Quantitative Strategic Planning

Matrix

SUBMITTED AND PRESENTED BY

K.VAISHNAVI
19L31E0124
STRATEGIC MANAGEMENT
• Strategic planning is something that takes place in all organizations. In fact,
it could be said that strategic planning and decision making takes place
every single day. Every choice that comes across the desk of a manager or
owner is strategic in nature, as even small choices are going to impact the
future of the organization in some manner. As the leader of an organization,
it is critical that you make quality, logical decisions on a daily basis.
• Some of the decisions you make are going to be based on little more than a
‘gut’ feeling. However, trusting your gut instinct isn’t always enough, as
you will sometimes want to have numbers behind the choices you make.
When that is the case, the Quantitative Strategic Planning Matrix – or
QSPM – is a helpful tool. When you know how to use this tool effectively,
it can provide you with some justification for the choices you make.
The ultimate goal of the QSPM method is to pick the right strategy to move
forward with based on the information available at hand. 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
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.
THANKYOU