Int. j. econ. manag. soc. sci., Vol(3), No (8), August, 2014. pp.

451-457

TI Journals

International Journal of Economy, Management and Social Sciences

www.tijournals.com

ISSN:
2306-7276

Copyright 2014. All rights reserved for TI Journals.

Formulating a strategy through quantitative strategic planning matrix

(QSPM) based on SWOT framework (Case study: industrial group of
Barez Tires)
Mohammad Saeed Taslimi
Professor, public administration, Faculty of Management, University of Tehran, Iran.

Ali Kaab Omeyr

MSc. Executive Master of Business Administration, Shahid Beheshti University, Tehran, Iran.

Sakineh Arabkoohsar *
MSc. International Business Management, Shahid Beheshti University, Tehran, Iran.
* Corresponding author: Sa.koohsar@gmail.com

Keywords

Abstract

strategic planning
SWOT analysis
strengths, and weaknesses of the
organization
environmental threats
opportunities,
Quantitative strategic planning matrix

Quantitative strategic planning matrix (QSPM) has been used to define corporate strategy of Barez Firm that
is based on SWOT framework. In the beginning, the company's mission statement is determined and then
the external factor evaluation matrix (EFE) and Internal Factors Evaluation Matrix (IFE) have been specified
in input stage. According to the information obtained from previous stages, SWOT matrix (SWOT) and
Internal and External Matrix (IE) have been formed. In the decision making stage different alternatives of
strategies have been defined using QSPM approach and they have been evaluated in implementation and
comparison stages. The best-adopted strategy is using up to date technology to produce tires, which could
compete with imported tires.

1. Introduction
Barez Industrial Group is a company that produces radial tires for the two largest automakers; Iran Khodro and Saipa Company. The most obvious
indicator of this company strategy is development of producing scale and product's design ability according to the growing rate of automakers and
increase in the volume of surrogate tires markets. It is obvious that none of the mentioned issues cannot be fulfilled without the use of specialized
and motivated human resources and dynamic organization, which the group considers the excellent concepts based on EFQM model to reach them.
In order to codify the strategy of Barez Company, a quantitative strategic planning matrix has been used. Data were collected through library
studies, questionnaire and interviewing with managers of this company. Barez Industrial Group is a large and hierarchical industrial unit. Therefore,
the population of this study consists of all 56 operational, middle, and senior managers of this company. Due to the low volume of population, the
study sample includes all target population. Since the population is different in terms of education and awareness, the knowledge of ea ch individual
is considered.
Importance and necessity of strategic planning Strategy codifying in organizations create and maintain a strategic balance between the
organization's goals, capabilities, and opportunities that are changing. The mission of various parts and its related purpose , and combined rational
activities and integrated operations policies are determined through the right strategy planning.
Today, the main concern for most organizations is to develop and implement strategies that guarantee the success and survival of the organization
in the complex and changing environmental conditions. Strategic planning is a means for organizations to codify and implement strategies in
organizations and manage its own strategic performance [4].
In order to codify the strategy of Barez industrial group, a quantitative strategic planning matrix (QSPM) is used. In order to obtain this matrix, it
is needed to estimate proper strategies of the company with the help of comprehensive framework for codifying a strategy (SWO T). This
framework provides the tools and techniques that are suitable for a variety of organizations in a variety of size s and help strategists to identify,
evaluate, and select the proper strategy. This framework has four main steps that includes: [1]
1- Beginning step: organization mission statement is made.
2- Input step: the required information and main internal and external factors for formulating strategy have been recognized. This step
includes internal and external factors evaluation matrix.
3- Comparison and coordination step: in this step the main internal factors( strengthens and weakness) and external factors ( opportunity
and threats) will be adapted using tools like SWOT matrix and internal and external matrix in order to identify the strategie s that are in
accordance with organization's mission and internal and external factors.
4- Decision making stage: in this stage, the various options of strategies are evaluated and their relative attractiveness is determined using
quantitative strategic planning matrix (QSPM).
Figure one show the comprehensive framework for formulating strategy:

Mohammad Saeed Taslimi , Ali Kaab Omeyr, Sakineh Arabkoohsar *

452

International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Beginning stage
Input stage
Comparison stage

Organization's mission statement

External factors evaluation matrix
Internal factors evaluation matrix
SWOT matrix
Internal and external matrix

