**1. **Fred R. David
Prentice Hall Ch 6-1 Chapter 6Strategy Analysis And Choice Strategic Management:
Concepts and Cases. 9th edition
Fred R. David
PowerPoint Slides by
Anthony F. Chelte
Western New England College

**2. **Fred R. David
Prentice Hall Ch 6-2 Chapter Outline The Nature of Strategy Analysis and Choice
A Comprehensive Strategy-Formulation Framework
The Input Stage

**3. **Fred R. David
Prentice Hall Ch 6-3 Chapter Outline The Matching Stage
The Decision Stage
Cultural Aspects of Strategy Choice

**4. **Fred R. David
Prentice Hall Ch 6-4 Chapter Outline The Politics of Strategy Choice
The Role of a Board of Directors

**5. **Fred R. David
Prentice Hall Ch 6-5 Strategy Analysis & Choice Whether it?s broke or not, fix it?make it better. Not just products, but the whole company if necessary.
-- Bill Saporito

**6. **Fred R. David
Prentice Hall Ch 6-6 Strategy Analysis & Choice Strategic analysis and choice largely involves making subjective decisions based on objective information.

**7. **Fred R. David
Prentice Hall Ch 6-7 Strategy Analysis & Choice The Nature of Strategy Analysis and Choice ?
Establishing long-term objectives
Generating alternative strategies
Selecting strategies to pursue
Best alternative to achieve mission and objectives

**8. **Fred R. David
Prentice Hall Ch 6-8 Strategy Analysis & Choice Alternative strategies derive from ?
Vision
Mission
Objectives
External audit
Internal audit
Past successful strategies

**9. **Fred R. David
Prentice Hall Ch 6-9 Strategy Analysis & Choice Participation in generating alternative strategies should be broad ?

**10. **Fred R. David
Prentice Hall Ch 6-10

**11. **Fred R. David
Prentice Hall Ch 6-11 Formulation Framework

**12. **Fred R. David
Prentice Hall Ch 6-12 Input Stage Provides basic input information for the matching and decision stage matrices
Requires strategists to quantify subjectivity early in the process
Good intuitive judgment always needed

**13. **Fred R. David
Prentice Hall Ch 6-13 Formulation Framework

**14. **Fred R. David
Prentice Hall Ch 6-14 Matching Stage Match between organization?s internal resources and skills and the opportunities and risks created by its external factors.

**15. **Fred R. David
Prentice Hall Ch 6-15 Matching Key Factors to Formulate Alternative Strategies

**16. **Fred R. David
Prentice Hall Ch 6-16 Formulation Framework

**17. **Fred R. David
Prentice Hall Ch 6-17 Matching Stage TOWS Matrix
Threats
Opportunities
Strengths
Weaknesses

**18. **Fred R. David
Prentice Hall Ch 6-18 TOWS Matrix Develop four types of strategies
Strengths-Opportunities (SO)
Weaknesses-Opportunities (WO)
Strengths-Threats (ST)
Weaknesses-Threats (WT)

**19. **Fred R. David
Prentice Hall Ch 6-19 SO Strategies

**20. **Fred R. David
Prentice Hall Ch 6-20 WO Strategies

**21. **Fred R. David
Prentice Hall Ch 6-21 ST Strategies

**22. **Fred R. David
Prentice Hall Ch 6-22 WT Strategies

**23. **Fred R. David
Prentice Hall Ch 6-23 TOWS Matrix Steps in developing the TOWS Matrix
List the firm?s key external opportunities
List the firm?s key external threats
List the firm?s key internal strengths
List the firm?s key internal weaknesses

**24. **Fred R. David
Prentice Hall Ch 6-24 TOWS Matrix Developing the TOWS Matrix
Match internal strengths with external opportunities and record the resultant SO Strategies
Match internal weaknesses with external opportunities and record the resultant WO Strategies
Match internal strengths with external threats and record the resultant ST Strategies
Match internal weaknesses with external threats and record the resultant WT Strategies

