Strategic Management Concepts & Cases

Fred R. David
8th edition

Chapter 6: Strategy Analysis & Choice

PowerPoint Slides By: DR.H. Zulkarnain, SE, MM Rendra Wasnury, SE. MIB UNIVERSITAS RIAU

Ch. 6-1 2001 Prentice Hall

Comprehensive Strategic Management Model

External Audit

Chapter 3 Strategy Analysis & Choice Chapter 6

Vision & Mission Statements

Strategies In Action

Implement Strategies: Mgmt Issues

Chapter 2

Chapter 5

Chapter 7

Implement Strategies: Marketing, Fin/Acct, R&D, CIS

Measure & Evaluate Performance

Chapter 8

Chapter 9

Internal Audit

Chapter 4

Ch. 6-2 2001 Prentice Hall

Analisis dan Pilihan Strategi

Strategi, tujuan, dan misi perusahaan saat ini digabungkan dengan informasi audit internal dan eksternal, memberikan dasar untuk menghasilkan dan evaluasi alternatif strtegi yang layak
Ch. 6-3 2001 Prentice Hall

Analisis dan Pilihan Strategi

Strategic Analysis and Choice:
Menghasilakan alternative satrategi Mengevaluasi alternatife strtegi Memilih strtegi alternative untuk tindakan

Ch. 6-4 2001 Prentice Hall

Analisis dan Pilihan Strategi

Menghasilkan dan memilih Strategi Membuat beberapa set up alternative strategi yang paling baik Untuk mengetahui set up ini dapat dilihat:
Manfaat Kerugian Trade-off Biaya Keuntungan

Ch. 6-5 2001 Prentice Hall

Analisis dan Pilihan Strategi

Menghasilkan dan memilih Strategi

Melibatkan banyak personal

Mewakili setiap department/function perusahaan Menghasilkan kesempatan untuk dapat mengerti arah perusahaan Menghasilkan alat to membangun komitmen dalam rangka mencapai tujuan organisasi

Ch. 6-6 2001 Prentice Hall

Analisis dan Pilihan Strategi

Generating & Selecting Strategies

Evaluasi setiap alternative strategi

Internal dan external audit informasi Misi perusahaan Di dokumentasikan Rangking menurut ke unggulannya

Ch. 6-7 2001 Prentice Hall

Kerangka Kerja Analitis untuk Perumusan-Strategi

Stage 1: Tahap Input

Stage 2: Tahap Pencocokan

Stage 3: Tahap Keputusan

Ch. 6-8 2001 Prentice Hall

Kerangka Kerja Analitis untuk Perumusan-Strategi

Stage 1: Tahap Input

External Factor Evaluation Matrix (EFE)

Competitive Profile Matrix (CPM)

Internal Factor Evaluation Matrix (IFE)

Ch. 6-9 2001 Prentice Hall

Kerangka Kerja Analitis untuk Perumusan-Strategi

Stage 2: Tahap Pencocokan

Threats Opportunities Weaknesses Strengths (SWOT)

Strategic Position & Action Evaluation (SPACE)

Boston Consulting Group Matrix (BCG)

InternalExternal Matrix (IE)

Grand Strategy Matrix

Ch. 6-10 2001 Prentice Hall

Strategy-Formulation Analytical Framework

Stage 3: Tahap Keputusan

Quantitative Strategic Planning Matrix (QSPM)

Ch. 6-11 2001 Prentice Hall

Analisis dan Pilihan Strategi

Stage 1: Tahap Input

Menghasilkan Dasar Info. Untuk tahap 2 dan 3

External Factor Evaluation Matrix (EFE) Internal Factor Evaluation Matrix (IFE) Competitive Profile Matrix

Ch. 6-12 2001 Prentice Hall

Analisis dan Pilihan Strategi

Stage 2: Tahap Pencocokan

Strategi dikateristikan oleh perusahaan yang cocok dengan :

Sumber-sumber Internal dan skill Kesempatan dan resiko yang ada pada external faktor

