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Chapter 6

Strategy Analysis & Choice

Copyright 2007 Prentice Hall Ch 6 -1


Chapter Outline

The Nature of Strategy & Choice

A Comprehensive
Strategy-Formulation Framework

The Input Stage

Ch 6 -2
Copyright 2007 Prentice Hall
Chapter Outline (cont’d)

The Matching Stage

The Decision Stage

Cultural Aspects of Strategy Choice

Ch 6 -3
Copyright 2007 Prentice Hall
Chapter Outline (cont’d)

The Politics of Strategy Choice

Governance Issues

Ch 6 -4
Copyright 2007 Prentice Hall
Strategy Analysis & Choice

To acquire or not to acquire, that is the


question –
Robert J. Terry

Life is full of lousy options –


General P.X. Kelley

Ch 6 -5
Copyright 2007 Prentice Hall
Strategy Analysis & Choice

Nature of Strategy Analysis & Choice

-- Establishing long-term objectives


-- Generating alternative strategies
-- Selecting strategies to pursue
-- Best alternative - achieve mission & objectives

Ch 6 -6
Copyright 2007 Prentice Hall
Strategy Analysis & Choice
Alternative Strategies Derive From --

 Vision
 Mission
 Objectives
 External audit
 Internal audit
 Past successful strategies

Alternative strategies do not come out of the


wild blue yonder
Ch 6 -7
Copyright 2007 Prentice Hall
Strategy Analysis & Choice
Process of Generating and Selecting
Alternatives
Participation in generating alternative
strategies should be as broad as
possible.

Ch 6 -8
Copyright 2007 Prentice Hall
Strategy Analysis & Choice
… Process of Generating and
Selecting Alternatives
In identifying and evaluating alternative
strategies should involve many of the
managers and employees who earlier
assembled the organizational vision and
mission statements, performed the
external audit, and conducted the
internal audit.
Ch 6 -9
Copyright 2007 Prentice Hall
Strategy Analysis & Choice
… Process of Generating and
Selecting Alternatives
Alternative strategies proposed by
participants should be considered and
discussed in a meeting or series of
meetings.
Proposed strategies should be listed in
writing and get understood by participants.

the strategies should Ch 6 -10


Copyright 2007 Prentice Hall
be ranked in order of attractiveness by all
Strategy Analysis & Choice
… Process of Generating and
Selecting Alternatives
Then the strategies should
be ranked in order of attractiveness by all
participants, with
1 = should not be implemented,
2 = possibly should be implemented,
3 = probably should be implemented, and
4 = definitely should be implemented.
Ch 6 -11
Copyright 2007 Prentice Hall
Comprehensive Strategy-Formulation
Framework
EFE
CPM
Stage 1: IFE
The Input Stage

Stage 2: Stage 3:
The Matching Stage The Decision Stage

SWOT
SPACE
BCG
QSPM
IE
GSM
Ch 6 -12
Copyright 2007 Prentice Hall
Strategy-Formulation Analytical
Framework
Internal Factor Evaluation
Matrix (IFE)

Stage 1: External Factor Evaluation


The Input Stage Matrix (EFE)

Competitive Profile Matrix


(CPM)

Ch 6 -13
Copyright 2007 Prentice Hall
Stage 1: The Input Stage

Basic input information for the matching


& decision stage matrices
Requires strategists to quantify
subjectivity early in the process
Good intuitive judgment always needed
in determining appropriate weights and
ratings.

Ch 6 -14
Copyright 2007 Prentice Hall
Strategy-Formulation Analytical
Framework
SWOT Matrix

SPACE Matrix

Stage 2: BCG Matrix


The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6 -15
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Stage 2: The Matching Stage

Match between organization’s


internal resources & skills and the
opportunities & risks created by its
external factors

Ch 6 -16
Copyright 2007 Prentice Hall
Stage 2: The Matching Stage

SWOT Matrix

Strengths
Weaknesses
Opportunities
Threats

Ch 6 -17
Copyright 2007 Prentice Hall
SWOT Matrix

Four Types of Strategies

Strengths-Opportunities (SO)
Weaknesses-Opportunities (WO)
Strengths-Threats (ST)
Weaknesses-Threats (WT)

Ch 6 -18
Copyright 2007 Prentice Hall
SO Strategies

Strengths
Weaknesses Use a firm’s
internal strengths
Opportunities
to take advantage
Threats SO of external
Strategies opportunities
SWOT

