6 A SPACE Matrix for Facebook tamban [ = y = 3. 6 = yaxis = 0 8. = u was Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Boston Consulting Group (BCG) Matrix BCG Matrix – graphically portrays differences among divisions in terms of relative market share position and industry growth rate – allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization ! input is penting Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Famous in final test > - Figure 6.7 The BCG Matrix (1 of 4) Source: Based on the BCG Portfolio Matrix from the Product Portfolio Matrix, © 1970, The Boston Consulting Group. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.7 The BCG Matrix (2 of 4) Question Marks - Quadrant I – Organization must decide whether to strengthen them by pursuing an intensive strategy (market penetration, market development, or product development) or to sell them Stars - Quadrant II – represent the organization’s best long-run opportunities for growth and profitability increase market share in hope an Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.7 The BCG Matrix (3 of 4) Cash Cows - Quadrant III – generate cash in excess of their needs – should be managed to maintain their strong position for as long as possible Dogs - Quadrant IV – compete in a slow- or no-market-growth industry – businesses are often liquidated, divested, or trimmed down through retrenchment Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.7 The BCG Matrix (4 of 4) The major benefit of the BCG Matrix is that it draws attention to the cash flow, investment characteristics, and needs of an organization's various divisions. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.8 An Example BCG Matrix Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.9 An Example BCG Matrix Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.10 The Internal-External (IE) Matrix (1 of 2) Source: Based on: The IE Matrix was developed from the General Electric (GE) Business Screen Matrix. For a description of the GE Matrix, see Michael Allen, “Diagramming GE’s Planning for What’s WATT,” in R. Allio and M. Pennington, eds., Corporate Planning: Techniques and Applications l par; New York: AMACOM, 1979. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.10 The Internal-External (IE) Matrix (2 of 2) The IE Matrix is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis Three Major Regions – Grow and build (I, II or IV) – Hold and maintain (III, V, VII) – Harvest or divest (VIII, VI, IX) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.11 An Example IE Matrix Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.12 The IE Matrix Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Grand Strategy Matrix (1 of 3) Grand Strategy Matrix – based on two evaluative dimensions: competitive position and market (industry) growth Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Figure 6.13 The Grand Strategy Matrix Source: Based on Roland Christensen, Norman Berg, and Malcolm Salter, Policy Formulation and Administration (Homewood, IL: Richard D. Irwin, 1976), 16-18. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Grand Strategy Matrix (2 of 3) Quadrant I – continued concentration on current markets (market penetration and market development) and products (product development) is an appropriate strategy Quadrant II – 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 Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Grand Strategy Matrix (3 of 3) Quadrant III – must make some drastic changes quickly to avoid further decline and possible liquidation – Extensive cost and asset reduction (retrenchment) should be pursued first Quadrant IV – have characteristically high cash-flow levels and limited internal growth needs and often can pursue related or unrelated diversification successfully Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Quantitative Strategic Planning Matrix (QSPM) Quantitative Strategic Planning Matrix (QSPM) – objectively indicates which alternative strategies are best – uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 6.4 The Quantitative Strategic Planning Matrix (QSPM) IFE dEFE Strategic Alternatives ↑ Key Factors Weight Strategy 1 Strategy 2 Strategy 3 Key External Factors Economy Political/Legal/Governmental Social/Cultural/Demographic/Environmental Technological Competitive Key Internal Factors Management Marketing Finance/Accounting Production/Operations Research and Development Management Information Systems Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Steps in a QSPM (1 of 2) 1. Make a list of the firm’s key external opportunities and threats and internal strengths and weaknesses in the left column. 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. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Steps in a QSPM (2 of 2) 4. Determine the Attractiveness Scores (AS). 5. Compute the Total Attractiveness Scores. 6. Compute the Sum Total Attractiveness Score. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Positive Features of the QSPM Sets of strategies can be examined sequentially or simultaneously Requires strategists to integrate pertinent external and internal factors into the decision process Can be adapted for use by small and large for-profit and nonprofit organizations Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Limitations of the QSPM Always requires informed judgments It is only as good as the prerequisite information and matching analyses on which it is based Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 6.5 A QSPM for a Retail Computer Store (1 of 3) if sesuai letule tinggi S not relate a kena letak Satu. every strategy satu per Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 6.5 A QSPM for a Retail Computer Store (2 of 3) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Table 6.5 A QSPM for a Retail Computer Store (3 of 3) Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved  Estimating Costs Associated With Recommendations The term recommendation is used to refer to “any alternative strategy that is selected for implementation.” Due to monetary and/or non-monetary constraints, no firm can implement all alternative strategies proposed in the matching matrices, so firms utilize the QSPM and expert judgment to select particular strategies. ensure resources to do strategy There enough Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved The Culture and Politics of Strategy Choice major _ changes Strategies that require fewer cultural changes may be more attractive because extensive changes can take considerable time and effort Political maneuvering consumes valuable time, subverts organizational objectives, diverts human energy, and results in the loss of some valuable employees Political biases and personal preferences get unduly embedded in strategy choice decisions of bias. because to focus on inside problem not bias due some strategies maybe Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved Copyright include QSPM 6 matrix ada Total Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved