The document outlines several strategic planning and analysis tools including: 1. Developing alternative strategies and evaluating their advantages, disadvantages, and costs/benefits. 2. Using matrices like TOWS, SPACE, BCG, and IE to match internal strengths/weaknesses with external opportunities/threats and determine appropriate strategies. 3. Evaluating strategies using the Grand Strategy Matrix based on competitive position and market growth to identify strategies like market penetration, product development, divestment.

3. • Develop set of most attractive alternative strategies
• Determine for the set
• Advantages
• Disadvantages
• Trade-offs
• Costs
• Benefits
• Involve a broad mix of personnel
• Representation from each department/function
• Provides opportunity to gain understanding of firm’s direction
• Provides vehicle to develop commitment to attainment of
organizational objectives
• Evaluate each alternative
• Internal and external audit information
• Firm’s mission statement
• Listed in writing
• Ranked in order of attractiveness

5. The Matching Stage
Competitive
Profile Matrix
(CPM)
Internal
Factor
Evaluation
Matrix (IFE)
External
Factor
Evaluation
Matrix (EFE)

6. In this stage we seek to match the organization’s internal resources and skills and
the opportunities and risks created by the industry’s external environment.
The Matching Stage
TOWS Matrix
SPACE Matrix
BCG Matrix
IE Matrix
Grand Strategy Matrix

8. Strategy is characterized by the
organizational match between
• Internal resources and skills
• Opportunities & risks
created by external
factors

9. Resultant StrategyKey External FactorKey Internal Factor
Develop a new employee
benefits package
=
Strong union activity
(threat)
+
Poor employee morale
(weakness)
Develop new products for
older adults
=
Decreasing numbers
of young adults
(threat)
+Strong R&D (strength)
Pursue horizontal
integration by buying
competitor's facilities
=
Exit of two major
foreign competitors
form the industry
(opportunity)
+
Insufficient capacity
(weakness)
Acquire Visioncable, Inc.=
20% annual growth in
the cablevision
industry (opportunity)
+
Excess working capacity
(strength)

10. The Threats-Opportunities-Weaknesses-Strengths (TOWS)
Matrix is an important matching tool that helps managers
develop four types of strategies:

11. List the firm’s key
1. external opportunities
2. external threats
3. internal strengths
4. internal weaknesses
1. Match internal strengths with external opportunities and record the resultant
SO Strategies
2. Match internal weaknesses with external opportunities and record the
resultant WO Strategies
3. Match internal strengths with external threats and record the resultant ST
Strategies
4. Match internal weaknesses with external threats and record the resultant
WT Strategies

12. Use a firm’s internal
strengths to take
advantage of external
opportunities
Improving internal
weaknesses by taking
advantage of external
opportunities
Using firm’s strengths
to avoid or reduce the
impact of external
threats.
Defensive tactics aimed
at reducing internal
weaknesses & avoiding
environmental threats.

14. Strategic Position and Action Evaluation
Four-quadrant framework indicates the following type of strategies:
1. Aggressive
2. Conservative
3. Defensive
4. Competitive
The axes of the SPACE Matrix represent two internal dimensions
– financial strength (FS)
– competitive advantage (CA)
and external dimensions
– environmental stability (ES)
– industry strength (IS)
These four factors are the most important determinants of an organization’s
overall strategic position.

15. 1. Select variables to define FS, CA, ES, & IS
2. Assign numerical ranking from +1 (worst) to +6 (best)
for FS and IS; Assign numerical ranking from –1 (best)
to –6 (worst) for ES and CA.
3. Compute average score for FS, CA, ES, & IS
4. Plot the average scores on the Matrix
5. Add the two scores on the x-axis and plot point on X. Add the
scores on the y-axis and plot Y. Plot the intersection of the
new xy point.
6. Draw a directional vector from origin through the new
intersection point.
Strategic Position and Action Evaluation

16. Financial Strength (FS)
Return on investment
Leverage
Liquidity
Working capital
Cash flow
Ease of exit from market
Risk involved in business
Internal Strategic Position
Environmental Stability (ES)
Technological changes
Rate of inflation
Demand variability
Price range of competing
products
Barriers to entry
Competitive pressure
Price elasticity of demand
External Strategic Position

17. Competitive Advantage (CA)
Market share
Product quality
Product life cycle
Customer loyalty
Competition’s capacity utilization
Technological know-how
Control over suppliers &
distributors
Internal Strategic Position
Industry Strength (IS)
Growth potential
Profit potential
Financial stability
Technological know-how
Resource utilization
Capital intensify
Ease of entry into market
Productivity, capacity utilization
External Strategic Position