Decision making stage

Figure 1. Comprehensive framework of strategy formulating

We are trying to formulate the appropriate strategies for Barez industrial group through identifying strengthens e, weaknesses ,
environmental opportunities, and threats in order to gain more competitive advantage for reaching long-term goals in addition to
use relative existence advantages.
2. Beginning stage (Determination of company's mission statement)
Mission statement expresses the organization's philosophy that distinguishes
the organization from other organizations and determines its
operational board base on products and market [5].
Mission statement expresses organization's philosophy in words as guidelines for formulating strategy [17].
The mission statement describes the existence and common organizational goals [15], originates from the top of organizational pyramid, and
penetrates in all levels of the organization. It must be clear and accepted at all levels of the organization [12].
2.1 Mission statement of Barez industrial group
Barez tires mission is to become a modern industrial company in producing light, heavy and competitiveness and agricultural tires with the use of
modern technology. Its vision is to become the first tire producing company in the country.
Barez industrial group focused on four main values:
Customer orientation
Creating a favorable environment for staff
Continuous improvement and learning
Result orientation
In recent years, this group efforts to specify strategic objectives in line with the defined values and plans to promote itse lf through definition of
strategic projects in the fields of "management and structure", "Production and Operations", "marketing and sales", "Research and development"
and "finance ".

3. The input stage

A) External factors evaluation matrix (EFE)
This matrix allows strategists to evaluate environmental, economic, social, political, cultural, legal, technological environments, and market and
competition conditions in the considered period and is useful for public and private organizations [16]. Dominant paradigm in the design of this
matrix mainly is prescriptive and is used as a means of gathering information of industrial and general environments [11]. In following matrix,
the influential environmental factors have been identified then have been evaluated and prioritized in the form of opportunities and threats.
3.1 Internal factor evaluation matrix (IFE)
This matrix is a mean for examining internal organizational factors that assesses the strengths and weaknesses of organizational units. In order to
provide an internal factor evaluation matrix, we need the opinions and judgments of experts [16]. This matrix recognizes and evaluates the strengths
and weaknesses of functional units and represents some ways in order to evaluate the relationships among the units. Intuitive judgments have been
used in this matrix. Furthermore, this matrix identifies and evaluates organization's competencies.

4. Matching and comparison stage

A) SWOT matrix
The Matrix is one of the major means by which managers can compare the information about internal and external fac tors and it may provide a
variety of strategies [15].
SWOT matrix consists of a two dimensional table. Each of the four areas represents a class of strategies. These strategies include [9].
Aggressive strategy (SO): the strategies for maximize use of environmental opportunities based on the strengths of the organization.
Conservative strategies (WO): the Strategy for using potential advantage of environmental opportunities in order to compensate organization's
weaknesses.
Competitive strategies: the strategies for using organizational strengths to avoid threats.
Defensive strategies: the strategies for minimize losses of threats and weaknesses.
With regard to the listed items and managers' opinions, some strategies were selected for each of the four areas of SWOT matrix.
Contents of section 3 goes here. It might include some subheadings. Format of subheadings are shown in table3.

453

Formulating a strategy through quantitative strategic planning matrix (QSPM) based on SWOT framework
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Table 1.External factors evaluation matrix of Barez Tires Company

(O-T) external factors
Row
opportunities (O):
1
Development of petrochemical activities in the country
2
The boom in auto industry
3
Existence of proper markets in region for exporting
4
High cost of using non-road transport
0
Ease of use of private car instead of other transportation
ways
6
Government attention to the auto industry
7
Close relationship between Iran, the Caucasus and
central Asia
0
Cheap labor
0
15
11
row
1
2
3
4
0
6
7
0
0
15
11
Total

Rapid growth of Barrie radial tires

Participation in international exhibition
Increase in the exchange rate ( note: if exports will be
increased)
treats
Increase in the exchange rate ( due to the import of
machinery and raw materials)
Inappropriate and excessive import
Bargaining power of raw material suppliers
boycotts
Eco system issues and its related rules
Rapid change in customer usage pattern
Rapid change in tire's technology
Tightened monetary policy of the central bank
Energy price increase
The entry of new competitors into the market
Modification of air travel rates

Coefficient

Rank

Grade

5/500
5/50
5/56
5/53
5/53

3
4
3
3
3

5/160
5/32
5/10
5/50
5/50

5/50
5/50

3
2

5/10
5/1

5/54

5/16

5/56
5/54
5/56

4
2
4

5/24
5/50
5/24

5/56

5/56

5/56
5/500
5/54
5/53
5/53
5/53
5/53
5/540
5/54
5/520
1

1
1
1
2
1
1
3
2
2
2
-

5/56
5/500
5/54
5/56
5/53
5/53
5/50
5/50
5/50
5/50
2 /64

Table 2.Internal factor evaluation matrix of Barez Tire Company

(S-W) internal factors
Row
strengths
1
Monopoly in producing radial tires for cargo, van and pickup
2
Taking advantage of the latest developments in designing and
constructing tire
3
Up to date production machinery
4
Good communication with internal automakers
0
Extensive distribution network
6
Wide variety of products
7
Active participation in local and international exhibitions
0
Management information system
Row
weakness
1
Lack of proper staff motivation
2
Some products are non-compliance with international standards
3
Failure to make full use of the productive potential capacity given
the up to date machinery and equipment's
4
Lack of proper education of staff
0
Low quality of products against foreign products
6
Low number of sales and marketing personnel
7
The large number of headquarters staff
0
Liquidity shortage
Total