Ch. 6-13 2001 Prentice Hall

Penyesuaian Faktor Kunci

Key Internal Factor Kelebihan kapasitas kerja (strength) Key External Factor Pertumbuhan tahunan industri + telepon seluler = 20%/th (opportunity) Keluarnya dua pesaing utama dr + = Industri(opportunity ) Menurunya jumlah penduduk dewasa muda usia (threat) Resultant Strategy Mengakuisisi Cellfone.inc

Kapasitas yang tidak mencukupi (weakness)

Menjalakan integrasi horizontal dengan membeli fasilitas milik pesaing

Keahlian Litbang yang + kuat (strength)

Mengembangkan = produk baru bagi dewasa yang sudah tua Mengembangkan = paket kompensasi baru bagi karyawan
Ch. 6-14

Aktivitas serikat Rendahnya moral + kerja yang kuat karyawan (weakness) (threat)
2001 Prentice Hall

Empat Tipe Strategi

Threats Opportunities Weaknesses Strengths (SWOT)

SO Strategies

WO Strategies

ST Strategies

WT Strategies

Ch. 6-15 2001 Prentice Hall

SO Strategies
Menggunakan kekuatan internal perusahaan untuk memanfaatkan peluang eksternal
Ch. 6-16 2001 Prentice Hall

Threats Opportunities Weaknesses Strengths (TOWS)

SO Strategies

WO Strategies
Untuk memperbaiki kelemahan internal perusahaan dengan memanfaatkan peluang eksternal
Ch. 6-17 2001 Prentice Hall

Threats Opportunities Weaknesses Strengths (SWOT)

WO Strategies

ST Strategies
Menggunakan kekuatan perusahaan untuk meghindari atau mengurangi pengaruh dari ancaman eksternal.
Ch. 6-18 2001 Prentice Hall

Threats Opportunities Weaknesses Strengths (SWOT)

ST Strategies

WT Strategies
Taktik defensif yang diarahkan pada penguranggan kelemahaan internal dan menghidari ancaman eksternal.
Ch. 6-19 2001 Prentice Hall

Threats Opportunities Weaknesses Strengths (SWOT)

WT Strategies

Analisis dan Pilihan Strategi

The SWOT Matrix

Tulis Tulis Tulis Tulis

peluang eksternal kunci perusahaan ancaman eksternal kunci perusahaan kekuatan internal kunci perusahaan kelemahan internal kunci perusahaan

Ch. 6-20 2001 Prentice Hall

Strategy Analysis & Choice

The TOWS Matrix

Cocokan kekuatan internal dengan peluang eksternal dan catat hasil strategi SO dalam sel yang ditentukan Cocokan kelemahan internal dengan peluang eksternal dan catat hasil strategi WO dalam sel yang ditentukan Cocokan kekuatan internal dengan ancaman eksternal dan catat hasil strategi ST dalam sel yang ditentukan Cocokan Kelemahan internal dengan ancaman eksternal dan catat hasil strategi WT dalam sel yang ditentukan
Ch. 6-21 2001 Prentice Hall

TOWS Matrix
Leave Blank Strengths-S
List Strengths

Weaknesses-W
List Weaknesses

Opportunities-O
List Opportunities

SO Strategies
Use strengths to take advantage of opportunities

WO Strategies
Overcome weaknesses by taking advantage of opportunities

Threats-T
List Threats

ST Strategies
Use strengths to avoid threats
2001 Prentice Hall

WT Strategies
Minimize weaknesses and avoid threats
Ch. 6-22

Strategy Analysis & Choice

Strategic Position & Action Evaluation Matrix (SPACE)

Four quadrant framework Determines appropriate strategies

Aggressive Conservative Defensive Competitive

Ch. 6-23 2001 Prentice Hall

Strategy Analysis & Choice

Strategic Position & Action Evaluation Matrix (SPACE)

Two Internal Dimensions

Financial

Strength [FS] Competitive Advantage [CA]

