Strategic Analysis &

Choice
Unit-4
 Environmental Threats & Opportunity
Profile (ETOP)
• ETOP analysis (environmental threat and opportunity profile) is the process by which
organizations monitor their relevant environment to identify opportunities and threats
affecting their business for the purpose of taking strategic decisions.
• An environmental analysis, or environmental scan, is a review of the internal and external
factors that can affect an organization. Internal components indicate the organization's
strengths and weaknesses, while external components show the opportunities and threats in
the outside environment.
• profile is a technique of environment analysis was organizations make of profile of their
external environment. ETOP analysis provides information about environment threats &
opportunities & their impact on strategic opportunities for the company.
 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.
• 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
 TOWS Matrix
• The main purpose of a TOWS analysis is to help organisations not only identify but also find
effective strategies for reducing threats and taking advantage of opportunities. Similarly, it also
equips them with the insight necessary for exploiting their individual strengths and removing
weaknesses.
• There are a few advantages of using the TOWS matrix: It gives you a clear, visual idea of the
foundations of your strategy. It's easy to use across any industry, team, or individual. It assesses
internal elements, as well as external.
• The TOWS (Threats, Opportunities, Weaknesses, Strengths) analysis builds on this tried and
tested SWOT model. It allows you to think about strategies around the internal and external
areas. A TOWS analysis should be undertaken at any level of your business, the whole
organisation, a department or even a team.
 GE Matrix
• McKinsey's GE Matrix is a visual tool designed to help portfolio
managers determine resource allocation for multi-business portfolios. The
GE Matrix looks at two factors when scoring SBUs (Strategic Business
Units) — the strength of a particular business and the attractiveness of the
industry.
• The GE 9 cell matrix is a way of structuring an organization's strategy into
manageable segments. The GE 9 Cell Model is a process of establishing
the organization's current position in the market. It can then evaluate each
of its strategies and choose a course of action to take.
 Directional Policy Matrix
• The Directional Policy Matrix (DPM) is a framework which can be used
to classify and categorise an organisation's business activities in terms of
its strengths, capabilities or market position, and the way it perceives
markets to be attractive.
• Directional options strategy is a strategy investors use to make money by
betting on the direction of the market. The four types of strategies are bull
calls, bull puts, bear calls, and bear puts. The strategies help decrease the
cost of options, volatility, and risk, but also create smaller payoffs.
• Divest: SBU’s running in losses with uncertain cash flows. They should be divested as the situation is not
likely to improve in the near future. These liquidate or move thee assets.
• Phased withdrawal: SBU’s with weak competitive position in a low growth market with very little
chance of generating cash flows. They should be phased out gradually. The cash realized should be
invested in more profitable ventures.
• Double or quit: Gamble on potential major SBU’s for the future. Either invests more to use the prospects
presented by the market or else better to quit the business.
• Custodial: SBU’s are just like a cash cow, milk it and do not commit any more resources. The corporate
has to bear with the situation by getting help from other SBU’s or get out of the scene so as to focus more
on other attractive business.
• Try harder: SBU’s could be vulnerable over a longer period of time, but fine for now. They need
additional resources to strength their capabilities. The corporate try harder to exploit the business prospects
thoroughly.
• Cash Generator: Even more like a cash cow, milk here for expansion elsewhere. SBU’s may continue
their operations, at least for generating strong cash flows and satisfactory profits. No further investments
are made.
• Growth: Grow the market by focusing just enough resources here. These SBU’s need funds to support
product innovations, R&D activities etc.
• Market Leadership: Major resources are focused upon the SBU. It must receive top priority.
 Organisational Capability Profile
• An organizational capability profile describes the skills, knowledge and
resources that enable your company to provide quality products or
services to customers. The profile provides useful background information
for your marketing and corporate communications.
• An organizational capability is the means by which an organization brings
together its people and other resources to respond to changes in the
business environment and deliver value to its customers and stakeholders.
Checklist for your capability statement
• business overview.
• core competencies.
• key personnel.
• products and services.
• clients and projects.
• contact details.
 Strategic Advantage Profile
• The strategic advantage profile is a tool for making a systematic
evaluation of the enterprises internal factors which are significant for the
company in its environment. The SAP shows the strengths and weakness
of an organization in different functional areas.
• "A Profile of strategic advantages (SAP) is a summary statement, which