coefficient

rank

grade

5/50
5/56

4
4

5/36
5/24

5/50
5/570
5/50
5/57
5/500
5/50

3
3
4
4
3
4

5/24
5/220
5/32
5/20
5/160
5/2

5/56
5/50
5/57

2
2
2

5/12
5/1
5/14

5/54
5/56
5/56
5/54
5/56
1

2
1
1
1
2
-

5/50
5/56
5/56
5/54
5/12
2 /57

Mohammad Saeed Taslimi , Ali Kaab Omeyr, Sakineh Arabkoohsar *

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International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Table 3 . Barez SWOT matrix

Internal factors

weaknesses
W1,W2,W3
,W4,W5,W6,
W7,W8

External factors
Threats

strenghts
S1,S2,S3,
S4,S5,S6,
S7,S8

Deffensive strategies (WT)

T1,T2,
T3,T4,
T5,T6,
T7,T8,
T9,T10,
T11

oppurtunities
O1,O2,
O3,O4,
O5,O6,
O7,O8,
O9,O10,
O11

Focusing on the
producing up to
date products and
removal of
producing old tires
Integration with
local companies

conservative strategies
)WO)

Motivate
employees with
participate them in
decision-making
and profits.

Review and revise

maintenance
system to reduce
overhead costs.

loss reduction

Competitive strategies (ST)

Marketing research increase
to identify the needs of
customers.
Using up to date technology
to produce products that can
compete with imported tires.
Prices increase due to their
distinctive to reduce the
negative effects caused by
the sanctions and the rising
exchange rate.

(SO) aggressive stratgeis

Cooperation eincreas in order

to produce various products
for
developing
export
markets
Develop
communication
with automakers
Increase
in
distribution
channels in order to gain
morenshare
of
internal
market

B) Internal and External Matrix (IE)

Internal and external matrix is used in order to analyze internal and external factors simultaneously. This matrix is used to determine the position
of your organization or business. An organization can use this matrix in order to determine the composition and tasks of your business unit. In
order to form this matrix, the evaluated scores of internal and external factors should be placed in the horizontal and vertical dimensions of the
matrix organization to recognize organizational statue and adapt appropriate strategy.
The position of the organization or business, in terms of scores on internal and external factors, determines the appropriate strategy. At home I,
conservative strategy, home II the aggressive strategy, home III the defensive, and finally home IV, the competitive strategy is selected.
4.1 IE matrix for Barez tire company

According to IE matrix, competitive strategies have been selected for Barez Company. Thus, following strategies should be
considered by managers:
1- Marketing research increase in order to identify customer needs.
2- Using technology in order to produce products that are compatible with quality of imported tires.
3- Products price increase due to their distinctive in comparison with local products to reduce the negative effects caused by
sanctions and exchange rate increase.

455

Formulating a strategy through quantitative strategic planning matrix (QSPM) based on SWOT framework
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Figure2 . Internal And External Matrix of Barez Company

5. Decision making stage: Quantitative strategic planning matrix (QSPM)

Quantitative strategic planning matrix is one of the most common tools for evaluating strategic alternatives [11]. This matrix determines the best
appropriate strategy in decision-making step and in fact prioritizes these selected strategies [16]. Previous analysis has been used for creating
QSPM matrix. Quantitate strategic matrix of Barez company is represented in the table 4.
Table 6 .QSPM for Barez company ( external factors)
Strategy(3):
Prices increase due to their
distinctive to reduce the
negative effects caused by
the sanctions and the
exchange rate increase.
Score
Attractiveness
coefficient

Strategy(2):
Using
up
to
date
technology to produce
products that can compete
with imported tires.
score

5/11
5/24
5/10
5/50
5/12
5/50
5/1
5/12
5/12
5/54
5/24

2
3
3
3
4
1
2
3
2
1
4

5/160
5/32
5/12
5/50
5/50
5/10
5/2
5/50
5/12
5/12
5/10

5/10
5/12
5/160
5/12
5/53
5/56
5/56
5/50
5/130
5/50
5/50
2 /7

3
2
3
3
1
2
2
3
3
2
2

5/56
5/24
5/500
5/50
5/12
5/12
5/12
5/56
5/50
5/16
5/50
2 /55

Strategy(1):
Marketing
research
increase in order to
identify customer needs.

