Strama 1 Lecture 2023

STRAMA 1
BY:
DR. NEIL CATLY BERMUDEZ
REVIEW OUTLINE
STRAMA 1
• INTRODUCTION ( CASE BACKGROUND )
• ENVIRONMENT ANALYSIS
• COMPETETIVE PROFILE MATRIX
• ASSUMPTIONS
• STATEMENT OF THE PROBLEM – supported by evidences
STRAMA 2 A. Tows Matrix

• ALTERNATIVE COURSE OF ACTION B. Internal-External Matrix
• RECOMMENDED ACA C. Grand Strategy Matrix
• PLAN OF ACTION D. Summary of Strategies
• FINANCIAL PROJECTION w/ ASSUMPTION
INTRODUCTION ( case background )
• Provide a summary of the salient case facts
that indicate the company’s mission, past and
current objectives, strategies, as well as the
financial situation of the company
• Discuss the current issues and concerns

being faced by the company’s management
ENVIRONMENT SCANNING
GENERAL ENVIRONMENT
EXTERNAL INDUSTRY ENVIRONMENT
ORGANIZATION
ENVIRONMENT
V
INTERNAL
2.A – General Environment
STEEP Analysis
SOCIO-CULTURAL Values, mores, customs and

DEMOGRAPHIC society composition
TECHNOLOGICAL Problem-solving
interventions
Exchange of materials,
ECONOMIC money, energy, and
information
ENVIRONMENT Natural resources
POLITICO-LEGAL Laws and regulations

Socio-Cultural Demographic Forces
• LIFESTYLE CHANGES “SAMPLE
• CLIENT ACTIVISM
CONDITIONS”
• RATE OF FAMILY FORMATION
• GROWTH RATE OF POPULATION
• AGE DISTRIBUTION OF POPULATION
• REGIONAL SHIFTS IN POPULATION
• LIFE EXPECTANCIES
• BIRTH RATES
• ATTITUDES TOWARD BUSINESS
• BUYING HABITS
• ATTITUDES TOWARD QUALITY
• LEVEL OF EDUCATION
Technological Forces
“SAMPLE
CONDITIONS”
• GOVERNMENT SPENDING
• FOCUS OF R & D EFFORTS
• RATE OF NEW PRODUCT INNOVATIONS
• PRODUCTIVITY IMPROVEMENTS
• AUTOMATION AND ROBOTICS
• TECHNO-TRANSFER DEVELOPMENTS
Economic Forces
“SAMPLE • GNP TRENDS

CONDITIONS” • INTEREST RATES
• INFLATION RATES
• MONETARY POLICY
• FISCAL POLICY
• UNEMPLOYMENT RATE
• ENERGY AVAILABILITY AND COSTS
• WAGE/PRICE CONTROLS
• CREDIT AVAILABILITY
• LEVEL OF DISPOSABLE INCOME
• CONSUMPTION PATTERNS
• PRICE FLUCTUATIONS
Economic Forces
“SAMPLE
CONDITIONS”
• MONEY MARKET RATES
• PEOPLE’S PROPENSITY TO SPEND
• GOV’T BUDGET DEFICITS
• WORKER PRODUCTIVITY LEVELS
• DOLLAR VALUE IN WORLD MARKETS
• PRICE FLUCTUATIONS
• EXPORT OF LABOR AND CAPITAL
• INCOME DIFFERENCES
• DEMANDS SHIFTS FOR
GOODS/SERVCES
Environment Forces
“SAMPLE
CONDITIONS”
• AVAILABILITY OF RAW MATERIALS
• LIMITATION OF NATURAL RESOURCES
• ENVIRONMENT AND ECONOMIC

DEVELOPMENT
Politico-Legal Forces
“SAMPLE
• ENVIRONMENTAL PROTECTION LAWS CONDITIONS”
• SPECIAL INCENTIVES
• LAWS ON HIRING, PROMOTION AND PAY
• GOVERNMENT STABILITY
• ATTITUDE TOWARDS FOREIGN FIRMS
• CHANGE IN TAX LAWS
• LEVEL OF GOVERNMENT SUBSIDIES
• POLITICAL CONDITIONS
• SIZE OF GOVERNMENT BUDGETS
• LOCATION/SEVERITY OF TERRORISM
• GOVERNMENT PROTESTS
Politico-Legal Forces
“SAMPLE • GOV’T REGULATIONS OR DEREGULATIONS

