strategy analysis andchoice
DESCRIPTION
Strategies to be used by school administratorsTRANSCRIPT
Strategy Analysis &
Choice
RAMIL P. POLINTANHead, Mathematics Department, TNHS
Strategic analysis and choice largely involve making subjective decisions based on objective information.
This report introduces important concepts that can help strategists generate feasible alternatives, evaluate those alternatives, and choose a specific course of action. Behavioral aspects of strategy formulation are described, including politics, culture, ethics, and social responsibility considerations.
Strategy Analysis & Choice
-- Establishing long-term objectives-- Generating alternative strategies-- Selecting strategies to pursue-- Best alternative - achieve mission &
objectives
Nature of Strategy Analysis & Choice
Vision Mission Objectives
External audit Internal audit
Past successful strategies
Strategy Analysis & ChoiceAlternative Strategies Derive From --
Comprehensive Strategy-Formulation Framework
Stage 1:The Input Stage
Stage 2:The Matching Stage
Stage 3:The Decision Stage
Strategy-Formulation Analytical Framework
Internal Factor EvaluationMatrix (IFE)
External Factor EvaluationMatrix (EFE)
Stage 1:The Input Stage
Competitive Profile Matrix(CPM)
Stage 1: The Input Stage
Basic input information for the matching & decision stage matrices
Requires strategists to quantify subjectivity early in the process
Good intuitive judgment always needed
Strategy-Formulation Analytical Framework SWOT Matrix
BCG Matrix
Grand Strategy Matrix
Stage 2:The Matching Stage
Stage 2: The Matching StageMatch between organization’s internal resources & skills and the opportunities & risks created by its external factors
E.g. internal: strong R and D function
External changing demographics (population getting older)
Strategy: Develop new products for older adults (related to long term objectives financial or strategic)
Stage 2: The Matching Stage: SWOT MatrixFour Types of Strategies
Strengths-Opportunities (SO):Use a firm’s internal strengths to take advantage of external opportunities
Weaknesses-Opportunities (WO):Improving internal weaknesses by taking advantageof external opportunities
Strengths-Threats (ST):Use a firm’s strengths to avoid or reduce the impact of external threats.
Weaknesses-Threats (WT):Defensive tactics aimed at reducing internal weaknesses and avoiding external threats
SWOT MatrixStrengths – S
List Strengths
Weaknesses – W
List Weaknesses
Opportunities – O
List Opportunities
SO Strategies
Use strengths to take advantage of opportunities
WO Strategies
Overcoming weaknesses by taking
advantage of opportunities
Threats – T
List Threats
ST Strategies
Use strengths to avoid threats
WT Strategies
Minimize weaknesses and avoid threats
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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 from the industry (opportunity)
+Insufficient capacity (weakness)
Acquire Cellfone, Inc.
=
20% annual growth in the cell phone industry (opportunity)
+Excess working capacity (strength)
Key Internal Factor
Key External Factor
Resultant Strategy
Matching Key Factors to Formulate Alternative Strategies
Which types of strategies, e.g. intensive diversification…, are referred to above
Strengths: Weaknesses:
1. R and D almost complete 2. Basis for strong management team 3. Key first major customer acquired 4. Initial product can evolve into range of
offerings 5. Located near a major centre of
excellence 6. Very focused management/staff 7. Well-rounded and managed business
1. Over dependent on borrowings - Insufficient cash resources
2. Board of Directors is too narrow 3. Lack of awareness amongst prospective
customers 4. Need to relocate to larger premises 5. Absence of strong sales/marketing
expertise 6. Overdependence on few key staff 7. Emerging new technologies may move
market in new directions
Threats: Opportunities:
1. Major player may enter targeted market segment
2. New technology may make products obsolescent
3. Economic slowdown could reduce demand
4. Euro/Yen may move against $ 5. Market may become price sensitive 6. Market segment's growth could attract
major competition
1. Market segment is poised for rapid growth
2. Export markets offer great potential 3. Distribution channels seeking new
products 4. Scope to diversify into related market
segments
1. Accelerate product launches by strengthening R
and D team 2. Extend links with key technology centres 3. Raise additional venture capital 4. Expand senior management team in
sales/marketing 5. Recruit non-executive directors 6. Strengthen human resources function and
introduce share options for staff 7. Appoint advisers for intellectual property and
finance 8. Seek new market segments/applications for
products
Key Strategies
SWOT MatrixStrengths – S
List Strengths
Weaknesses – W
List Weaknesses
Opportunities – O
List Opportunities
SO Strategies
Match and determine strategy
WO Strategies
Match and determine strategy
Threats – T
List Threats
ST Strategies
Match and determine strategy
WT Strategies
Match and determine strategy
Inset key strategies into correct box element of the Matrix
Does not show how to achieve a
competitive advantage Provides a static assessment in time May lead the firm to overemphasize
a single internal or external factor in formulating strategies
Limitations with SWOT Matrix
BCG Matrix
Boston Consulting Group MatrixEnhances multi-divisional firm in formulating strategies
