SM

Unit-4
 STRATEGIC ANALYSIS, CHOICE

 As environment changes, companies need to change their strategies to

adapt to the environment not only to prosper but also to survive. Based
on the multiple strategic choices, each choice is analyze and the best one
is selected and implemented.
 Strategic analysis and choice are two important components of the
implementation stage of the strategic management plan. These two
components are crucial links in the strategic management implementation
procedure.
 The strategic management process has three main components as shown
below
 STRATEGIC ANALYSIS IS ALL ABOUT ANALYZING THE STRENGTH OF
BUSINESSES’ POSITION AND UNDERSTANDING THE IMPORTANT
EXTERNAL FACTORS THAT MAY INFLUENCE THAT POSITION.
FACTORS TAKEN INTO CONSIDERATION FOR STRATEGIC ANALYSIS
AND CHOICE

 Key Internal Factors

 Key External Factors
 Marketing
 Political/
Governmental/Legal
 Management  Economy
 Operations/  Technological
Production  Social/Demographic/
 Accounting/Finance Cultural/
 Computer Environmental
Information Systems  Competitive
 Research and  Techniques Used in
Development Strategic Analysis
 BCG Matrix
THE FOLLOWING DEVICES OR TECHNIQUES ARE USED IN THE PROCEDURE OF STRATEGIC ANALYSIS:

 Ansoff Grid
 GE NINE Mc
 McKinsey’s 7S frame work

Strategic choice involves understanding the

nature of stakeholders expectations,
identifying the strategic option and evaluating
and selecting the best/optimal choice amongst
all.
 BCG MATRIX
 The Boston Consulting group’s product portfolio matrix (BCG matrix) is
designed to help with long-term strategic planning, to help a business
consider growth opportunities by reviewing its portfolio of products to
decide where to invest, to discontinue, or develop products. It's also
known as the Growth/Share Matrix.
 The Matrix is divided into 4 quadrants based on an analysis of market
growth and relative market share, as shown in the diagram below.
BCG
 1. Dogs: These are products with low growth
or market share
 2. Question marks or Problem
Child: Products in high growth markets with
low market share
 3. Stars: Products in high-growth markets
with high market share
 4. Cash cows: Products in low growth
markets with high market share
 ANSOFF MODEL
 Also referred to as the Ansoff matrix, due to its grid format,
the Ansoff Model helps marketers identify opportunities to
grow revenue for a business through developing new
products and services or "tapping into" new markets. So it's
sometimes known as the ‘Product-Market Matrix’ instead of
the ‘Ansoff Matrix’.
 The Ansoff Model's focus on growth means that it's one of
the most widely used marketing models. It is used to
evaluate opportunities for companies to increase their sales
through showing alternative combinations for new markets
(i.e. customer segments and geographical locations) against
products and services offering four strategies as shown.
Strategic questions that can be
answered using the matrix include:
Market Penetration: How to sell
more of your existing products or
services to your existing customer
base?
Market Development: How to
enter new markets?
Product and Development: How
to develop existing products or
services.
Diversification: How to move into
new markets with new products or
services, increase your sales with
your existing customer base as well
as acquisition.
 Market development
 Market development is the second quadrant,
and it's when an organization uses its current
offerings and attempts to grow into other
markets. This can include expansion to other
municipalities if they are a local shop, other
regions, nationwide or even internationally.
Whenever an organization is expanding from
their current market into another where they
do not yet exist, whatever that new market
may be, it's a market development growth
strategy.
 Product development
 The third segment of the Ansoff Matrix,
product development, is when an
organization creates new offerings for its
existing market. A product development
growth strategy is about as risky as the
market development strategy. With this
strategy, the organization will have an
expanded product line that customers can
choose from. As part of their product
development plan, a business may:
 Diversification
 The fourth and final segment in the Ansoff
Matrix is diversification, and it poses the
most risk to businesses. This growth strategy
involves an organization that wants to enter
new markets with new products, services or
other offerings. This is the riskiest because it
involves an untested product in a market
that you don't have any experience in.
 Market penetration
 The market penetration strategy is the first
quadrant of the Ansoff Matrix and provides
the least risk of the four growth options. It's
when an organization attempts to grow in a
market it already exists in with products,
services or other offerings it already has. The
goal of market penetration is for the
organization to increase its market share by
finding new customers in the same market or
selling more of its offerings to an existing
customer base.
 GE/MCKINSEY MATRIX
 The GE/Mckinsey 9 cell matrix, named after General Electronics was
first developed by Mckinsey. The objective of this matrix is to assess
the industry attractiveness and competitive strength of strategic
business units.
 Factors affecting the industry attractiveness are market growth rate,
market size, demand variability, market profitability etc and all these
factors are external to the organization.
 Internal factors such as assets, competencies, brand strength, profit
margins and quality etc make a competitive strength or business
strength of organization.
 The important advantage of GE matrix is Portfolio analysis. Let’s
take the example of Patanjali for the application of GE matrix.
 Patanjali’s Dantkanti, Honey and Ghee operate in the green
segment giving the organization opportunities to go ahead and
grow & build the product. The green zone pushes an organization
for expansion strategies.
 Patanjali’s Candy, Fruit juice, and medicines takes place in yellow
category signifying that brand should hold the product for some time and
makes necessary developments. The yellow area suggests making
strategies aimed at maintaining stability.
 Patanjali’s Home care category like agarbatti, dish wash bar etc comes
under red area due to the presence of other strong competitors. The red
segment signifies that company should start harvesting the brand. Brand
harvesting means maximizing your profit by reducing your expenditure on
brand due to its decline phase in product life cycle.
 MCKINSEY 7S MODEL
 The McKinsey 7S Model is a framework for
organizational effectiveness that postulates that
there are seven internal factors of an organization
that need to be aligned and reinforced in order for it
to be successful.
 The 7S Model specifies seven factors that are
classified as "hard" and "soft" elements. Hard
elements are easily identified and influenced by
management, while soft elements are fuzzier,
more intangible, and influenced by corporate
culture. The hard elements are as follows:
1. Strategy
2. Structure
3. Systems
 The soft elements are as follows:
 Shared values
 Skills
 Style
 Staff