CONDITIONS” • CHANGES IN TAX LAWS
• SPECIAL TARIFFS
• POLITICAL ACTION COMMITTEES
• VOTER PARTICIPATION RATES
• GOVERNMENT PROTESTS
• CHANGES IN PATENT LAWS
• EQUAL EMPLOYMENT LEGISLATION
• GOVERNMENT SUBSIDIES
• COUNTRY-COUNTRY RELATIONSHIPS
• LOBBYING ACTIVITIES
• WORLD OIL, CURRENCY AND LABOR
MARKETS
• TERRORIST ACTIVITIES
• List ‘opportunities and threats’ conditions
2. ENVIRONMENT ANALYSIS
A. GENERAL ENVIRONMENT
A.1 OPPORTUNITIES
A.1.1 SOCIO-CULTURAL-DEMOGRAPHIC FORCES
• The average US retail purchaser of a motorcycle is a married man in his mid to late
forties.
A.1.2 ECONOMIC FORCES
• The growing upper class in India now warrants opening dealership there.
A.2 THREATS
A.2.1 SOCIO-CULTURAL-DEMOGRAPHIC FORCES
• The average US retail purchaser of a new motorcycle has a median household
income of approximately $87,000
A.2.2 ECONOMIC FORCES
• Discretion spending on high-end consumer goods
• Basic consumer and commercial financing problems
• Economic crisis
A.2.3 POLITICO-LEGAL FORCES
• High import tariffs of 90% on motorcycle
• Not tabular answer
FORCES OPPORTUNITIES THREATS
Socio-cultural-
demographic  
Technological
Economic
 
Environment
Politico-Legal

 - conditions
2.B – Operating Environment
• Influence firm’s major operations
• External conditions not under the control of the firm
• Not problems but “given” conditions
• Opportunities or threats
OPPPORTUNITIES - favorable conditions that could affect the strategic

decisions of the company (Avenues for growth)
THREATS – unwanted conditions that could affect the business
+
environment (Hindrances for growth)
-
Group of firms producing similar product or service
Potential
Entrants
Power of Industry Power of

Suppliers Competitors Buyers
Shareholders, Rivalry Among Community

Creditors Firms Perceptions
Threats of
Substitute
Rivalry Among Existing Firms
“SAMPLE
CONDITIONS”
NO. OF COMPETITORS Size and Power
FIXED COSTS Airlines’ cheap fare
PRODUCT Focus on price/service
CAPACITY Production Volume

Potential Entrants
Barriers to Entry
“SAMPLE
CONDITIONS”
ECONOMIES OF SCALE Cost advantage
SWITCHING COSTS Computer software
PRODUCT Customer loyalty

DIFFERENTIATION
CAPITAL REQUIREMENTS Rent or sell photocopier
ACCESS TO DISTRIBUTION Secure distribution

Entry Barriers in Some Industries
“SAMPLE
CONDITIONS”
INDUSTRY BARRIER
Steel High fixed asset requirement
Beer Heavy advertising expenses
Petroleum Scarce raw materials
Electric Difficult government requirements
Appliance Credit sales required
Retail Auto Ability to handle trade-ins
Drug Products protected by patents
Network Television Control of key distribution channels

Substitute Products
“SAMPLE
CONDITIONS”
APPEAR
DIFFERENT
BUT
SATISFY SAME
NEED
Bargaining Power of Suppliers
“SAMPLE
CONDITIONS”
• Supplier industry dominated

by few firms
• Unique product lead to high
switching costs
• Substitutes not available
• Suppliers able to integrate
forward
Bargaining Power of Buyers
“SAMPLE
CONDITIONS”
• Purchase large proportion