Ch 6 -19
Copyright 2007 Prentice Hall
WO Strategies

Strengths
Weaknesses Improving internal
weaknesses by
Opportunities
taking advantage
Threats WO of external
Strategies opportunities
SWOT

Ch 6 -20
Copyright 2007 Prentice Hall
ST Strategies

Strengths Use a firm’s


Weaknesses strengths
Opportunities to avoid or
Threats ST reduce the impact
Strategies of external
threats
SWOT

Ch 6 -21
Copyright 2007 Prentice Hall
WT Strategies

Defensive tactics
Strengths aimed at reducing
Weaknesses internal
Opportunities weaknesses &
Threats WT avoiding
Strategies environmental
threats
SWOT

Ch 6 -22
Copyright 2007 Prentice Hall
SWOT Matrix

Developing the SWOT

List firm’s key internal Strengths


List firm’s key internal Weaknesses
List firm’s key external Opportunities
List firm’s key external Threats

Ch 6 -23
Copyright 2007 Prentice Hall
SWOT Matrix
Strengths – S Weaknesses – W
Leave Blank
List Strengths List Weaknesses

Opportunities – O SO Strategies WO Strategies

Use strengths to take Overcoming weaknesses


List Opportunities advantage of by taking advantage of
opportunities opportunities

Threats – T ST Strategies WT Strategies

Use strengths to avoid Minimize weaknesses and


List Threats threats avoid threats

Ch 6 -24
Copyright 2007 Prentice Hall
Matching Key Factors to Formulate Alternative Strategies

Key Internal Factor Key External Factor Resultant Strategy

20% annual growth in


Excess working capacity
+ the cell phone industry = Acquire Cellfone, Inc.
(strength)
(opportunity)

Exit of two major foreign Pursue horizontal integration


Insufficient capacity
+ competitors from the = by buying competitor's
(weakness)
industry (opportunity) facilities

Decreasing numbers of Develop new products for


Strong R&D (strength) + =
young adults (threat) older adults

Develop a new
Poor employee morale Strong union
+ = employee benefits
(weakness) activity (threat) package

Ch 6 -25
Copyright 2007 Prentice Hall
Limitations with SWOT Matrix

 Does not show how to achieve a


competitive advantage
 Provides a static assessment in time
 May lead the firm to overemphasize a
single internal or external factor in
formulating strategies

Ch 6 -26
Copyright 2007 Prentice Hall
Strategy-Formulation Analytical
Framework
SWOT Matrix

SPACE Matrix

Stage 2: BCG Matrix


The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6 -27
Copyright 2007 Prentice Hall
SPACE Matrix
Strategic Position & Action Evaluation Matrix

Aggressive
Conservative
Defensive
Competitive

Ch 6 -28
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SPACE Matrix

Two Internal Dimensions

Financial Strength (FS)


Competitive Advantage (CA)

Ch 6 -29
Copyright 2007 Prentice Hall
SPACE Matrix

Two External Dimensions

Environmental Stability (ES)


Industry Strength (IS)

Ch 6 -30
Copyright 2007 Prentice Hall
SPACE Factors
Internal Strategic Position External Strategic Position

Financial Strength (FS) Environmental Stability (ES)


(Financial Position, FP) (Stability Position, SP)
Return on investment
Leverage Technological changes
Liquidity Rate of inflation
Working capital Demand variability
Cash flow Price range of competing products
Barriers to entry
Competitive pressure
Price elasticity of demand
Ease of exit from market
Risk involved in business
Ch 6 -31
Copyright 2007 Prentice Hall
SPACE Factors
Internal Strategic Position External Strategic Position

Competitive Advantage CA Industry Strength (IS)


(Competitive Position, CP) (Industry Position, IP)

Market share Growth potential


Product quality Profit potential
Product life cycle Financial stability
Customer loyalty Technological know-how
Competition’s capacity utilization Resource utilization
Technological know-how Ease of entry into market
Control over suppliers & distributors Productivity, capacity utilization

Ch 6 -32
Copyright 2007 Prentice Hall
Steps to Developing a SPACE Matrix
1. Select a set of variables to define FS, CA, ES, &
IS
2. Assign a numerical value:
1. From +1(worst) to +7 (best) to each FS & IS
dimension
2. From -1 (best) to -7(worst) to each ES & CA
dimension
3. Compute an average score for each FS, CA, ES,
& IS (summing the values given to the variables of each
dimension and then by dividing by the number of variables
included in the respective dimension)

Ch 6 -33
Steps to Developing a SPACE Matrix

4. Plot the average score on the appropriate


axis
5. Add the two scores on the x-axis and plot
the point. Add the two scores on the y-axis
and plot the point. Plot the intersection of
the new xy point
6. Draw a directional vector from the origin
through the new intersection point.

