BAM 200: Strategic Management

Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

Lesson title: Strategy Formulation – Quantitative References:

Strategic Planning Matrix (QSPM) Strategic Management and
Lesson Objectives: Business Policy, Wheelen, T.
At the end of this lesson, I should be able to: and Hunger, J.D.
1. define QSPM, Fundamentals of Strategic
2. identify the steps in preparing QSPM, Management, Orcullo, N.A.
3. understand the purpose of QSPM.

As a rule of thumb:
Trusting your gut instinct isn’t always enough, as you will sometimes want to have numbers
behind the choices you make.
A. LESSON PREVIEW/REVIEW
1) Introduction (2 mins)
Hi there! We continue to enter into the next phase of strategic management known as
strategy formulation – the most crucial part of the whole process. We will tackle advance
concepts in starting the phase. Enjoy!
2) Activity 1: What I Know Chart, part 1 (3 mins)
What I Know Questions: What I Learned (Activity
4)

1.What is a Quantitative
Strategic Planning Matrix?

2.What is the ultimate goal of

QSPM?

3. Provide one advantage of

using this?

B.MAIN LESSON
1) Activity 2: Content Notes (13 mins)

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 BAM 200: Strategic Management
Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

The Quantitative Strategic Planning Matrix (QSPM)

QSPM is a high-level StratMa
approach for evaluating
strategies, it provides
analytical method for
comparing feasible alternative
actions.
The ultimate goal of the QSPM
method is to pick the right

If you would like to construct your own QSPM in order to make a sound decision on a given
problem, consider following the steps below.

1 – Internal Factors
To get started on the process of constructing a QSPM, you are first going to develop a list of
strengths and weaknesses from within your organization. What is it that you have within your
organization which puts you in a position of advantage? What is it that you feel you are missing?
Filling out a few points under both the strengths and weaknesses category will give you a great
start to your matrix. Remember, as this point, you are only dealing with considerations inside of
your organization. Both the strengths and weaknesses which you identify should be listed down
the left side of a piece of paper – or down the left side of a computer spreadsheet.

2 – External Factors
In much the same way, you are now going to look outside your organization for opportunities and
threats which exist in the market. Possible opportunities include a new market which is
expanding, or the struggles of a competitor. On the other hand, threats can include strong
competition or decreasing market prices. The external factors you identify should be listed
further down the left side of your paper or spreadsheet.

3 – Strategy Alternatives
With all of your strengths, weaknesses, opportunities, and threats identified, it is now time to get
into the process of outlining strategies. These are the strategies that you are going to be

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 BAM 200: Strategic Management
Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

choosing from, with the help of the completed matrix. All of the strategies you wish to consider
should be listed across the top of your matrix. You will obviously need to have at least two
options in play, but you can have many more than that if you so choose. Under each strategy
option, you will need to have room for three columns – a weight, an ‘attractiveness score’, and a
total.

4 – Weighting the Factors

For each internal and external factor which you have included in your matrix, you will need to
assign a weight. The weights are going to assign a perceived importance to each of the factors,
so you will need to take time to think through how much influence each factor is expected to
have in practical application. The weights of your internal factors should add up to 100%, as
should the weights from your external factors. Expect to spend a bit of time on this step until you
are happy with the weighting distribution you have established. When finished, you should have
weights under each of your proposed strategy alternatives. Since different strategies are going
to place different importance on your various factors, it makes sense to have unique weights for
each alternative.

5 – Attractiveness Scores
Just as you did with the weights, you are now going to assign attractiveness scores for each
factor, both internal and external. These scores are going to be on a scale from 1 to 4, where a 1
is equal to not attractive and a 4 is equal to highly attractive. If the factor in question will have
no effect on the choice you are making, you can rate the attractiveness score as a zero. Go
through the entire matrix you have created until all of your factors have both a weight and an
attractiveness score.

6 – Do the Math
To finish up the QSPM process, you are going to do the math required to settle on final scores for
all of your alternatives. This math is quite simple – you are going to multiply the weight by the
attractiveness score, and you are then going to add those scores up within each column. With
your math complete, you can now compare the totals for each alternative which was included in
the matrix. The highest total score should be seen as the best overall option.