18. Strategic Position and Action Evaluation

19. Strategic Position and Action Evaluation

20. Strategic Position and Action Evaluation

21. Strategic Position and Action Evaluation

22. Strategic Position and Action Evaluation

23. Boston Consulting Group Matrix (BCG)
• The BCG Matrix graphically portrays differences among divisions in terms of relative
market share position and industry growth rate.
• The BCG Matrix 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.
• The BCG Matrix is designed to enhance a multidivisional firm’s efforts to formulate
strategies.
• Thus it allows a multidivisional organization to manage its portfolio of businesses
• Focuses on relative market share position and the industry growth rate.
• Whereas relaltive market share is Ratio of a division’s own market share in a particular
industry to the market share held by the largest rival firm in that industry.

24. Boston Consulting Group Matrix (BCG)

25. Boston Consulting Group Matrix (BCG)
• Low relative market share position yet
compete in high-growth industry.
• Cash needs are high
• Case generation is low
• Decision to strengthen (intensive strategies)
or divest

26. Boston Consulting Group Matrix (BCG)
• High relative market share and high
industry growth rate.
• Best long-run opportunities for growth and
profitability
• Substantial investment to maintain or
strengthen dominant position
• Integration strategies, intensive strategies, joint
ventures

27. Boston Consulting Group Matrix (BCG)
• High relative market share position, but
compete 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 becomes weak—retrenchment or divestiture

28. Boston Consulting Group Matrix (BCG)
• Low relative market share position and
compete in slow or no market growth
• Weak internal and external position
• Decision to liquidate, divest,
retrenchment

29. • The Internal - External Analysis reveals the
type of strategies most appropriate:
• Hold and Maintain,
• Grow and Build,
• Harvest or Divest.
• In the IE Analysis, we score our firm's
Internal and External position against the
competition.

30. • The IE Matrix is based on two key dimensions
 The IFE total weighted scores on the x-axis
 The EFE total weighted scores on the y-axis
 Scores: 3.0 to 4.0 = strong; 2.0 – 2.99 = average; and 1.0 to 1.99 = weak.

31. A tool for formulating alternative strategies.
Grand Strategy is based on two evaluative
dimensions
1. Competitive position (internal dimension)
2. Market growth (external dimension)

32. Rapid Market Growth
Slow Market Growth
Weak
Competitive
Position
Strong
Competitive
Position
Quadrant II
Market development
Market penetration
Product development
Horizontal integration
Divestiture
Liquidation
Quadrant I
Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Concentric diversification
Quadrant III
Retrenchment
Concentric diversification
Horizontal diversification
Conglomerate
diversification
Liquidation
Quadrant IV
Concentric diversification
Horizontal diversification
Conglomerate
diversification
Joint ventures

33. Quadrant I
• Excellent strategic position
• Concentration on current markets and products
• Take risks aggressively when necessary
Quadrant II
• Evaluate present approach seriously
• How to change to improve competitiveness
• Rapid market growth requires intensive strategy
Quadrant III
• Compete in slow-growth industries
• Weak competitive position
• Drastic changes quickly
• Cost and asset reduction indicated (retrenchment)
Quadrant IV
• Strong competitive position
• Slow-growth industry
• Diversification indicated to more promising growth areas

34. 1. Comprises Stage 3 of the analytical framework
2. Analytical technique designed to determine the relative
attractiveness of feasible alternative actions.
3. Uses input from Stage 1 and Stage 2
4. Tool for objective evaluation of alternative strategies
5. Based on identified external and internal crucial
success factors
6. Requires good intuitive judgment

35. Key Internal Factors
Management
Marketing
Finance/Accounting
Production/Operations
Research and Development
Computer Information
Systems
Strategy 3Strategy 2Strategy 1WeightKey External Factors
Economy
Political/Legal/Governmental
Social/Cultural/Demographic/
Environmental
Technological
Competitive

36. 1. List the firm’s key external opportunities & threats; list
the firm’s key internal strengths and weaknesses
2. Assign weights to each external and internal critical
success 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
6. Compute the Sum Total Attractiveness Score

37. Positives:
1. Sets of strategies examined simultaneously or sequentially
2. Requires the integration of pertinent external and internal factors in
the decision-making process
Limitations:
1. Requires intuitive judgments and educated assumptions
2. Only as good as the prerequisite inputs