Two External Dimensions

Environmental

Stability [ES] Industry Strength [IS]

Ch. 6-24 2001 Prentice Hall

Strategy Analysis & Choice

Strategic Position & Action Evaluation Matrix (SPACE) Overall Strategic position determined by:

Financial Strength [FS] Competitive Advantage [CA] Environmental Stability [ES] Industry Strength [IS]
Ch. 6-25 2001 Prentice Hall

Strategy Analysis & Choice

Strategic Position & Action Evaluation Matrix (SPACE)
Developing the SPACE Matrix:

EFE Matrix IFE Matrix Financial Strength Competitive Advantage Environmental Stability Industry Strength
Ch. 6-26 2001 Prentice Hall

Strategy Analysis & Choice

The 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

Ch. 6-27 2001 Prentice Hall

Strategy Analysis & Choice

The 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.

Ch. 6-28 2001 Prentice Hall

SPACE Factors
Internal Strategic Position External Strategic Position

Financial Strength (FS)

Return on investment Leverage Liquidity Working capital Cash flow Ease of exit from market Risk involved in business

Environmental Stability (ES)

Technological changes Rate of inflation Demand variability Price range of competing products Barriers to entry Competitive pressure Price elasticity of demand

Ch. 6-29 2001 Prentice Hall

SPACE Factors
Internal Strategic Position External Strategic Position

Competitive Advantage CA
Market share Product quality Product life cycle Customer loyalty Competitions capacity utilization Technological know-how Control over suppliers & distributors

Industry Strength (IS)

Growth potential Profit potential Financial stability Technological know-how Resource utilization Capital intensify Ease of entry into market Productivity, capacity utilization
Ch. 6-30

2001 Prentice Hall

SPACE Matrix
Conservative FS
+6 +5 +4 +3 +2 +1

Aggressive

CA
-6 -5 -4 -3 -2 -1 -1 -2 -3 -4 -5 +1 +2 +3 +4 +5 +6

IS

Defensive

-6

Competitive ES
Ch. 6-31

2001 Prentice Hall

Strategy Analysis & Choice

Boston Consulting Group Matrix (BCG)

Enhances multidivisional firms efforts to formulate strategies Autonomous divisions (or profit centers) constitute the business portfolio Firms divisions may compete in different industries requiring separate strategy
Ch. 6-32 2001 Prentice Hall

Strategy Analysis & Choice

Boston Consulting Group Matrix (BCG)

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
Ch. 6-33 2001 Prentice Hall

Strategy Analysis & Choice

Boston Consulting Group Matrix (BCG)

Relative market share position defined:

Ratio

of a divisions own market share in a particular industry to the market share held by the largest rival firm in that industry.

Ch. 6-34 2001 Prentice Hall

BCG Matrix
Relative Market Share Position
High 1.0 Medium .50 Low 0.0

Industry Sales Growth Rate

High +20

Stars II
Medium 0

Question Marks I

Cash Cows III

Low -20
2001 Prentice Hall

Dogs IV
Ch. 6-35

Strategy Analysis & Choice

BCG Matrix

Question Marks Stars Cash Cows Dogs

Ch. 6-36 2001 Prentice Hall

Strategy Analysis & Choice

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

Ch. 6-37 2001 Prentice Hall

Strategy Analysis & Choice

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
Ch. 6-38 2001 Prentice Hall

Strategy Analysis & Choice

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

possible

strong position as long as

Product development, concentric diversification If becomes weakretrenchment or divestiture

Ch. 6-39 2001 Prentice Hall

Strategy Analysis & Choice

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

Ch. 6-40 2001 Prentice Hall

Strategy Analysis & Choice

Grand Strategy Matrix

Popular tool for formulating alternative strategies Based on two evaluative dimensions
Competitive

position Market growth

Ch. 6-41 2001 Prentice Hall

Grand Strategy Matrix

RAPID MARKET GROWTH
Quadrant II

Quadrant I

Market development Market penetration Product development Horizontal integration Divestiture Liquidation