of seller’s product
• Potential to integrate
backward
• Plenty of alternative buyers
• Little cost of changing
buyers
Other Operating Environment Forces
• Industry growth
• Shareholders’ actions
• Creditors’ actions
• Community perception
“Operating Forces” ANALYSIS
FORCES OPPORTUNITY THREAT
Rivalry among competing firms Competitors doing bad Competitors doing good
Potential entrants Ease of entry Entry difficult
Substitute products - Threat
Bargaining power of suppliers With control Without control
Bargaining power of buyers With control Without control
Industry growth Increasing Declining
Shareholders’ actions Positive Negative
Creditors’ actions Positive Negative
Community perception Positive Negative
• List ‘opportunities and threats’ conditions
B. OPERATING ENVIRONMENT
B.1 OPPORTUNITIES
B.1.1 RIVALRY AMONG COMPETING FIRMS
• The competitors currently have production and sales volumes that are lower and have
considerable lower US market share.
• Currently, Yamaha has seen decreasing motorcycle sales in Japan, the US, and Europe,
Yamaha recently has undertaken temporary factory shutdown in Japan and bonus pay
reductions at least through 2009.
B.1.2 INDUSTRY GROWTH
• The European heavyweight motorcycle market is roughly 80% of the size of US market.
B.1.3 COMMUNITY PERCEPTIONS
• Customer relate tot and find motivation in this American dream that became a reality.
B.2 THREATS
B.2.1 RIVALRY AMONG COMPETING FIRMS
• Yamaha is faring better in Southeast Asia and Latin America.
• Major competitors are based outside the US and generally have financial and marketing
resources that are higher.
FORCES OPPORTUNITIES THREATS
Rivalry among competing firms  

Potential entrants
Substitute products
Bargaining power of suppliers
Bargaining power of buyers
Industry growth 
Shareholders’ actions
Creditors’ actions
Community perception 
 - conditions
C. Internal
Environment
2.C – Internal Environment
• Status of the firm’s resources and capabilities
• Conditions under the control of the firm
• Source of major problem (weaknesses)
• Strengths or Weaknesses
STRENGTHS – capabilities that enhance the competitive position of the

firm or what the firm is good at doing (Competitive Asset) +
WEAKNESSES – unwanted conditions that weakens its competitive
position or what it lacks or does poorly (Liability) -
Functional Analysis
• MARKETING
• PRODUCTION/OPERATION
• FINANCE
• ORGANIZATION & MANAGEMENT
• HUMAN RESOURCES
• RESEARCH AND DEVELOPMENT
• INFORMATION SYSTEMS
Marketing Analysis
“SAMPLE
CONDITIONS”
Selection of specific areas for
MARKET marketing concentration and
expressed in terms of market,
POSITION
product and geographic
Discover which niches to seek,

MARKET which products to develop and
SEGMENTATION ensure the firms products don’t
compete with each other
Combination of key variables to

MARKETING
effect demand and gain
MIX competitive advantage
Production/Operation Analysis
“SAMPLE
CONDITIONS”
QUANTITY
QUALITY
RIGHT COST
TIME
Finance Analysis
“SAMPLE
CONDITIONS”
RAISING OF CASH FROM
INTERNAL AND
EXTERNAL SOURCES
MONITORING OF FLOW
OF FUNDS TO
OPERATIONS
Ascertains the best