**25. **Fred R. David
Prentice Hall Ch 6-25 TOWS Matrix

**26. **Fred R. David
Prentice Hall Ch 6-26 Formulation Framework

**27. **Fred R. David
Prentice Hall Ch 6-27 SPACE Matrix Strategic Position and Action Evaluation Matrix
Four quadrant framework
Determines appropriate strategies
Aggressive
Conservative
Defensive
Competitive

**28. **Fred R. David
Prentice Hall Ch 6-28 SPACE Matrix Two Internal Dimensions
Financial Strength [FS]
Competitive Advantage [CA]
Two External Dimensions
Environmental Stability [ES]
Industry Strength [IS]

**29. **Fred R. David
Prentice Hall Ch 6-29 SPACE Matrix Overall Strategic position determined by:
Financial Strength [FS]
Competitive Advantage [CA]
Environmental Stability [ES]
Industry Strength [IS]

**30. **Fred R. David
Prentice Hall Ch 6-30 SPACE Matrix Developing the SPACE Matrix:
EFE Matrix
IFE Matrix
Financial Strength
Competitive Advantage
Environmental Stability
Industry Strength

**31. **Fred R. David
Prentice Hall Ch 6-31 SPACE Matrix Select variables to define FS, CA, ES, & IS
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.
Compute average score for FS, CA, ES, & IS

**32. **Fred R. David
Prentice Hall Ch 6-32 SPACE Matrix Plot the average scores on the Matrix
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.
Draw a directional vector from origin through the new intersection point.

**33. **Fred R. David
Prentice Hall Ch 6-33 SPACE Factors

**34. **Fred R. David
Prentice Hall Ch 6-34 SPACE Factors

**35. **Fred R. David
Prentice Hall Ch 6-35 SPACE Matrix

**36. **Fred R. David
Prentice Hall Ch 6-36 Formulation Framework

**37. **Fred R. David
Prentice Hall Ch 6-37 BCG Matrix Boston Consulting Group Matrix
Enhances multidivisional firms? efforts to formulate strategies
Autonomous divisions (or profit centers) constitute the business portfolio
Firm?s divisions may compete in different industries requiring separate strategy

**38. **Fred R. David
Prentice Hall Ch 6-38 BCG Matrix Boston Consulting Group Matrix
Graphically portrays differences among divisions
Focuses on market share position and industry growth rate
Manage business portfolio through relative market share position and industry growth rate

**39. **Fred R. David
Prentice Hall Ch 6-39 BCG Matrix Relative market share position defined:
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.

**40. **Fred R. David
Prentice Hall Ch 6-40 BCG Matrix

**41. **Fred R. David
Prentice Hall Ch 6-41 BCG Matrix
Question Marks
Stars
Cash Cows
Dogs

**42. **Fred R. David
Prentice Hall Ch 6-42 BCG Matrix Question Marks
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

**43. **Fred R. David
Prentice Hall Ch 6-43 BCG Matrix Stars
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

**44. **Fred R. David
Prentice Hall Ch 6-44 BCG Matrix Cash Cows
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

**45. **Fred R. David
Prentice Hall Ch 6-45 BCG Matrix Dogs
Low relative market share position and compete in slow or no market growth
Weak internal and external position
Decision to liquidate, divest, retrenchment

**46. **Fred R. David
Prentice Hall Ch 6-46 Formulation Framework

**47. **Fred R. David
Prentice Hall Ch 6-47 Grand Strategy Matrix Popular tool for formulating alternative strategies
All organizations (or divisions) can be positioned in one of four quadrants
Based on two evaluative dimensions:
Competitive position
Market growth

**48. **Fred R. David
Prentice Hall Ch 6-48

**49. **Fred R. David
Prentice Hall Ch 6-49 Grand Strategy Matrix
Quadrant I
Excellent strategic position
Concentration on current markets and products
Take risks aggressively when necessary

**50. **Fred R. David
Prentice Hall Ch 6-50 Grand Strategy Matrix
Quadrant II
Evaluate present approach seriously
How to change to improve competitiveness
Rapid market growth requires intensive strategy

**51. **Fred R. David
Prentice Hall Ch 6-51 Grand Strategy Matrix
Quadrant III
Compete in slow-growth industries
Weak competitive position
Drastic changes quickly
Cost and asset reduction indicated (retrenchment)