Attractiveness
score
Attractiveness
coefficient
coefficient
Opportunities(O) :
3
5/11
2
4
5/32
4
2
5/24
4
3
5/50
3
3
5/50
3
3
5/1
2
4
5/10
3
2
5/54
1
2
5/10
3
3
5/16
4
3
5/10
3
Threats(T):
1
5/12
2
4
5/24
4
1
5/11
2
2
5/12
3
4
5/12
4
4
5/12
4
4
5/50
3
2
5/56
2
2
5/50
2
4
5/12
3
2
5/570
3
2 /527

Importance
coefficient

5/500
5/50
5/56
5/53
5/53
5/50
5/50
5/54
5/56
5/54
5/56

O1
O2
O3
O4
O5
O6
O7
O8
O9
O10
O11

5/56
5/56
5/500
5/54
5/53
5/53
5/53
5/53
5/540
5/54
5/520
1

T1
T2
T3
T4
T5
T6
T7
T8
T9
T10
T11
Total

Mohammad Saeed Taslimi , Ali Kaab Omeyr, Sakineh Arabkoohsar *

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International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

Table 7 .QSPM for Barez company ( internal factors)

Strategy(3):
Prices increase due to their
distinctive to reduce the
negative effects caused by
the sanctions and the
exchange rate increase.

Strategy(2):
Using up to
date
technology to produce
products
that
can
compete with imported
tires.

score

Attractiveness
coefficient

5/27
5/12
5/16
5/10
5/24
5/21
5/11
5/50

3
2
2
2
3
3
2
1

5/27
5/10
5/32
5/220
5/24
5/20
5/160
5/1

5/12
5/50
5/14
5/54
5/12
5/12
5/50
5/24
2 /22

2
1
2
1
2
2
2
4

5/12
5/2
5/20
5/50
5/24
5/56
5/54
5/12
2 /52

Strategy(1):
Marketing
research
increase in order to identify
customer needs.

Attractiveness score
Attractiveness
coefficient
coefficient
Strengths (S)
3
5/50
1
3
5/10
3
4
5/24
3
3
5/570
1
3
5/32
4
4
5/20
4
3
5/22
4
2
5/1
2
Weakness (W)
2
5/12
2
4
5/10
3
4
5/21
3
2
5/54
1
4
5/10
3
1
5/12
2
1
5/50
2
2
5/12
2
2 /727

Importance
coefficient

5/50
5/56
5/50
5/570
5/50
5/57
5/500
5/50

S1
S2
S3
S4
S5
S6
S7
S8

5/56
5/50
5/57
5/54
5/56
5/56
5/54
5/56
1

W1
W2
W3
W4
W5
W6
W7
W8
Total

6. Conclusion
After summing up the quantitative strategic planning matrix, 6 table is obtained.
Table 6.Attractiveness of strategy to the internal and external factors
strategies
1)
2)

3)

Marketing research increase in order to identify

customer needs
Using up to date technology to produce
products that can compete with imported tires.
Prices increase due to their distinctive to reduce
the negative effects caused by the sanctions and
the exchange rate increase.

Attraction of
internal factors
2/020

Attraction of
external factors
2/020

Average

2/02

2/70

2/000

2/22

2/0

2/36

2/720

Given the assessment of competitive strategies scores in quantitative strategic planning matrix, the second strategy that is the use of
technology to produce compatible products against imported tires has been selected as the best strategy for Barez Company[24].
6.1 Suggestions

1- Since using up to date strategy for producing product has been selected as the leading strategy for Barez industrial group,
it is necessary to note that this strategy can be like a blade edge action and reduces the middle and long-term organizational
profits by creating additional capacity, if the extremist attitude of the organization's managers used.
2- Although using up to date strategy has been selected as the best strategy for Barez Company, it does not mean that the
managers could neglect the two other strategies. In fact, this company should use the two other strategies in order to reach
balanced performance based on the situation.

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Formulating a strategy through quantitative strategic planning matrix (QSPM) based on SWOT framework
International Journal of Economy, Management and Social Sciences Vol(3), No (8), August, 2014.

3- If the pressure from international sanctions, liquidity shortage, or any other reason prevents the use of up to date strategy
for the company, it is better to choose marketing research strategy in order to identify customer needs.
4- Since the rubber industry acts in a dynamic environment and is under the influence of various factors, given the resulting
scores of EFE=2/46, it is recommended that Barez company select cooperation increase strategy among aggressive
strategies in order to produce various products for developing export markets, if the enviro nmental condition improves in
the future.
5- Since all the staff of the company participated in different strategy formulation stages, it is possible to commit them to the
organization's future and implementation of strategies and using their abilities and c apabilities in formulating and
implementing strategies through encouraging their participation.

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www.bareztires.com