WEAK COMPETITIVE POSITION

Market development Market penetration Product development Forward integration Backward integration Horizontal integration Concentric diversification

Quadrant III
Retrenchment Concentric diversification Horizontal diversification Conglomerate diversification Liquidation

Quadrant IV
Concentric diversification Horizontal diversification Conglomerate diversification Joint ventures

STRONG COMPETITIVE POSITION

SLOW MARKET GROWTH

Ch. 6-42 2001 Prentice Hall

Strategy Analysis & Choice

Grand Strategy Matrix

Quadrant I
Excellent

strategic position Concentration on current markets and products Take risks aggressively when necessary

Ch. 6-43 2001 Prentice Hall

Strategy Analysis & Choice

Grand Strategy Matrix

Quadrant II
Evaluate

present approach seriously How to change to improve competitiveness Rapid market growth requires intensive strategy

Ch. 6-44 2001 Prentice Hall

Strategy Analysis & Choice

Grand Strategy Matrix

Quadrant III
Compete

in slow-growth industries Weak competitive position Drastic changes quickly Cost and asset reduction indicated (retrenchment)

Ch. 6-45 2001 Prentice Hall

Strategy Analysis & Choice

Grand Strategy Matrix

Quadrant IV
Strong

competitive position Slow-growth industry Diversification indicated to more promising growth areas

Ch. 6-46 2001 Prentice Hall

Strategy Analysis & Choice

Quantitative Strategic Planning Matrix (QSPM)

Comprises Stage 3 of the analytical framework Analytical technique designed to determine the relative attractiveness of feasible alternative actions. Uses input from Stage 1 and Stage 2
Ch. 6-47 2001 Prentice Hall

Strategy Analysis & Choice

Quantitative Strategic Planning Matrix (QSPM)

Tool for objective evaluation of alternative strategies Based on identified external and internal crucial success factors Requires good intuitive judgment

Ch. 6-48 2001 Prentice Hall

QSPM
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 Computer Information Systems Weight

Strategic Alternatives
Strategy 1 Strategy 2 Strategy 3

Ch. 6-49 2001 Prentice Hall

Strategy Analysis & Choice

QSPM

List the firms key external opportunities & threats; list the firms key internal strengths and weaknesses Assign weights to each external and internal critical success factor

Ch. 6-50 2001 Prentice Hall

Strategy Analysis & Choice

QSPM

Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing Determine the Attractiveness Scores (AS)
Ch. 6-51 2001 Prentice Hall

Strategy Analysis & Choice

QSPM

Compute the total Attractiveness Scores Compute the Sum Total Attractiveness Score

Ch. 6-52 2001 Prentice Hall

Strategy Analysis & Choice

QSPM
Positives: Sets of strategies examined simultaneously or sequentially Requires the integration of pertinent external and internal factors in the decision-making process

Ch. 6-53 2001 Prentice Hall

Strategy Analysis & Choice

QSPM
Limitations: Requires intuitive judgments and educated assumptions Only as good as the prerequisite inputs

Ch. 6-54 2001 Prentice Hall

Key Terms & Concepts

Aggressive quadrant Attractiveness Scores (AS) Board of Directors Boston Consulting Group (BCG) Matrix Business portfolio Cash cows Champions Competitive Advantage (CA)

Competitive quadrant Conservative quadrant Culture Decision stage Defensive quadrant Directional vector Dogs Environmental Stability (ES) Financial Strength (FS)

Ch. 6-55

2001 Prentice Hall

Key Terms & Concepts

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)

Question marks Relative market share position SO strategies ST strategies Stars Strategic Position and Action Evaluation (SPACE) Matrix Strategy-formulation framework

Ch. 6-56

2001 Prentice Hall

Key Terms & Concepts

Sum total attractiveness scores Threats-OpportunitiesWeaknesses-Strengths (TOWS) Matrix

Total Attractiveness Scores (TAS) WO strategies WT strategies

Ch. 6-57 2001 Prentice Hall