Materi Kuliah Ke 7 Strategy Generation and Selection

Strategy
Generation and
Selection
PKN STAN 2020
Ch. 6-1
© 2001 Prentice Hall
Four Types of Strategies
Threats SO WO
Opportunities Strategies Strategies
Weaknesses
Strengths ST WT
(SWOT)
Strategies Strategies
Ch. 6-2
SO Strategies
Threats Use a firm’s

Opportunities SO internal
strengths to
Weaknesses Strategies
take advantage
Strengths of external
(SWOT) opportunities
Ch. 6-3
WO Strategies
Improving
Threats internal
Opportunities WO weaknesses by
Weaknesses Strategies taking
Strengths advantage of
(SWOT) external
opportunities
Ch. 6-4
ST Strategies
Threats Using firm’s

Opportunities ST strengths to
Weaknesses Strategies avoid or reduce
Strengths the impact of
(SWOT) external threats.
Ch. 6-5
WT Strategies
Defensive tactics
Threats aimed at
Opportunities WT reducing
internal
Weaknesses Strategies
weaknesses and
Strengths avoiding
(SWOT) environmental
threats.
Ch. 6-6
Strategy Analysis & Choice
The SWOT 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
Ch. 6-7
The SWOT 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
Ch. 6-8
SWOT Matrix
Leave Blank Strengths-S Weaknesses-W
List Strengths List Weaknesses
Opportunities-O SO Strategies WO Strategies
List Opportunities Use strengths to take Overcome weaknesses

advantage of by taking advantage of
opportunities opportunities
Threats-T ST Strategies WT Strategies
List Threats Use strengths to avoid Minimize weaknesses

threats and avoid threats
Ch. 6-9
Boston Consulting Group Matrix
(BCG)
• 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
Ch. 6-10
(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. 6-11
(BCG)
• Relative market share position defined:
Ø 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.
Ch. 6-12
BCG Matrix
Relative Market Share Position
High Medium Low
1.0 .50 0.0
High
+20
Industry Sales Growth Rate
Stars Question Marks

II I
Medium
0
Cash Cows Dogs

III IV
Low
-20 Ch. 6-13
BCG Matrix
• Question Marks
Ø Low
relative market share position yet
compete in high-growth industry.
§ Cash needs are high
§ Case generation is low
Ø Decisionto strengthen (intensive
strategies) or divest
Ch. 6-14
BCG Matrix
• Stars
Ø High relative market share and high
industry growth rate.
§ Best long-run opportunities for growth and
profitability
Ø Substantialinvestment to maintain or
strengthen dominant position
§ Integration strategies, intensive strategies, joint
ventures
Ch. 6-15
BCG Matrix
• Cash Cows
Ø High
relative market share position, but
compete in low-growth industry
§ Generate cash in excess of their needs
§ Milked for other purposes
Ø Maintain strong position as long as
possible
§ Product development, concentric diversification
§ If becomes weak—retrenchment or divestiture
Ch. 6-16
BCG Matrix
• Dogs
Ø Low
relative market share position and
compete in slow or no market growth
§ Weak internal and external position
Ø Decision to liquidate, divest, retrenchment
Ch. 6-17
Grand Strategy Matrix
• Popular tool for formulating alternative

strategies
• Based on two evaluative dimensions
Ø Competitive position
Ø Market growth
Ch. 6-18
RAPID MARKET GROWTH
Quadrant II Quadrant I
• Market development • Market development
• Market penetration • Market penetration
• Product development • Product development
• Horizontal integration • Forward integration
• Divestiture • Backward integration
• Liquidation • Horizontal integration
WEAK • Concentric diversification STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV POSITION
• Retrenchment • Concentric diversification
• Concentric diversification • Horizontal diversification
• Horizontal diversification • Conglomerate
• Conglomerate diversification
diversification • Joint ventures
• Liquidation
SLOW MARKET GROWTH

Ch. 6-19
• Quadrant I
Ø Excellent strategic position
Ø Concentration on current markets and products
Ø Take risks aggressively when necessary
Ch. 6-20
• Quadrant II
Ø Evaluate present approach seriously
Ø How to change to improve competitiveness
Ø Rapid market growth requires intensive strategy
Ch. 6-21
• Quadrant III
Ø Compete in slow-growth industries
Ø Weak competitive position
Ø Drastic changes quickly
Ø Cost and asset reduction indicated (retrenchment)
Ch. 6-22
• Quadrant IV
Ø Strong competitive position
Ø Slow-growth industry
Ø Diversification indicated to more promising growth
areas
Ch. 6-23

Materi Kuliah Ke 7 Strategy Generation and Selection

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Strategy

Threats Use a firm’s

Threats Using firm’s

• List the firm’s key external opportunities

• Match internal strengths with external opportunities

List Strengths List Weaknesses

Opportunities-O SO Strategies WO Strategies

List Opportunities Use strengths to take Overcome weaknesses

List Threats Use strengths to avoid Minimize weaknesses

• Enhances multidivisional firms’ efforts to

• Graphically portrays differences among

• Relative market share position defined:

Ø Ratio of a division’s own market share in a

Stars Question Marks

Cash Cows Dogs

• Popular tool for formulating alternative

SLOW MARKET GROWTH

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