sources and use of funds,
and controls their use
Organization & Mgt. Analysis
“SAMPLE
CONDITIONS”
VISION/MISSION
CULTURE/VALUES
ORG’L. STRUCTURE
MANAGEMENT
Human Resource Analysis
“SAMPLE
CONDITIONS”
USE OF TEAMS
UNION RELATIONS
QUALITY OF WORK
LIFE
Research & Dev’t. Analysis
“SAMPLE
CONDITIONS”
• Product development –
improving product quality
• Process development –
improving manufacturing
processes to reduce costs
Information Systems Analysis
“SAMPLE
CONDITIONS”
• System technology –
manual, computer-based
• Office automation system
• Decision support system
• Electronic data sharing
• Internet & world wide web
• List ‘Strengths and Weaknesses conditions
C. INTERNAL ENVIRONMENT
C.1 STRENGTHS
C.1.1 MARKETING
• Harley’s suggested retail price for its motorcycles is generally higher than
its competitors’.
• In the first half of 2010, Harley-Davidson opened its first five dealerships in
India.
C.1.2 PRODUCTION OPERATIONS
• Harley is closing several facilities
C.1.3 ORGANIZATION & MANAGEMENT
• Harley’s mission statement is: We fulfill dreams through the experiences
of motorcycling, by providing to motorcyclists and to the general public
an expanding line motorcycles, branded products and services in
selected market segments.
C.2 WEAKNESSES
C.2.1 MARKETING
• Its motorcycle sales decreased 13% during the first two months of 2009.
FUNCTIONAL AREA STRENGTHS WEAKNESSES
Marketing  
Production/Operations 
Finance
Organization & Mgt. 
Human Resources
Research & Development
Information System
 - conditions
#2D
Derivation of Strategic Factors
Influencing firm’s
1. Case Background List of SWOT Most Imp’t.
success (sales, mkt.
2. Environment Analysis Conditions Conditions
share, profit)
A. General Environment
O/T
“STEEP FORCES”
Key Strategic External
B. Operating “4O/4T” D. EFE Matrix
Factors
Environment “Porter’s O/T
5-Forces”
C. Internal Environment S/W Key Strategic Internal
Factors “4S/4W” E. IFE Matrix
“Functional Areas”
External Factor Evaluation
Identify and prioritize key strategic factors identified in the
analysis of the general and operating environments
1. List the key external factors as identified in the analysis of the external environment.
List the opportunities first and then the threats.
2. Assign to each factor a weight that ranges from 0.0 (not important) to 1.0 (very
important). Weight indicates the relative importance of that factor to being
successful in the firm’s industry. Opportunities often receive higher weights, but
threats too can receive lighter weights if they are severe or threatening. Appropriate
weights can be determined by comparing successful with unsuccessful competitors.
The sum of all weights assigned to the factors must equal 1.0.
3. Assign ratings to each key external factor to indicate how effectively the firm’s
current strategies respond to the factor. Use (1) poor response, (2) average response,
(3) above average response, and (4) superior response.
4. Multiply each factor’s weight by its rating to determine a weighted score.
5. Sum the weighted scores for each variable to determine the total weighted score for
the organization.
“Weights are Industry-based whereas ratings are

company based.”
External Factor Evaluation (EFE) Matrix
• Test of present strategy/activities’ appropriateness to key strategic factors
KEY EXTERNAL WEIGHT RATING WEIGHTED RATING VALUES

FACTORS SCORE
OPPORTUNITIES (4) – superior response
1. (3) – above ave.
2. response
3. (2) – ave. response
4. (1) – poor response
THREATS Overall Rating:

1. >2.5 – high response
2. 2.5 – medium response
3. <2.5 – low response
4.
TOTAL (Overall Rating) Conclusion:
WEIGHTED Firm’s strategies
SCORE 1.00 - (responding or not)
External Factor Evaluation (EFE) Matrix
List most important Relative importance Action taken by Explain how weight
conditions or key of factor to firm’s firm relative to and rating were
strategic factors (KSF) success factor based on estimated
case facts
WHAT? HOW? WHY?
FACTORS SCORE
1. KSF A 0.31 (3) – above ave. response
2. KSF B 0.16 (2) – ave. response
3. KSF C 0.10 (1) – poor response
4. KSF D 0.05

1. KSF E 0.20 >2.5 – high response
2. KSF F 0.08 2.5 – medium response
3. KSF G 0.06 <2.5 – low response
4. KSF H 0.04
TOTAL WEIGHTED (Overall Rating) Conclusion:

SCORE 1.00 - Firm’s strategies
(responding or not)
Industry Company
-based -based
Derivation of Key Strategic Factors
List of SWOT Influencing firm’s
1. Case Background Most Imp’t.
Conditions success (sales, mkt.
2. Environment Analysis Conditions
share, profit)
O/T
“STEEP FORCES”
Key Strategic External
B. Operating “4O/4T” D. EFE Matrix
Factors
Environment “Porter’s O/T
5-Forces”
C. Internal Environment
KEY EXTERNAL FACTORS WEIGHT RATING WEIGHTED RATING VALUES
SCORE
OPPORTUNITIES:
1. Global markets are practically 0.31 4 1.24 (4) – superior

untapped by smokeless tobacco market response
(3) – above ave.
2. Increased demand caused by public 0.16 4 0.64 response
banning of smoking (2) – ave. response
3. More social pressure to quit smoking, 0.10 4 0.40 (1) – poor response
thus leading users to switch to
alternatives
4. Increasing health consciousness 0.05 3 0.15
THREATS:
1. Legislation against the tobacco 0.20 3 0.60 Overall Rating:

industry >2.5 – high
response
2. Production limits on tobacco output 0.08 2 0.16 2.5 – medium
response
3. Bad media exposure from the Federal 0.06 1 0.06 <2.5 – low response
Drug Administration
4. High taxes on tobacco products 0.04 3 0.12
TOTAL WEIGHTED SCORE 1.00 - 3.37
“Firm’s strategies take advantage of existing opportunities and minimize

potential adverse effects of threats.”
2.D - External Factor Evaluation Matrix
• Prepare proforma table with pre-computed weights

FACTORS SCORE
1. 0.31 (3) – above ave.
2. 0.16 response
3. 0.10 (2) – ave. response
4. 0.05 (1) – poor response

1. 0.20 >2.5 – high response
2. 0.08 2.5 – medium response
3. 0.06 <2.5 – low response
4. 0.04
WEIGHTED Firm’s strategies
SCORE 1.00 - (responding or not)
2 . E
#
Internal Factor Evaluation
Summarizes and evaluates major strengths and weaknesses in the
functional areas of business
1. List the key internal factors as identified in the analysis of company
environment. List the strengths first and then weakness.
2. Assign to each factor a weight that ranges from 0.0 (not important) to 1.0
(very important). Weight indicates the relative importance of that factor to
being successful in the industry. Regardless of whether a key factor is an
internal strength or weakness, factors considered to have the greatest effect
on organizational performance should ne assigned the highest weights. The
sum of all weights assigned to the factors must equal 1.0.
3. Assign ratings to each key internal factor to indicate how effectively the firm’s
current strategies respond to the factor. Use (1) major weakness, (2) minor
weakness, (3) minor strength, and (4) major strength.
5. Sum the weighted scores for each variable to determine the total weighted
score for the organization.

company based.”
Internal Factor Evaluation (IFE) Matrix
• Test of present strategy/activities’ effect to key strategic factors
KEY INTERNAL WEIGHT RATING WEIGHTED RATING VALUES

FACTORS SCORE
S (4) – major strength
1. (3) – minor strength
2. (2) – minor weakness
3. (1) – major weakness
4.
W Overall Rating:
1. >2.5 – strong internal
2. position
3. 2.5 – average internal
4. position
<2.5 – weak internal
position
WEIGHTED 1.00 - Firm’s internal position
SCORE is (strong or weak)
Internal Factor Evaluation (IFE) Matrix
List most important Relative importance Action taken by Explain how weight
conditions or key of factor to firm’s firm relative to and rating were
strategic factors (KSF) success factor based on estimated
case facts
WHAT? HOW? WHY?
FACTORS SCORE
Strengths (4) – major strength

1. KSF A 0.30 (3) – minor strength
2. KSF B 0.17 (2) – minor weakness
3. KSF C 0.11 (1) – major weakness
4. KSF D 0.04
Weaknesses Overall Rating:

1. KSF E 0.21 >2.5 – strong internal
2. KSF F 0.09 position
3. KSF G 0.05 2.5 – average internal
4. KSF H 0.03 position
position
TOTAL WEIGHTED (Overall Rating) Conclusion:
SCORE 1.00 - Firm’s internal position is
(strong or weak)
Industry Company
-based -based
Influencing firm’s
1. Case Background List of SWOT Most Imp’t.
success (sales, mkt.
2. Environment Analysis Conditions Conditions
share, profit)
“STEEP FORCES”
B. Operating
Environment “Porter’s
5-Forces”
C. Internal Environment S/W Key Strategic Internal
D. EFE Matrix
KEY INTERNAL FACTORS WEIGHT RATING WEIGHTED RATING VALUES
SCORE
STRENGTHS:
1. Largest casino company in the 0.30 4 1.20 (4) – major strength
United States (3) – minor strength
2. Room occupancy over 95% in Las 0.17 4 0.68 (2) – minor weakness
Vegas (1) – major weakness
3. Increasing free cash flows 0.11 3 0.33
4. Buffets at most facilities 0.05 3 0.12
WEAKNESSES:
1. Little diversification 0.21 2 0.42 Overall Rating:
>2.5 – strong internal
2. Recent loss of joint ventures 0.09 1 0.09 position
2.5 – average internal
3. Most properties location in Las 0.05 2 0.10 position
Vegas <2.5 – weak internal
4. Limited parking space 0.03 1 0.03 position
TOTAL WEIGHTED SCORE 1.00 - 2.97
“Weighted score of 2.97 – firm’s internal position is strong.”