Autonomous divisions = business portfolio
Divisions may compete in different industries
Focus on market-share position & industry growth rate
BCG Matrix
Relative Market Share Position
Ratio of a division’s own market share in an industry to the market share held by the largest rival firm in that industry
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BCG Matrix
DogsIV
Cash CowsIII
Question MarksI
StarsII
Relative Market Share PositionHigh1.0
Medium.50
Low0.0
Ind
ustr
y S
ale
s G
row
th R
ate
High+20
Low-20
Medium0
BCG Matrix
Question Marks
Low relative market share – compete in high-growth industry
Cash needs are high
Case generation is low
Decision to strengthen (intensive strategies) or divest
BCG Matrix
Stars
High relative market share and high growth rate
Best long-run opportunities for growth & profitability
Substantial investment to maintain or strengthen dominant position
Integration strategies, intensive strategies, joint ventures
BCG Matrix
Cash Cows
High relative market share, competes 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 weakens—retrenchment or divestiture
BCG Matrix
Dogs
Low relative market share & compete in slow or no market growth
Weak internal & external position
Liquidation, divestiture, retrenchment
Grand Strategy Matrix
Tool for formulating alternative strategies
Based on two dimensions
Competitive position
Market growth
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Quadrant IV1. Concentric
diversification2. Horizontal
diversification3. Conglomerate
diversification4. Joint ventures
Quadrant III1. Retrenchment2. Concentric
diversification3. Horizontal
diversification4. Conglomerate
diversification5. Liquidation
Quadrant I1. Market development2. Market penetration3. Product development4. Forward integration5. Backward integration6. Horizontal integration7. Concentric
diversification
Quadrant II1. Market development2. Market penetration3. Product development4. Horizontal integration5. Divestiture6. Liquidation
RAPID MARKET GROWTH
SLOW MARKET GROWTH
WEAK COMPETITIVE
POSITION
STRONGCOMPETITIVE
POSITION
Grand Strategy Matrix
Excellent strategic position
Concentration on current markets/products
Take risks aggressively when necessary
Which type of strategy would you suggest?
Quadrant I
Grand Strategy Matrix
Evaluate present approach
How to improve competitiveness
Rapid market growth requires intensive strategy
Quadrant II
Grand Strategy Matrix
Compete in slow-growth industries
Weak competitive position
Drastic changes quickly
Cost & asset reduction (retrenchment)
Quadrant III
Grand Strategy Matrix
Strong competitive position
Slow-growth industry
Diversification to more promising growth areas
Quadrant IV
Strategy-Formulation Analytical Framework
Stage 3:The Decision Stage
Quantitative StrategicPlanning Matrix
(QSPM)
Technique designed to determine the relative attractiveness of feasible alternative actions
1. Make a list of the firm’s key external
opportunities/threats and internal strengths/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 (A.S)5. Compute the Total Attractiveness Scores 6. Compute the Sum Total Attractiveness Score
Steps to Develop a QSPM
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QSPM : information from IFE and EFE
Key Internal FactorsManagementMarketingFinance/AccountingProduction/OperationsResearch and DevelopmentComputer Information SystemsSum total A.S.
Strategy 3Strategy 2
Strategy 1
WeightKey External Factors EconomyPolitical/Legal/GovernmentalSocial/Cultural/Demographic/EnvironmentalTechnologicalCompetitive
Strategic Alternatives
AS 1 to 4 and blank if factor does not effect strategy: TAS = Weight x AS
QSPM
Requires intuitive judgments & educated assumptions
Only as good as the prerequisite inputs
Limitations
Advantages
Sets of strategies considered simultaneously or sequentially
Integration of pertinent external & internal factors in the decision making process
A. Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities, heroes, and heroines that describe a firm.
B. All Organizations Have a Culture
1.It is beneficial to view strategic management from a cultural perspective because success often rests on the degree of support that strategies receive from a firm’s culture.
2.If a firm’s strategies are supported by cultural products such as values, beliefs, rites, rituals, ceremonies, stories, symbols, language, heroes, and heroines then managers often can implement changes swiftly and easily.
3.Strategies that require fewer cultural changes may be more attractive because extensive changes can take considerable time and effort.
CULTURAL ASPECTS OF STRATEGIC CHOICE
A. In the absence of objective analyses, strategy
decisions too often are based on the politics of the moment. With development of improved strategy-formulation tools, political factors become less important in making strategic decisions.
B. Tactics to aid in strategy:1. Equifinality 2. Satisfying3. Generalization4. Focus on Higher-Order Issues5. Provide Political Access on Important Issues
THE POLITICS OF STRATEGY CHOICE
A director is one of a group of persons entrusted with the overall direction of a corporate enterprise. A board of directors is a group of persons elected by the ownership of a corporation to have oversight and guidance over management and to look out for the shareholders’ interests.
THE ROLE OF A BOARD OF DIRECTORS
“Be an Effective Analyst using Strategies and
Choices”
Thank You….
