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Lecture 7 - Strategy Analysis and Selecting

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7 views

Lecture 7 - Strategy Analysis and Selecting

Uploaded by

faiqsh480
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Strategy Analysis and Selecting

Syed Saad Bin Kazim


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
Internal factors
• W: Weaknesses
• O: Opportunities External factors
• T: Threats
SWOT Matrix
SWOT Matrix
Internal Factors
Strengths Weaknesses

External factors S W

Opportunities
SO strategies WO strategies
O

Threats
ST strategies WT strategies
T
TWOS Matrix
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) Internal strategic dimension
– Competitive Advantage (CA)
– Environmental Stability (ES) External strategic dimension
– Industry Strength (IS)
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.
SPACE Matrix
Steps to develop a SPACE matrix

1. Select a set of variables to define FS, CA,


ES, & IS
2. Assign a numerical value:
1. From +1 to +7 to each FS & IS dimension
2. From -7 to -1 to each ES & CA dimension
3. Compute an average score for each FS, CA,
ES, & IS
Steps to Developing a SPACE
Matrix
1. Plot the average score on the appropriate
axis.
2. Add the average scores of CA and IS on the
x-axis and plot the point.
3. Add the average scores of ES and FS on the
y-axis and plot the point.
4. Draw a directional vector from the origin
through the new intersection point.
Sample of a SPACE matrix
SPACE Matrix
BCG Matrix
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.
Grand Strategy Matrix
Rapid Market Grow
Quadrant 2: Quadrant 1:
Market penetration Market penetration
Market development Market development
Product development Product development
Horizontal integration Forward integration
Divestiture Backward integration
Liquidation Horizontal integration
Concentric diversification
Weak Strong
Competiti Competiti
ve Quadrant 3: Quadrant 4: ve
Retrenchment Concentric Diversification
Position Position
Concentric diversification Horizontal diversification
Horizontal diversification Conglomerate Diversification
Conglomerate diversification Joint Ventures
Divestiture
Liquidation

Slow Market Grow


Grand Strategy Matrix
Quadrant 2: Quadrant 1:
Evaluate present approach Excellent strategic position
seriously Concentration on current markets
How to change to improve and products
competitiveness Take risks aggressively when
Rapid market growth requires necessary
intensive strategy
Quadrant 3: Quadrant 4:
Compete in slow-growth Strong competitive position
industries Slow-growth industry
Weak competitive position Diversification indicated to more
Drastic changes quickly promising growth areas
Cost and asset reduction
indicated (retrenchment)

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