Chapter 6 Strategy Analysis And Choice
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Chapter 6 Strategy Analysis And Choice

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Fred R. DavidPrentice Hall. Ch 6-2. Chapter Outline. The Nature of Strategy Analysis and ChoiceA Comprehensive Strategy-Formulation FrameworkThe Input Stage. Fred R. DavidPrentice Hall. Ch 6-3. Chapter Outline. The Matching StageThe Decision StageCultural Aspects of Strategy Choice. Fred
Chapter 6 Strategy Analysis And Choice

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1. Fred R. David Prentice Hall Ch 6-1 Chapter 6 Strategy 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


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