More Related Content Similar to Session 5 Strategy in Action.pptx (20) More from ssusercbc19c (14) Session 5 Strategy in Action.pptx1. Unit 5
Strategy in Action
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA
3. Learning Objectives
1. Review of internal and external factors
2. Objectives classifications
3. Type strategies
4. Strategy in actions
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 3
4. Learning Objectives
1. Objective and its types
2. Objectives classifications (Long term vs Short term)
3. SMART-C objective
4. Objective hierarchy (Corporate, Division, Functional)
5. Congruent Objectives
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 4
5. Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 5
Integration Strategy (Growth Strategy)
1. Forward Integration (Distributors)
2. Backward Integration (Suppliers)
3. Horizontal Integration (Ownership of competitors)
Types of Strategies
6. Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 6
Intensive Strategy (Growth Strategy)
1. Market Penetration (Present product in present market)
2. Market Development (Present product in new market)
3. Product Development(Renovation / New model)
Types of Strategies
7. Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 7
Diversification Strategy
1. Concentric (Related) Diversification
• Adding new but related products in portfolio
1. Conglomerate (Unrelated) Diversification (New but unrelated products)
2. Horizontal Diversification (New unrelated products for current customers)
Types of Strategies
8. Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 8
Diversification Strategy
1. Concentric (Related) Diversification (New but related products)
2. Conglomerate (Unrelated) Diversification (New but unrelated products)
3. Horizontal Diversification (New unrelated products for current customers)
Types of Strategies
9. Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 9
Defensive Strategy
1. Joint Venture (Partnership/ R & D /Marketing)
2. Retrenchment (Cost and Assets reduction)
3. Divestiture (Selling division or some part)
4. Liquidation (Selling company assets to avoid bankruptcy)
5. Merger and Acquisition (Partnership / Purchasing)
Types of Strategies
10. SWOT Matrix
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 10
11. SWOT Matrix
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.
(Continued)
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 11
12. SWOT Matrix
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.
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 12
13. 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 13
14. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved
Figure 6.7 The BCG Matrix
Source: Based on the BCG Portfolio Matrix from the Product Portfolio Matrix, © 1970, The Boston Consulting Group.
15. The Boston Consulting Group (BCG) Matrix
• 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
(Continued)
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 15
16. The Boston Consulting Group (BCG) Matrix
• 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 16
17. The Boston Consulting Group (BCG) Matrix
• 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.
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 17
18. Figure 6.8 An Example BCG Matrix
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 18
19. Figure 6.9 An Example BCG Matrix
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 19
20. Figure 6.10 The Internal-External (IE) Matrix
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 20
21. The Internal-External (IE) Matrix
• 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
• Hold and maintain
• Harvest or divest
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 21
22. Figure 6.11 An Example IE Matrix
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 22
23. Figure 6.12 The IE Matrix
• A
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 23
24. The Grand Strategy Matrix
• Grand Strategy Matrix
• based on two evaluative dimensions: competitive
position and market (industry) growth
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 24
25. Figure 6.13 The Grand Strategy Matrix
• A
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 25
26. The Grand Strategy Matrix
• 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
(Continued)
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 26
27. The Grand Strategy Matrix
• 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 27
28. The Quantitative Strategic Planning Matrix
• 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 28
29. Table 6.4 The Quantitative
Strategic Planning Matrix (QSPM)
• A
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 29
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
30. Steps in a QSPM
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.
4. Determine the Attractiveness Scores (AS).
5. Compute the Total Attractiveness Scores.
6. Compute the Sum Total Attractiveness Score.
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 30
31. 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 31
32. 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 32
33. Table 6.5 A QSPM for a Retail Computer Store
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 33
34. Table 6.5 A QSPM for a Retail Computer Store
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 34
35. Table 6.5 A QSPM for a Retail Computer Store
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 35
36. 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.
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 36
37. The Culture and Politics of Strategy Choice
• 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
Source: David, Fred R. & David, Forest R, 16th. Edition (©2017)
Strategic Management. Pearson Education Inc., USA 37
39. Disclaimer
The information provided in this module is derived from Pearson
Education Inc., USA, and other sources. All information is provided in
good faith for educational purposes only. Iqra University claims no
ownership of this information, and will not be liable for any claims
arising thereof, now or in the future.
Editor's Notes Based on each division’s respective (x, y) coordinate, each segment can be properly positioned (centered) in a BCG Matrix. Each circle represents a separate division. The size of the circle corresponds to the proportion of corporate revenue generated by that business unit, and the pie slice indicates the proportion of corporate profits generated by that division.