2.E - Internal Factor Evaluation (IFE )Matrix

FACTORS SCORE
Strength (4) – major strength
1. 0.30 (3) – minor strength
2. 0.17 (2) – minor weakness
3. 0.11 (1) – major weakness
4. 0.04
Weakness Overall Rating:

1. 0.21 >2.5 – strong internal
2. 0.09 position
3. 0.05 2.5 – average internal
4. 0.03 position
position
WEIGHTED 1.00 - Firm’s internal position is
SCORE (strong or weak)
IL E
. F OF
# 2 P R
V E
IT I X
T R I
P E A T
OM M
C
Competitive Profile Matrix
CORPORATE
Company
BUSINESS comparison against
two (2)
major competitors, if
FUNCTIONAL
supported by
qualitative or
quantitative data in
case facts
Weights and total weighted scores in both a CPM
and EFE have the same meaning
CPM Features (different from EFE):

• Critical success factors are broader;
and even focus on internal data
• Critical success factors not grouped
into opportunities and threats
• Ratings and total weighted score for
rival firms can be compared
Identifies a firm’s major competitors and their particular strengths and
weaknesses in relation to the firm’s strategic position
1. List the critical success factors as identified in the analysis of industry
environment.
2. Assign to each factor a weight that ranges from 0.0 (not important) to 1.0
(very important). Weight indicates the relative importance of that factor to
being successful in the industry. Regardless of whether a key factor is an
internal strength or weakness, factors considered to have the greatest effect
on organizational performance should ne assigned the highest weights. The
sum of all weights assigned to the factors must equal 1.0.
3. Assign ratings to each key external factor to indicate how effectively the firm’s
current strategies respond to the factor. Use (1) major weakness, (2) minor
weakness, (3) minor strength, and (4) major strength.
5. Sum the weighted scores for each variable to determine the total weighted
score for the organization.

company based.”
Include only critical success Relative importance of Action taken by firm Explain how weight and
factors with qualitative or factor to firm’s success relative to factor based rating were estimated
quantitative data to support on case facts
comparative rating values
WHAT? HOW? WHY?

COMPANY COMPETITOR 1 COMPETITOR 2
CRITICAL SUCCESS
WEIGHT
FACTORS Weighted Weighted Weighted
Rating Rating Rating
Score Score Score
1. CSF A 0.53
2. CSF B 0.24
3. CSF C 0.15
4. CSF D 0.08
OVERALL SCORE 1.00
Industry Company
-based -based
Rating Values: 4 = major strength, 3 = minor strength

2 = minor weakness, 1 = major weakness
• Determine areas for improvement
CRITICAL SUCCESS
WEIGHT
Score Score Score
1. MARKET SHARE 0.53 3 1.59 2 1.06 2 1.06
2. PRICE
COMPETITIVENESS 0.24 1 0.24 4 0.96 1 0.24
3. FINANCIAL POSITION 0.15 2 0.30 1 0.15 4 0.60

4. PRODUCT QUALITY 0.08 4 0.32 3 0.24 3 0.24
OVERALL SCORE 1.00 - 2.45 - 2.41 - 2.14

Conclusion: Company is the Strongest.

“Numbers reveal the relative strength of firms, their implied precision is an illusion. The aim is to
assimilate and evaluate information in a meaningful way that aids in decision making.”
• Consider critical success factors with case facts
Critical Success Factors

MANUFACTURING-RELATED • Low-cost production efficiency
• Quality of manufacture
• High utilization of fixed assets
• Low-cost plant locations
• High labor productivity
• Manufacturing flexibility
DISTRIBUTION-RELATED • Strong network of distributors/dealers

• Ample sample on retailers shelves
• Company-owned retail outlets
• Low distribution costs
• Fast delivery
MARKETING-RELATED • Well-trained effective sales force