The hard elements are as follows:

 The strategy is the plan deployed by an organization in order to
remain competitive in its industry and market. An ideal approach is
to establish a long-term strategy that aligns with the other elements
of the model and clearly communicates what the organization’s
objective and goals are.
 The structure of the organization is made up of its corporate
hierarchy, the chain of command, and divisional makeup that
outlines how the operations function and interconnect. In effect, it
details the management configuration and responsibilities of
workers.
 Systems of the company refer to the daily procedures, workflow, and
decisions that make up the standard operations within the
 Shared values are the commonly accepted standards and norms
within the company that both influence and temper the behavior of
the entire staff and management. This may be detailed in company
guidelines presented to the staff. In practice, shared values relate to
the actual accepted behavior within the workplace.
 Skills comprise the talents and capabilities of the organization’s
staff and management, which can determine the types of
achievements and work the company can accomplish. There may
come a time when a company assesses its available skills and
decides it must make changes in order to achieve the goals set forth
in its strategy.
 Style speaks to the example and approach that management takes
in leading the company, as well as how this influences
performance, productivity, and corporate culture.
 Staff refers to the personnel of the company, how large the
workforce is, where their motivations reside, as well as how they
are trained and prepared to accomplish the tasks set before them
STRATEGIC IMPLEMENTATION:
 Strategic implementation: Meaning: Strategic
implementation refers to the process of
executing plans and strategies. These
processes aim to achieve longterm goals within
an organization. Strategic implementation, in
other words, is a technique through which a
firm develops. It utilizes and integrates new
processes into the structure of an organization.
PROCESS OF STRATEGY
IMPLEMENTATION: •
 Building an organization, that possess the
capability to put the strategies into action
successfully.
 • Supplying resources, in sufficient quantity, to
strategy-essential activities.
 • Developing policies which encourage
strategy.
 • Such policies and programs are employed
which helps in continuous improvement.
 • Combining the reward structure, for
achieving the results.
 • Using strategic leadership.