Ch 6 -34
Copyright 2007 Prentice Hall
SPACE Matrix
FS Aggressive
Conservative
+6 • Backward, forward, horizontal
• Market penetration +5 integration
• Market development +4 • Market penetration
• Product development +3 • Market development
• Related diversification
+2 • Product development
• Diversification (related or
+1 unrelated)
CA IS
-6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6
Defensive -2 Competitive
• Retrenchment -3 • Backward, forward, horizontal
• Divestiture integration
• Liquidation -4 • Market penetration
-5 • Market development
-6 • Product development

Copyright 2007 Prentice Hall


ES Ch 6 -35
Table: A SPACE Matrix for a
Bank Position (FP)
Financial Ratings
• The bank’s primary capital ratio is 7.23 1.0
percent, which is 1.23 percentage points over
the generally required ratio of 6 percent.
• The bank’s return on assets is negative 0.77,
compared to a bank industry average ratio of
positive 0.70. 1.0
• The bank’s net income was $183 million,
down 9 percent from a year earlier. 3.0
• The bank’s revenues increased 7 percent to
$3.46 billion. 4.0
9.0

Ch 6 -36
Table: A SPACE Matrix for a
BankPosition (IP)
Industry Ratings
• Deregulation provides geographic and 4.0
product freedom.
• Deregulation increases competition in the
banking industry. 2.0
• Pennsylvania’s interstate banking law allows
the bank to acquire other banks in New
Jersey, Ohio, Kentucky, the District of
Columbia, and West Virginia. 4.0

10.0

Ch 6 -37
Table: A SPACE Matrix for a
BankPosition (SP)
Stability Ratings
• Less-developed countries are experiencing
high inflation and political instability. -4.0 -4.0
• Headquartered in Pittsburgh, the bank
historically has been heavily dependent on
the steel, oil, and gas industries.
• These industries are depressed. -5.0
• Banking deregulation has created instability
throughout the industry. -4.0 -4.0

-13.0

Ch 6 -38
Table: A SPACE Matrix for a
Bank Position (CP)
Competitive Ratings
• The bank provides data processing services
for more than 450 institutions in 38 states. -2.0
• Superregional banks, international banks,
and nonbanks are becoming increasingly
competitive. -5.0
• The bank has a large customer base. -2.0
-9.0

Ch 6 -39
Conclusion
SP Average is -13.0 ÷ 3 = -4.33

IP Average is +10.0 ÷ 3 = 3.33

CP Average is -9.0 ÷ 3 = -3.00

FP Average is +9.0 ÷ 4 = 2.25

Directional Vector Coordinates:


 x-axis: -3.00 + (+3.33) = +0.33
 y-axis: -4.33 + (+2.25) = -2.08
The bank should pursue Competitive
Strategies.
Ch 6 -40
Strategy-Formulation Analytical
Framework
SWOT Matrix

SPACE Matrix

Stage 2: BCG Matrix


The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6 -41
Copyright 2007 Prentice Hall
BCG Matrix

Boston Consulting Group Matrix


Enhances multi-divisional firm in
formulating strategies
Autonomous divisions = business portfolio
Divisions may compete in different
industries
Focus on market-share position & industry
growth rate
Ch 6 -42
BCG Matrix

Relative Market Share Position


Ratio of a division’s own market
share in an industry to the market
share held by the largest rival firm in
that industry

Ch 6 -43
Copyright 2007 Prentice Hall
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 -44
Copyright 2007 Prentice Hall
BCG Matrix
Question Marks
Low relative market share –
compete in high-growth industry
Cash needs are high
Case generation is low

Decision to strengthen
(intensive strategies) or divest
Ch 6 -45
BCG Matrix
Stars
High relative market share and high
growth rate
Best long-run opportunities for growth &
profitability

Substantial investment to maintain or


strengthen dominant position
Integration strategies, intensive
strategies, joint ventures
Copyright 2007 Prentice Hall Ch 6 -46
BCG Matrix
Cash Cows
High relative market share, competes
in low-growth industry
Generate cash in excess of their needs
Milked for other purposes
Maintain strong position as long as
possible
Product development, concentric
diversification
If weakens—retrenchment or divestiture
Ch 6 -47
BCG Matrix