**52. **Fred R. David
Prentice Hall Ch 6-52 Grand Strategy Matrix
Quadrant IV
Strong competitive position
Slow-growth industry
Diversification indicated to more promising growth areas

**53. **Fred R. David
Prentice Hall Ch 6-53 Formulation Framework

**54. **Fred R. David
Prentice Hall Ch 6-54 QSPM
Quantitative Strategic Planning Matrix
Only technique designed to determine the relative attractiveness of feasible alternative actions

**55. **Fred R. David
Prentice Hall Ch 6-55 QSPM
Quantitative Strategic Planning Matrix
Tool for objective evaluation of alternative strategies
Based on identified external and internal crucial success factors
Requires good intuitive judgment

**56. **Fred R. David
Prentice Hall Ch 6-56 QSPM
Quantitative Strategic Planning Matrix
List the firm?s key external opportunities & threats; list the firm?s key internal strengths and weaknesses
Assign weights to each external and internal critical success factor

**57. **Fred R. David
Prentice Hall Ch 6-57 QSPM
Quantitative Strategic Planning Matrix
Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing
Determine the Attractiveness Scores (AS)

**58. **Fred R. David
Prentice Hall Ch 6-58 QSPM
Quantitative Strategic Planning Matrix
Compute the total Attractiveness Scores
Compute the Sum Total Attractiveness Score

**59. **Fred R. David
Prentice Hall Ch 6-59 QSPM

**60. **Fred R. David
Prentice Hall Ch 6-60 QSPM
Limitations:
Requires intuitive judgments and educated assumptions
Only as good as the prerequisite inputs

**61. **Fred R. David
Prentice Hall Ch 6-61 QSPM
Positives:
Sets of strategies examined simultaneously or sequentially
Requires the integration of pertinent external and internal factors in the decision-making process

**62. **Fred R. David
Prentice Hall Ch 6-62 Cultural Aspects of Strategy Choice
Culture:
The set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm

**63. **Fred R. David
Prentice Hall Ch 6-63 Cultural Aspects of Strategy Choice
Culture:
Successful strategies depend on degree of support from a firm?s culture

**64. **Fred R. David
Prentice Hall Ch 6-64 Politics of Strategy Choice
Politics in organizations:
Management hierarchy
Career aspirations
Allocation of scarce resources

**65. **Fred R. David
Prentice Hall Ch 6-65 Politics of Strategy Choice
Political tactics for strategists:
Equifinality
Satisfying
Generalization
Focus on Higher-Order Issues
Provide Political Access on Important Issues

**66. **Fred R. David
Prentice Hall Ch 6-66 Role of A Board of Directors
Duties and Responsibilities:
Control and oversight over management
Adherence to legal prescriptions
Consideration of stakeholder interests
Advancement of stockholders? rights

**67. **Fred R. David
Prentice Hall Ch 6-67 Key Terms Aggressive quadrant
Attractiveness Scores (AS)
Board of Directors
Boston Consulting Group (BCG) Matrix
Business portfolio
Cash cows
Champions
Competitive Advantage (CA)

**68. **Fred R. David
Prentice Hall Ch 6-68 Key Terms Competitive quadrant
Conservative quadrant
Culture
Decision stage
Defensive quadrant
Directional vector
Dogs
Environmental Stability (ES)
Financial Strength (FS)

**69. **Fred R. David
Prentice Hall Ch 6-69 Key Terms Grand Strategy Matrix
Halo error
Industry Strength (IS)
Input stage
Internal-External (IE) Matrix
Long-term objectives
Matching
Matching stage
Quantitative Strategic Planning Matrix (QSPM)

**70. **Fred R. David
Prentice Hall Ch 6-70 Key Terms Question marks
Relative market share position
SO strategies
ST strategies
Stars
Strategic Position and Action Evaluation (SPACE) Matrix
Strategy-formulation framework

**71. **Fred R. David
Prentice Hall Ch 6-71 Key Terms Sum total attractiveness scores
Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
Total Attractiveness Scores (TAS)
WO strategies
WT strategies