Week 14-15: STRATEGY ANALYSIS AND CHOICE Flashcards
(37 cards)
____________ never consider all feasible alternatives that could benefit the firm because there are an infinite number of possible actions and an infinite number of ways to implement those actions.
Strategists
Therefore, 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.
Strategists
_______________ from each department and division of the firm should be included in this process, as was the case in previous strategy-formulation activities.
Representatives
Recall that involvement provides the best opportunity for managers and employees to gain an understanding of what the firm is doing and why and to become committed to helping the firm accomplish its objectives.
Representatives
Alternative strategies proposed by participants should be considered and discussed in a meeting or 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 by all participants,
1 = should not be implemented
2 = possibly should be implemented
3 = probably should be implemented
4 = definitely should be implemented
Representatives
Alternative strategies proposed by participants should be considered and discussed in a meeting or 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 by all participants,
1 = should________________
2 = possibly______________
3 = probably _____________
4 = _______________________
- not be implemented
- should be implemented
- should be implemented
- definitely should be implemented
THE STRATEGY-FORMULATION ANALYTICAL FRAMEWORK
Stage ___ of the formulation framework consists of the EFE Matrix, the IFE Matrix, and the Competitive Profile Matrix (CPM). Called the __________, Stage 1 summarizes the basic input information needed to formulate strategies.
1
Input Stage
THE STRATEGY-FORMULATION ANALYTICAL FRAMEWORK
Stage __, called the ___________, focuses upon generating feasible alternative strategies by aligning key external and internal factors.
techniques include the Strengths-Weaknesses-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.
2
Matching Stage
THE STRATEGY-FORMULATION ANALYTICAL FRAMEWORK
Stage __, called the ____________, involves a single technique, the Quantitative Strategic Planning Matrix (QSPM).
A QSPM uses input information from Stage 1 to objectively evaluate feasible alternative strategies identified in Stage 2.
3
Decision Stage
THE STRATEGY-FORMULATION ANALYTICAL FRAMEWORK
A ________reveals the relative attractiveness of alternative strategies and thus provides an objective basis for selecting specific strategies.
QSPM or Quantitative Strategic Planning Matrix
is an important matching tool that helps managers develop four types of strategies:
The Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix i
Matching key external and internal factors is the most difficult part of developing a SWOT Matrix and requires good judgment—and there is no one best set of matches.
SO (strengths-opportunities) Strategies,
WO (weaknesses-opportunities) Strategies,
ST (strengths-threats) Strategies, and
WT (weaknesses-threats) Strategies.
________________ use a firm’s internal strengths to take advantage of external opportunities.
All managers would like their organizations to be in a position in which internal strengths can be used to take advantage of external trends and events.
SO Strategies
_________________ aim at improving internal weaknesses by taking advantage of external opportunities.
Sometimes key external opportunities exist, but a firm has internal weaknesses that prevent it from exploiting those opportunities.
For example, there may be a high demand for electronic devices to control the amount and timing of fuel injection in automobile engines (opportunity), but a certain auto parts manufacturer may lack the technology required for producing these devices (weakness).
WO Strategies
____________ use a firm’s strengths to avoid or reduce the impact of
external threats.
This does not mean that a strong organization should always meet threats in the external environment head-on.
An example of ST Strategy occurred when Texas Instruments used an excellent legal department (a strength) to collect nearly $700 million in damages and royalties from nine Japanese and Korean firms that infringed on patents for semiconductor memory chips (threat).
ST Strategies
______________ are defensive tactics directed at reducing internal weakness and avoiding external threats.
An organization faced with numerous external threats and internal weaknesses may indeed be in a precarious position.
In fact, such a firm may have to fight for its survival, merge, retrench, declare bankruptcy, or choose liquidation.
WT Strategies
Another important Stage 2 matching tool.
Its four-quadrant framework indicates whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a given organization.
The Strategic Position and Action Evaluation (SPACE) Matrix
The axes of the ____________ represent two internal dimensions (financial position [FP] and competitive position [CP]) and two external dimensions (stability position [SP] and industry position [IP]).
The Strategic Position and Action Evaluation (SPACE) Matrix
numerous variables could make up each of the dimensions represented on the axes of the _____________.
Factors that were included earlier in the firm’s EFE and IFE Matrices should be considered in developing a _____________.
For example, return on investment, leverage, liquidity, working capital, and cash flow are commonly considered to be determining factors of an organization’s financial strength.
Like the SWOT Matrix, the _________________ should be both tailored to the particular organization being studied and based on factual information as much as possible.
The Strategic Position and Action Evaluation (SPACE) Matrix
The steps required to develop a SPACE Matrix are as follows:
- Select a _____________ to define financial position (FP), competitive position (CP), stability position (SP), and industry position (IP).
set of variables
The steps required to develop a SPACE Matrix are as follows:
- Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the variables that make up the _____ and ___________________.
Assign a numerical value ranging from -1(best) to -7 (worst) to each of the variables that make up the _____ and __________________.
On the _____________ axes, make comparison to competitors.
On the ______________ axes, make comparison to other industries.
FB and IP dimensions
SP and CP dimensions.
FP and CP
IP and SP
The steps required to develop a SPACE Matrix are as follows:
- Compute an ______________ for FP, CP, IP, and SP by summing the values given to the variables of each dimension and then by dividing by the number of variables included in the respective dimension.
average score
The steps required to develop a SPACE Matrix are as follows:
- _____ the average scores for FP, IP, SP, and CP on the appropriate axis in the SPACE MATRIX.
Plot
The steps required to develop a SPACE Matrix are as follows:
- Add the ___________ on the x-axis and plot the restaurant point on X. Add the two scores on the y-axis and plot the restaurant point on Y. Plot the intersection of the new xy point.
two scores