Dogs

Low relative market share & compete


in slow or no market growth
Weak internal & external position

Liquidation, divestiture, retrenchment

Ch 6 -48
Copyright 2007 Prentice Hall
Strategy-Formulation Analytical
Framework
SWOT Matrix

SPACE Matrix

Stage 2: BCG Matrix


The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6 -49
Copyright 2007 Prentice Hall
The Internal-External (IE) Matrix

 Positions an organization’s various


divisions in a nine-cell display
 Similar to BCG Matrix except the IE
Matrix:
 Requires more information about the
divisions
 Strategic implications of each matrix are
different

Ch 6 -50
Copyright 2007 Prentice Hall
Ch 6 -51
Copyright 2007 Prentice Hall
IE Matrix

 Based on two key dimensions


 The IFE total weighted scores on the x-axis
 The EFE total weighted scores on the y-
axis
 Divided into three major regions
 Grow and build – Cells I, II, or IV
 Hold and maintain – Cells III, V, or VII
 Harvest or divest – Cells VI, VIII, or IX

Ch 6 -52
Copyright 2007 Prentice Hall
IE Matrix
 Grow and build – Cells I, II, or IV
 Backward, Forward, or Horizontal Integration
 Market Penetration
 Market Development
 Product Development
 Hold and maintain – Cells III, V, or VII
 Market Penetration
 Product Development
 Harvest or divest – Cells VI, VIII, or IX
 Retrenchment
 Divestiture

Ch 6 -53
Copyright 2007 Prentice Hall
Ch 6 -54
Strategy-Formulation Analytical
Framework
SWOT Matrix

SPACE Matrix

Stage 2: BCG Matrix


The Matching Stage

IE Matrix

Grand Strategy Matrix

Ch 6 -55
Copyright 2007 Prentice Hall
Grand Strategy Matrix

Tool for formulating alternative


strategies
Based on two dimensions
Competitive position
Market growth

Ch 6 -56
Copyright 2007 Prentice Hall
RAPID MARKET GROWTH
Quadrant II Quadrant I
1. Market development 1. Market development
2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Forward integration
5. Divestiture 5. Backward integration
6. Liquidation 6. Horizontal integration
WEAK 7. Concentric diversification
STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV
POSITION
1. Retrenchment 1. Concentric diversification
2. Concentric diversification 2. Horizontal diversification
3. Horizontal diversification 3. Conglomerate
4. Conglomerate diversification
diversification 4. Joint ventures
5. Liquidation
SLOW MARKET GROWTH
Ch 6 -57
Copyright 2007 Prentice Hall
Grand Strategy Matrix

Quadrant I

Excellent strategic position


Concentration on current
markets/products
Take risks aggressively when
necessary

Ch 6 -58
Copyright 2007 Prentice Hall
Grand Strategy Matrix

Quadrant II

Evaluate present approach


How to improve competitiveness
Rapid market growth requires intensive strategy

Ch 6 -59
Copyright 2007 Prentice Hall
Grand Strategy Matrix

Quadrant III

Compete in slow-growth industries


Weak competitive position
Drastic changes quickly
Cost & asset reduction
(retrenchment)

Ch 6 -60
Copyright 2007 Prentice Hall
Grand Strategy Matrix

Quadrant IV

Strong competitive position


Slow-growth industry
Diversification to more promising
growth areas

Ch 6 -61
Copyright 2007 Prentice Hall
Strategy-Formulation Analytical
Framework

Quantitative Strategic
Stage 3:
Planning Matrix
The Decision Stage
(QSPM)

Ch 6 -62
QSPM

Quantitative Strategic Planning Matrix

Technique designed to determine the


relative attractiveness of feasible alternative
actions

Ch 6 -63
QSPM Strategic Alternatives
Key External Factors Weight Strategy 1 Strategy 2 Strategy 3
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

Ch 6 -64
Copyright 2007 Prentice Hall
Steps to Develop a QSPM

1. Make a list of the firm’s key external


opportunities/threats and internal
strengths/weaknesses in the left column
2. Assign weights to each key external and
internal factor
3. Examine the Stage 2 (matching)
matrices, and identify alternative
strategies that the organization should
consider implementing
Ch 6 -65
Copyright 2007 Prentice Hall
Steps to Develop a QSPM