SWOT ANALYSIS
SWOT Analysis is an effective way of identifying the strengths and weaknesses of the impact of legislation, policy, protocols, parent-partnership arrangements, and so on, and of examining the opportunities and threats your organisation/school may face as a result of implementing such policies, protocols, and arrangements.
SWOT Analysis
Attributes of the school that are
likely to have a positive effect on achieving the school’s objectives.
Strength
Weaknesses
Threats
Opportunities
Attributes of the school that are likely to have a positive effect on achieving the school’s objectives.
: Conditions external to the school that are likely to have a positive effect on achieving the school’s objectives.
Conditions external to the school that are likely to have a negative effect on achieving the school’s objectives.
In sum, the purpose of a SWOT
analysis is to develop strategies that capitalise on the school’s strengths, minimise the effects of any weaknesses, exploit available opportunities and defend against threats. Implementing these strategies should lead to achieving the school’s objectives.
Purpose
To carry out a SWOT Analysis, write
down answers to the following questions. Where appropriate, use similar questions and, whenever possible, consider your answers from your own point of view and from the point of view of the people you deal with.
How to use the tool ?
1. What advantages does this
policy/protocol/arrangement/other present?
2. What do we currently do well? 3. What relevant resources do we
access to? 4. What do other people see as your
strengths?
Strength
1. What can we improve? 2. What do we not do well? Consider what
you are criticised for or what you receive complaints about.
3. Where are we vulnerable?
Weaknesses
Remember to consider this from an internal and external perspective. Do other people perceive weaknesses that you do not see? Are other schools doing any better than you in this area? It is best to be realistic now, and face any unpleasant truths as soon as possible.
1. What opportunities do we know about but
have not addressed?2. Are there emerging trends on which we can
capitalise?
Opportunities
Useful opportunities can come from such things as:1. changes in technology and educational markets on
both a broad and narrow scale 2. changes in government policy related to your field 3. changes in social patterns, population profiles,
lifestyle changes, and so on 4. local events
A useful approach to considering opportunities is to look at your strengths and ask yourself whether these open up any opportunities. Alternatively, examine your weaknesses and ask yourself whether you could open up opportunities by eliminating them.
Opportunities
1. What obstacles do we face? 2. Are economic conditions affecting our financial
viability? Ask yourself, what would be the financial, social, educational impact of not implementing changes?
3. Are the required specifications for our services changing?
4. Is changing technology threatening our position? 5. Could any of our weaknesses seriously threaten
our business, children’s educational attainment, and so on? In other words, are weaknesses likely to make us critically vulnerable?
Threats
Carrying out this analysis will often be illuminating – both in terms of pointing out what needs to be done, and in putting what we might see as a problem into perspective. You can then use a simple matrix such as the one below to record your analysis.
STRENGTH WEAKNESSES
OPPORTUNITIES THREATS
We will use an example of a teacher working within a local primary school who is keen to review and
improve relationships with parents.
TASK
1. Consider what practices you currently have in place to encourage parent-partnerships within your school.
2. Use this to conduct a SWOT analysis, identifying your current strengths and realistically appraising your current weaknesses.
3. Then suggest up to three opportunities for improving your current systems and, for each, list a possible threat that would need to be managed if you were to pursue each opportunity.
The Special Educational Needs Co-ordinator (SENCO) for a local Primary School identified
the following school objective:
To improve parent-partnership by encouraging parents to visit the
school and become active members of the learning
community, thereby fostering parental confidence.
Currently, the school’s practice is to hold
an Open House event once each year, using this as a means to encourage
parents to visit the school and engage with school staff. The SENCO formulated
the following SWOT Analysis.
STRENGTHS1. Highly-skilled, committed and
concerned teachers. 2. History of successful Open
House events.3. School has a strong ethos of
openness, sharing and commitment to increasing parental confidence
WEAKNESSES1. Teachers not available to
meet parents often enough.2. Insufficient school staff to
plan more frequent Open House events.
3. Staff not always clear of their responsibilities to parent partnership under current legislation.
OPPORTUNITIES1. Active volunteer group willing
to plan and organise Open House events.
2. Pupils active in the school’s Pupil Participation Project can be asked for their opinions and suggestions.
3. Head Teacher is willing to use some designated ‘training days’ for Open House events so that all teachers can attend.
THREATS1. Confidentiality is
compromised: need to ensure proper governance of voluntary organisations.
2. Pupil coercion: need to ensure that adults are not leading or forcing pupils’ opinions.
3. Incomplete mandatory training: need to ensure that time borrowed from the designated training day does not result in staff failing to complete statutory/mandatory training, leading to local authority censure.
SWOT MatrixStrengths – S
List Strengths
Weaknesses – W
List Weaknesses
Opportunities – O
List Opportunities
SO Strategies
Use strengths to take advantage of opportunities
WO Strategies
Overcoming weaknesses by taking
advantage of opportunities
Threats – T
List Threats
ST Strategies
Use strengths to avoid threats
WT Strategies
Minimize weaknesses and avoid threats
Thank You….