• Dependable service/technical assistance
• Breadth of product line and product selection
• Merchandising skills
• Attractive styling/packaging
• Customer guarantees and warrantees
• Consider critical success factors with case facts
Critical Success Factors

TECHNOLOGY-RELATED • Scientific research expertise
• Production process innovation capability
• Product innovation capability
SKILLS-RELATED • Superior talent

• Quality control know-how
• Design expertise
• Ability to come up with clever, catchy ads
• Ability to get newly R&D developed products into market
very quickly
ORGANIZATIONAL CAPABILITY • Superior information systems

• Ability to respond quickly to shifting markets
• More experienced and managerial know-how
OTHERS • Favorable image/reputation with buyers

• Overall low cost, convenient locations
• Pleasant, courteous employees
• Access to financial capital
2.F - Competitive Profile Matrix

CRITICAL SUCCESS
WEIGHT
Score Score Score
1. 0.53
2. 0.24
3. 0.15
4. 0.08
OVERALL SCORE 1.00

2 . G S
# I ON
P T
U M
S S
A
Assumptions
• Conditions based on case facts that must exist for firm to succeed
• Assumptions formulated as positive conditions
“Assumptions”
GENERAL General Environment
Stability
OPERATING
Industry Growth
Prospects
INTERNAL Company’s Competitive

Position
Positive conditions:
Assumptions OPPORTUNITIES/
STRENGTHS
“STEEP” Forces
Socio-Cultural-Demographic, General Environment
Technological, Economic, Stability
Environment, Politico-Legal
“Porter’s 5 & Other Forces”

Rivalry of competitors, Potential
entrants, Substitute products, Industry Growth Prospects
bargaining power of suppliers/buyers,
Industry growth,
Shareholders/Creditors’ actions,
Community perception
Marketing, Production, Finance, Company’s Competitive
Orgn. & Mgt., Human Resources, Position
Research & Devt., Accounting,
Information Systems
1. Case Background List of SWOT Most Imp’t. Influencing firm’s
2. Environment AnalysisConditions Conditions success (sales, mkt.
share, profit)
“STEEP FORCES” O/T
B. Operating Environment Key Strategic External
“4O/4T” D. EFE Matrix
“Porter’s 5-Forces” O/T Factors
C. Internal Environment
“Functional Areas” S/W Key Strategic Internal
F. Competitive Profile Matrix
G. Assumptions
G.1 General Environment stability:
The __(STEEP)__ environment/s is/are stable since ___ (EFE KSF –Gen. “O”)___.
G.2 Industry Growth Prospects:

The market presents a promising opportunity due to __(EFE KSF-Oper. “O”)___.
G.3 Company’s Competitive Position:

The competitive strengths of the company are ___ (IFE KSF – “45”)_____.
2.G – Assumptions
• Develop assumptions based on SWOT - EFE/IFE findings
G.1 General Environment Stability

The __(STEEP)__ environment/s is/are stable since ___ (EFE KSF –Gen. “O”)___.
The economic and political environments are stable since the China’s economy
is growing and there are favorable regulations.
G.2 Industry Growth Prospects:

The market presents a promising opportunity due to __(EFE KSF-Oper. “O”)___.
The market presents a promising opportunity due to the 5% projected industry
growth and the closure of competitors.
G.3 Company’s Competitive Position:

The competitive strengths of the company are ___ (IFE KSF – “45”)_____.
The competitive strengths of the company are high quality products, affordable
price, accessible and with aggressive promotions.
STATEMENT OF THE PROBLEM or
PROBLEM STATEMENT
• Characteristics of BEST SOP
1. Simple sentence
2. Direct to the point
3. Declarative sentence
4. It must be at the level of the CEO
5. Back up by evidences
STATEMENT OF THE PROBLEM
• It state the most unwanted condition of the
organization
• SOP can be stated positively or negatively
EXAMPLE:
1. Formulating effective business strategy in
becoming the leader globally in the beverage
industry, as evidenced by the following:
2. Inefficient growth in becoming the leader
globally in the beverage industry, as
evidenced by the following:
Wrong Statement of the Problem
• Failure to compete in the international market
as evidenced by:
• Reduction in profit due to product quality as
evidenced by:
• Maintain competitiveness or leadership in the
industry by providing quality products and
effective sales promotions as evidenced by:
Sample of Evidences
1. DPS management has expressed an intension to maintain
its focus on North America.
2. Aside from its problems gaining overall market share in