4. Determine the Attractiveness Scores


5. Compare the Total Attractiveness Scores
6. Compute the Sum Total Attractiveness
Score

Ch 6 -66
Copyright 2007 Prentice Hall
A QSPM for a Retail Computer Store
STRATEGIC
ALTERNATIVES
Buy New Fully
Land Renovate
and Build Existing
New Store
Larger
Store
Key Factors Weigh AS TAS AS TAS
t
Opportunities

1. Population of city growing 10% 0.10 4 0.40 2 0.20


2. Rival computer store opening 1 mile away 0.10 2 0.20 4 0.40
3. Vehicle traffic passing store up 12% 0.08 1 0.08 4 0.32
4. Vendors average six new products/year 0.05 --- --- --- ---
5. Senior citizen use of computers up 8% 0.05 --- --- --- ---
6. Small business growth in area up 10% 0.10 --- --- --- ---
7. Desire for Web sites up 18% by Realtors 0.06 --- --- --- ---
8. Desire for Web sites up 12% by small firms 0.06 --- --- --- ---
A QSPM for a Retail Computer Store
STRATEGIC
ALTERNATIVES
Buy New Fully
Land Renovate
and Build Existing
New Store
Larger
Store
Key Factors Weigh AS TAS AS TAS
t
Threats

1. Best Buy opening new store nearby in 1 0.15 4 0.60 3 0.45


year
2. Local university offers computer repair 0.08 --- --- --- ---
3. New bypass for Hwy 34 in 1 year will
divert traffic 0.12 4 0.48 1 0.12 0.12 4 0.48 1 0.12
4. New mall being built nearby 0.08 2 0.16 4 0.32
5. Gas prices up 14% 0.04 --- --- --- ---
6. Vendors raising prices 8% 0.03 --- --- --- ---
1.00
A QSPM for a Retail Computer Store
STRATEGIC
ALTERNATIVES
Buy New Fully
Land Renovate
and Build Existing
New Store
Larger
Store
Key Factors Weigh AS TAS AS TAS
t
Strengths

1. Inventory turnover increased from 5.8 to 0.05 --- --- --- ---
6.7
2. Average customer purchase increased
from $97 to $128 0.07 2 0.14 4 0.28 0.07 2 0.14 4 0.28
3. Employee morale is excellent 0.10 — — 0.10 --- --- ---- ---
4. In-store promotions resulted in 20%
increase in sales 0.05 --- --- --- ---
5. Newspaper advertising expenditures
increased 10% 0.02 --- --- --- ---
A QSPM for a Retail Computer Store
STRATEGIC
ALTERNATIVES
Buy New Fully
Land Renovate
and Build Existing
New Store
Larger
Store
Key Factors Weigh AS TAS AS TAS
t
Strengths (Contd)

6. Revenues from repair/service segment of


store up 16% 0.15 4 0.60 3 0.45
7. In-store technical support personnel have
MIS college degrees 0.05 — — 0.05 --- --- --- ---
8. Store’s debt-to-total assets ratio declined
to 34% 0.03 4 0.12 2 0.06 0.03 4 0.12 2 0.06
9. Revenues per employee up 19% 0.02 --- --- --- ---
A QSPM for a Retail Computer Store
STRATEGIC
ALTERNATIVES
Buy New Fully
Land Renovate
and Build Existing
New Store
Larger
Store
Key Factors Weigh AS TAS AS TAS
t
Weaknesses

1. Revenues from software segment of store 0.10 --- --- --- ---
down 12%
2. Location of store negatively impacted by
new Hwy 34 0.15 4 0.60 1 0.15 0.15 4 0.60 1 0.15
3. Carpet and paint in store somewhat in
disrepair 0.02 1 0.02 4 0.08 0.02 1 0.02 4 0.08
4. Bathroom in store needs refurbishing 0.02
1 0.02 4 0.08 0.02 1 0.02 4 0.08
5. Revenues from businesses down 8% 0.04 3 0.12 4 0.16
A QSPM for a Retail Computer Store
STRATEGIC
ALTERNATIVES
Buy New Fully
Land Renovate
and Build Existing
New Store
Larger
Store
Key Factors Weigh AS TAS AS TAS
t
Weaknesses (Contd)

6. Store has no Web site 0.05 --- --- --- ---


7. Supplier on-time delivery increased to 2.4
days 0.03 --- --- --- ---
8. Often customers have to wait to check out 0.05 2 0.10 4 0.20
Total 1.00 4.36 3.27
QSPM

