Strategic Management

Concepts & Cases

Fred R. David
Chapter 6:
Strategy Analysis &
Choice
PowerPoint Slides By:
Anthony F. Chelte
Western New England College

Ch. 6-1
© 2001 Prentice Hall
 Comprehensive Strategic Management Model

External
Audit

Chapter 3

Vision Strategy Implement

Strategies Implement Measure &
& Analysis Strategies:
In Strategies: Evaluate
Mission & Marketing,
Performance
Statements Action Mgmt Issues
Fin/Acct,
Choice
R&D, CIS
Chapter 5 Chapter 7 Chapter 9
Chapter 2 Chapter 6 Chapter 8

Internal
Audit

Chapter 4

Ch. 6-2
© 2001 Prentice Hall
Strategy Analysis & Choice
“Strategic management is not a box of tricks or
a bundle of techniques. It is analytical
thinking and commitment of resources to
action. But quantification alone is not
planning. Some of the most important issues
in strategic management cannot be quantified
at all.”

—Peter Drucker—

Ch. 6-3
© 2001 Prentice Hall
Strategy Analysis & Choice

“Whether it’s broke or not, fix it—make it

better. Not just products, but the whole
company if necessary.”

—Bill Saporito—

Ch. 6-4
© 2001 Prentice Hall
Strategy Analysis & Choice

“Planning is often doomed before it ever

starts, either because too much is
expected of it or because not enough is
put into it.”

—T. J. Cartwright—
Ch. 6-5
© 2001 Prentice Hall
Strategy Analysis & Choice

Strategic Analysis and Choice:

Making subjective decisions based on

objective information

Ch. 6-6
© 2001 Prentice Hall
 Strategy Analysis & Choice

Strategic Analysis and Choice:

• Generate feasible alternatives

• Evaluate alternatives
• Select specific course of action

Ch. 6-7
© 2001 Prentice Hall
Strategy Analysis & Choice
Generating & Selecting Strategies

 Develop set of most attractive alternative

strategies
 Determine for the set
• Advantages
• Disadvantages
• Trade-offs
• Costs
• Benefits
Ch. 6-8
© 2001 Prentice Hall
Strategy Analysis & Choice
Generating & Selecting Strategies

 Involve a broad mix of personnel

• Representation from each department/function
• Provides opportunity to gain understanding of
firm’s direction
• Provides vehicle to develop commitment to
attainment of organizational objectives

Ch. 6-9
© 2001 Prentice Hall
Strategy Analysis & Choice
Generating & Selecting Strategies

 Evaluate each alternative

• Internal and external audit information
• Firm’s mission statement
• Listed in writing
• Ranked in order of attractiveness

Ch. 6-10
© 2001 Prentice Hall
Strategy-Formulation Analytical Framework

Stage 1: The Input Stage

Stage 2: The Matching Stage

Stage 3: The Decision Stage

Ch. 6-11
© 2001 Prentice Hall
 Strategy-Formulation Analytical Framework

Stage 1: The Input Stage

External Internal
Competitive
Factor Factor
Profile
Evaluation Evaluation
Matrix
Matrix (EFE) Matrix (IFE)

Ch. 6-12
© 2001 Prentice Hall
 Strategy-Formulation Analytical Framework

Stage 2: The Matching Stage

Threats Strategic Boston Internal-

Opportunities Position & Consulting External Grand
Weaknesses Action Group Matrix Strategy
Strengths Evaluation Matrix (IE) Matrix
(TOWS) (SPACE) (BCG)

Ch. 6-13
© 2001 Prentice Hall
Strategy-Formulation Analytical Framework

Stage 3: The Decision Stage

Quantitative Strategic
Planning Matrix
(QSPM)

Ch. 6-14
© 2001 Prentice Hall
Strategy Analysis & Choice
Stage 1: The Input Stage

 Provides Basic Input for Stages 2 and 3

• External Factor Evaluation Matrix (EFE)
• Internal Factor Evaluation Matrix (IFE)
• Competitive Profile Matrix

Ch. 6-15
© 2001 Prentice Hall
Strategy Analysis & Choice
Stage 2: The Matching Stage

 Strategy is characterized by the

organizational match between

• Internal resources and skills

• Opportunities & risks created by external
factors

Ch. 6-16
© 2001 Prentice Hall
 Matching Key Factors
Key Internal Factor Key External Factor Resultant Strategy

Ch. 6-17
© 2001 Prentice Hall
 Four Types of Strategies

Threats
Opportunities
Weaknesses
Strengths
(TOWS)

Ch. 6-18
© 2001 Prentice Hall
 SO Strategies

Threats
Opportunities
Weaknesses
Strengths
(TOWS)

Ch. 6-19
© 2001 Prentice Hall
 WO Strategies

Threats
Opportunities
Weaknesses
Strengths
(TOWS)

Ch. 6-20
© 2001 Prentice Hall
 ST Strategies

Threats
Opportunities
Weaknesses
Strengths
(TOWS)

Ch. 6-21
© 2001 Prentice Hall
 WT Strategies

Threats
Opportunities
Weaknesses
Strengths
(TOWS)

Ch. 6-22
© 2001 Prentice Hall