Obviously, any tool like the QSPM is only going to be as good as the information which is put into
the system. If you don’t take the time necessary to develop accurate weights and attractiveness
scores, you won’t be able to place much faith in the final outcome of the process. To get the
most from QSPM, you have to take each step along the way seriously. Only then will you be able
to base important decisions on the outcome of this analysis.

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 BAM 200: Strategic Management
Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

What does a QSPM look like and what does it tell me?
First, let us take a look at a sample Quantitative Strategic Planning Matrix QSPM, see the picture
below. This QSPM compares two alternatives. Based on strategies in the steps provided company
executives determined that this company XYZ needs to pursue an aggressive strategy aimed
at development of new products and further penetration of the market. They also identified that
this strategy can be executed in two ways. One strategy is acquiring a competing company. The
other strategy is to expand internally. They are now asking which option is the better one.

(Attractiveness Score: 1 = not acceptable; 2 = possibly acceptable; 3 = probably acceptable; 4 =

most acceptable; 0 = not relevant)

Doing some easy calculations in the Quantitative Strategic Planning Matrix QSPM, we came to a
conclusion that acquiring a competing company is a better option. This is given by the Sum Total
Attractiveness Score figure. The acquisition strategy yields higher score than the internal

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 BAM 200: Strategic Management
Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

expansion strategy. The acquisition strategy has a score of 4.04 in the QSPM shown above
whereas the internal expansion strategy has a smaller score of 2.70.

2) Activity 3: Skill-building Activities (with answer key) (20 mins + 2 mins checking)
Exercise I. Questions for critical thinking. Answer in a substantial manner.

Prepare a sample QSPM enlisting the following alternative marketing strategies: (1)
Increase in Advertising Expenditures by 50% and (2) Lower menu prices by 10% and
provide your analysis.

3) Activity 4: What I Know Chart, part 2 (2 mins)

This document is a property of PHINMA EDUCATION

 BAM 200: Strategic Management
Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

Now, let’s check your knowledge on strategy formulation. I hope that everything about the topic is clear
to you. This time you have to fill out the What I Learned column.

4) Activity 5: Check for Understanding (5 mins)

True or False. Write True on the blank before the number if you think the statement is
correct/accurate, otherwise write False.

_________1. The Quantitative Strategic Planning Matrix is a strategic tool which is used to
evaluate alternative set of strategies.
_________2. Make a list of the firm’s key external opportunities/threats and internal
strengths/weaknesses in the left column of the QSPM is on the 1 st Step.
_________3. Weaknesses can include strong competition or decreasing market prices.
_________4. QSPM provides numerical justification.
_________5. The best thing about QSPM is that it never insists the strategist to enter the
information on assumptions, it extract the information from initial stages.

C. LESSON WRAP-UP
1) Activity 6: Thinking about Learning (5 mins)
A. Work Tracker
You are done with this session! Let’s track your progress. Shade the session number you
just completed.

B. Think about your Learning

1. Do you think you were able to grasp and learn something new today? What are they?
What helped you learn them? If not, why do you think so?
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2. Which parts of the lesson do you have difficulty understanding? Do you have questions
about the lesson? List them down.
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This document is a property of PHINMA EDUCATION

 BAM 200: Strategic Management
Student Activity Sheet Module #19

Name: Class number:

_________________________________________________________________ _______

Section: ____________ Schedule: Date:

________________________________________ ________________

__________________________________________________________________________________________
__________________________________________________

FAQs

Can I compare more than two strategies using a QSPM?

Yes, in general, any number of alternative strategies can be included in the QSPM analysis. We
included only two alternatives in our example just to keep it simple. It is important to note that
strategies subject to comparison should be mutually exclusive if possible.

KEY TO CORRECTIONS
Activity 3. Exercise 1.

You may assume data and refer to this sample:

https://www.researchgate.net/publication/
299998678_The_quantitative_strategic_planning_matrix_a_new_marketing_tool

Activity 5.

1. TRUE
2. TRUE
3. FALSE, these are examples of threats
4. TRUE
5. TRUE

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