Limitations

Requires intuitive judgments & educated


assumptions
Only as good as the prerequisite inputs

Ch 6 -73
Copyright 2007 Prentice Hall
QSPM

Advantages

Sets of strategies considered


simultaneously or sequentially
Integration of pertinent external &
internal factors in the decision making
process

Ch 6 -74
Copyright 2007 Prentice Hall
Cultural Aspects of Strategy
Choice

Organization Culture

Successful strategies depend on the


degree of consistency with the firm’s
culture

Ch 6 -75
Copyright 2007 Prentice Hall
Politics of Strategy Choice

Politics in Organizations
In the absence of objectivity, political
factors sometimes dictate strategies,
and this is unfortunate.
Management hierarchy
Career aspirations
Allocation of scarce resources

Ch 6 -76
Politics of Strategy Choice
Political Tactics for Strategists

Equifinality: It is often possible to achieve


similar results using different means or
paths.
Satisfying: Achieving satisfactory results
with an acceptable strategy is far better
than failing to achieve optimal results with
an unpopular strategy.
Generalization: Shifting focus from specific
issues to more general ones may increase
strategists’ options for gaining Ch 6 -77
Copyright 2007 Prentice Hall
organizational commitment.
Politics of Strategy Choice

Political Tactics for Strategists


Higher-order issues: By raising an
issue to a higher level, many short-
term interests can be postponed in
favor of long-term interests. For
instance, by focusing on issues of
survival, the airline and automotive
industries were able to
persuade unions to make concessions
on wage increases.
 Political
Copyright access
2007 Prentice Hall on important issues: Ch 6 -78
Governance Issues

Board of Directors Roles & Responsibilities

Control & oversight over management


Adherence to legal prescriptions
Consideration of stakeholder interests
Advancement of stockholder rights

Ch 6 -79
Copyright 2007 Prentice Hall
Corporate Governance Issues

Business Week’s “Principles of Good Governance”

1. No more than 2 directors are current or former company


executives
2. No directors do business with the company
3. Audit, compensation, and nominating committees made up
of outside directors
4. Each director owns a large equity stake in the company
5. At least one outside director with extensive experience
6. Fully employed directors sit on no more than 4 boards –
Retirees on no more than 7
7. Each director attends at lest 75% of all meetings

Ch 6 -80
Copyright 2007 Prentice Hall
Corporate Governance Issues

Business Week’s “principles of good governance”

8. Board meets regularly without management present


9. Audit committee meets at least four times a year
10. Board is frugal on executive pay, diligent in CEO succession,
and prompt to act when trouble arises
11. CEO is not also the Chairperson of the Board
12. Shareholders have considerable power and information to
choose & replace directors
13. Stock options are considered a corporate expense
14. No interlocking directorships

Ch 6 -81
Copyright 2007 Prentice Hall
For Review (Chapter 6)

Key Terms & Concepts

Aggressive Quadrant Business Portfolio

Attractiveness Scores
Cash Cows
(AS)

Competitive Advantage
Boards of Directors
(CA)

Boston Consulting
Competitive Quadrant
Group (BCG) Matrix

Ch 6 -82
Copyright 2007 Prentice Hall
For Review (Chapter 6)

Key Terms & Concepts

Conservative Quadrant Dogs

Environmental Stability
Culture
(ES)

Financial Strength
Defensive Quadrant
(FS)

Directional Vector Governance

Ch 6 -83
Copyright 2007 Prentice Hall
For Review (Chapter 6)

Key Terms & Concepts

Internal-External (IE)
Grand Strategy Matrix
Matrix

Halo Error Matching

Industry Strength
Matching Stage
(IS)

Quantitative Strategic
Input Stage
Planning Matrix (QSPM)

Ch 6 -84
Copyright 2007 Prentice Hall
For Review (Chapter 6)

Key Terms & Concepts

Question Marks Stars

Relative Market Share Strategic Position & Action


Position Evaluation (SPACE)

Sum Total Attractiveness


SO Strategies
Score (STAS)

ST Strategies Sustainability

Ch 6 -85
Copyright 2007 Prentice Hall
For Review (Chapter 6)

Key Terms & Concepts

Strengths, Weaknesses
WO Strategies
Opportunities, Threats SWOT

Total Attractiveness
WT Strategies
Scores (TAS)

Ch 6 -86
Copyright 2007 Prentice Hall

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