You are on page 1of 8

STREETS CORPORATION

Strategic Management Marben B. Silva

CHAPTER VI STRATEGY FOMRULATION 6.1 Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix STRENGTHS 1. Customers Loyalty 2. Solid Revenue and Profit Stability 3. Human Resource Management 4. Research and Development Capability OPPORTUNITIES 1. Increase in numbers of possible customers (Hotels and Restaurants) SO STRATEGIES 1. Train employees and agents to attract and get more customers (S3,O1) WO STRATEGIES 1. Expand the corporation by establishing business (laundry shop) related to its products (W2, O1, O2) 2. Technological Advancements 2. a) Research affecting on 2. Research on cheaper materials product without and less the affecting the quality of the manufacturing costs (W3, O2)
Page 94

WEAKNESSES 1. Brand Name 2. Low Inventory Turnover 3. Expensive Manufacturing Costs and Raw Materials

cheaper raw materials raw without quality of the product b) Buy machines to reduce operating

STREETS CORPORATION
Strategic Management Marben B. Silva

expenses (S4,02) 3. Economic Development 3. Manufacture more

3. Exert more efforts in advertising the products in the market (W1, O2)

quality products for the customers (S1, S2, 03)

THREATS 1. Lower price offered

ST STRATEGIES

WT STRATEGIES Give orders will the so be loyal that fast

on 1. Give the customers 1. will have their loyalty bulk for the company (S1, T1) there

products

by incentives so that they customers discounts in

Competitors

turnover of inventory (W1, T2 )

2. Increase in price of raw materials 3. Growth of Inflation Rate

2. Research on cheaper materials without affecting the quality of the products (S4, T2)

2. Research on alternatives of raw materials (W3, T2)

6.2 SPACE Matrix Internal Strategic Position Financial Position (FP) External Strategic Position Stability Position (SP)

Page 95

STREETS CORPORATION
Strategic Management Marben B. Silva

Leverage Liquidity Working Capital Inventory Turnover

(+4) (+6) (+5) (+3)

Technological Changes Rate of Inflation Price Range on Competing Products Competitive Pressure

(-2) (-5)

(-6) (-3)

TOTAL AVERAGE

+4.5

TOTAL Industry Position (IP) Growth Potential Profit Potential Financial Stability Resource Utilization

-4

Competitive Position (CP) Product Quality Customer Loyalty Capacity Utilization Product Life Cycle (-3) (-3) TOTAL -2.5 (-2) (-2)

(+5) (+6) (+6) (+5)

TOTAL

+5.5

Conclusion FP Average = +4.5 SP Average = -4 CP Average = -2.5 IP Average = +5.5

Directional Vector Coordinates X-axis: (-2.5)+(+5.5)=3 Y-axis: (+4.5)+(-4)=0.5

Page 96

STREETS CORPORATION
Strategic Management Marben B. Silva

Figure 6.1 SPACE Graph

Based on the results, Streets Corporation belongs to the Aggressive Quadrant. It means that the company is financially strong and has achieved major competitive advantages in growing and stable industry.
2

6.3 Internal-External Matrix Figure 6.2 IE Matrix


Page 97

STREETS CORPORATION
Strategic Management Marben B. Silva

Total IFE Rating 3.18 Total EFE Rating 3.40


HIGH 3.0 to 4.0 Medium 2.00 to 2.99 Low 1.0 to 1.99 The IE matrix assigns the position of the firm in a nine cell display based onR., its IFE and EFE results. If the company placed in cells I,II and IV it David, Fred Strategic Management (2006)
2

Strong 3.00 to 4.0

Average 2.00 to 2.99 II

Weak 1.0 to 1.99 III

I
IV

VI

VII

VIII

IX

should implement grow and build strategies. If it placed in cells III, V and VII hold and maintain strategies are recommended. And if placed in cells VI, VIII and IX it should pursue harvest and divest strategies. 2 Based from the strategic management tool, the company lies in first quadrant which implies that the company is on the phase of grow and build. There should be intensive strategies such as market penetration, market development and product development or integrative strategies such as backward, forward or horizontal integration.2

Page 98

STREETS CORPORATION
Strategic Management Marben B. Silva

6.4 Grand Strategy Matrix

David, Fred R., Strategic Management (2006)

Figure 6.4

Quadrant II Market Development Market Penetration Product Development Horizontal Integration Divestiture Liquidation

Quadrant I Market Development Market Penetration Product Development Forward Integration Backward Integration Horizontal Integration
Page 99

STREETS CORPORATION
Strategic Management Marben B. Silva

Related Diversification

Quadrant III Retrenchment Related Diversification Unrelated Diversification Divestiture Liquidation

Quadrant IV

Related Diversification Unrelated Diversification Joint Ventures

Streets Corporation is placed on the second quadrant. It needs to evaluate the present approach to the market place seriously. Streets Corporation needs to determine why the firms current approach is ineffective and how the company can best change to improve its

competitiveness.2

6.5 BCG Matrix Figure 6.5


Page 100

STREETS CORPORATION
Strategic Management Marben B. Silva

Stars II Backward, Forward, Horizontal Integration Market Penetration Market Development Product Development Cash Cows III Product Development Diversification Retrenchment Divestiture

Question Marks I Market Penetration Market Development Product Development Divestiture

Dogs IV Retrenchment Divestiture Liquidation

Streets Corporation is on the second quadrant which is the Stars quadrant. This represents that the organizations best long-run opportunities for growth and profitability. Divisions with a high relative market share and a high industry growth rate should receive substantial investment to maintain or strengthen the dominant position.2
2

David, Fred R., Strategic Management (2006)

Page 101

David, Fred R., Strategic Management (2006)