the U.S., DPS has also had difficulty competing
internationally.
3. Coke collects about 74 percent of its sales outside of
North America.
4. Pepsi generates over 40 percent of its sales

internationally.
SWOT ANALYSIS
CONTROLABLE
STRENGTHS WEAKNESESS
P ( POSITIVE-Internal ) ( NEGATIVE-INTERNAL) N
O E
S G
I A
T OPPORTUNITIES THREATS T
I I
(POSITIVE-EXTERNAL) (NEGATIVE-EXTERNAL V
V
E E
UNCONTROLABLE
Situation Assessment
OPPORTUNITIES What trends or events, now or in the
future can significantly benefit the
Avenues for growth organization?
THREATS What trends or events, now or in the

future potentially harm the
Hindrances for growth organization?
What activities or conditions within the

WEAKNESSES organization seriously limit or inhibit
Lacks or does poorly overall success?
STRENGTHS What activities within the organization

are performed exceptionally well?
Competitive asset What conditions within the
organization strongly promote overall
success?
THANK YOU!
Dr. Neil C. Bermudez
Professor/Author/
Reviewer

Strama 1 Lecture 2023

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Strama 1 Lecture 2023

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STRAMA 1

STRAMA 2 A. Tows Matrix

• Discuss the current issues and concerns

EXTERNAL INDUSTRY ENVIRONMENT

SOCIO-CULTURAL Values, mores, customs and

ENVIRONMENT Natural resources

POLITICO-LEGAL Laws and regulations

“SAMPLE • GNP TRENDS

• AVAILABILITY OF RAW MATERIALS

• LIMITATION OF NATURAL RESOURCES

• ENVIRONMENT AND ECONOMIC

“SAMPLE • GOV’T REGULATIONS OR DEREGULATIONS

OPPPORTUNITIES - favorable conditions that could affect the strategic

Power of Industry Power of

Shareholders, Rivalry Among Community

NO. OF COMPETITORS Size and Power

FIXED COSTS Airlines’ cheap fare

PRODUCT Focus on price/service

CAPACITY Production Volume

ECONOMIES OF SCALE Cost advantage

SWITCHING COSTS Computer software

PRODUCT Customer loyalty

CAPITAL REQUIREMENTS Rent or sell photocopier

ACCESS TO DISTRIBUTION Secure distribution

Steel High fixed asset requirement

Beer Heavy advertising expenses

Petroleum Scarce raw materials

Electric Difficult government requirements

Appliance Credit sales required

Retail Auto Ability to handle trade-ins

Drug Products protected by patents

Network Television Control of key distribution channels

• Supplier industry dominated

• Purchase large proportion

FORCES OPPORTUNITY THREAT

Rivalry among competing firms  

STRENGTHS – capabilities that enhance the competitive position of the

• ORGANIZATION & MANAGEMENT

• RESEARCH AND DEVELOPMENT

Discover which niches to seek,

Combination of key variables to

Ascertains the best

“Weights are Industry-based whereas ratings are

KEY EXTERNAL WEIGHT RATING WEIGHTED RATING VALUES

THREATS Overall Rating:

THREATS Overall Rating:

TOTAL WEIGHTED (Overall Rating) Conclusion:

1. Global markets are practically 0.31 4 1.24 (4) – superior

1. Legislation against the tobacco 0.20 3 0.60 Overall Rating:

TOTAL WEIGHTED SCORE 1.00 - 3.37

“Firm’s strategies take advantage of existing opportunities and minimize

KEY EXTERNAL WEIGHT RATING WEIGHTED RATING VALUES

THREATS Overall Rating:

“Weights are Industry-based whereas ratings are

KEY INTERNAL WEIGHT RATING WEIGHTED RATING VALUES

Strengths (4) – major strength

Weaknesses Overall Rating:

“Weighted score of 2.97 – firm’s internal position is strong.”

KEY INTERNAL WEIGHT RATING WEIGHTED RATING VALUES

Weakness Overall Rating:

CPM Features (different from EFE):

“Weights are Industry-based whereas ratings are

WHAT? HOW? WHY?