provides an overview of the advantages and disadvantages in key areas
likely to affect future operations of the firm.
 Corporate Level Strategic-Growth
• Corporate-level strategies are adopted at the corporate or holding company level and may
include all or some of the business units either wholly or partially owned by the corporation. A
growth strategy entails a focus on accelerating the firm's consolidated revenue, profit, and cash-
flow growth.
• Corporate strategy is important because it helps companies identify trends and opportunities,
creates a vision, encourages innovation, offers a competitive advantage in the market, and
optimizes your business model.
• A strategy diamond is a collection of the five elements forming a coherent business strategy.
These five elements of strategy include Arenas, Differentiators, Vehicles, Staging, and
Economic Logic. This model was developed by strategy researchers Donald Hambrick and
James Fredrickson.
 Stability
• A stability strategy is one of the corporate-level strategies. Under this
strategy, as firms seek to maintain their current position in the marketplace,
they do not bring any significant changes in their product, market, plans,
policies, and activities.
• For example, a company that is committed to its guiding principle of
providing superior quality products and services to its consumers (a force for
stability) might do so by finding new manufacturing tools or processes (a
force for change) to innovate or create and help the company remain
successful.
 Renewal
• Renewal strategies are used when a business gets in trouble and there is a
decline in its performance. It is a responsive strategy used against the
continuously changing factors in the business environment to improve
deteriorating business conditions.
• Relevant actions aimed at redesigning an organization and changing its
business model based on radical changes and progress in the environment
that lead to a strategic opening (a discrepancy between an organization's
capacity and potential to grow).
 Corporate Protfolio Analysis
• A corporate portfolio is the collection of products and services a business offers. While it's
often used to describe the assets of large companies, small-business owners with more than
one product or service can benefit from a corporate portfolio analysis.
• Corporate portfolio analysis is a set of techniques that help strategist in taking strategic
decision regard to individual product or business in a firm's portfolio. Each segment of a
company's product line is evaluated including sales, market share, cost of production and
potential market strength.
• Assessing all your investments to see if their performance is meeting your goals,
requirements, and resources is a portfolio analysis. In other words, it means you are
assessing your portfolio based on whether you are progressing towards
 Grand Strategies
• A grand strategy provides a national vision for the future and a precise plan for the
fulfillment of that vision. Achieving the goals of a grand strategy presupposes more than
the successful prosecution of a war or the economic development of a country.
There are four grand strategic alternatives that can be followed by the organization to
realize its long-term objectives:
• Stability Strategy.
• Expansion Strategy.
• Retrenchment Strategy.
• Combination Strategy.
 MCKinsey’s 7s Framwork
• The McKinsey 7S Model refers to a tool that analyzes a company's
“organizational design.” The goal of the model is to depict how
effectiveness can be achieved in an organization through the interactions
of seven key elements – Structure, Strategy, Skill, System, Shared Values,
Style, and Staff.
 Business Level Strategies
• Business-level strategy refers to companies' deliberate and purposeful
actions to achieve competitive advantage within their specific market
segments. It involves making critical choices about how to allocate
resources, differentiate offerings, and create unique value for customers.
• Cost leadership, differentiation, focused low-cost, focused differentiation,
integrated, and customer intimacy are effective business-level strategies
for gaining a competitive advantage.
 Michael Porter’s Generic Strategies
• Michael Porter argues that operational effectiveness, although necessary to superior
performance, is not sufficient, because its techniques are easy to imitate. In contrast,
the essence of strategy is choosing a unique and valuable position rooted in systems
of activities that are much more difficult to match.

• PepsiCo uses cost leadership as its primary generic competitive strategy. This
generic strategy focuses on cost minimization as a way to improve PepsiCo's
financial performance and overall competitiveness. For example, to compete against
Coca-Cola products, PepsiCo offers low prices based on low operating costs.
 Functional Level Strategies
• Functional level strategies are the actions and goals assigned to various
departments that support your business level strategy and corporate level
strategy. These strategies specify the outcomes you want to see achieved
from the daily operations of specific departments (or functions) of your
business.
• Functional area strategies typically include marketing, production, human
resources (HR), and research and development (R&D).
 Examples of Functional level strategy

• Marketing Strategy: A company like Coca-Cola might have a marketing

strategy to strengthen its brand image by associating it with happiness and
fun.
• Financial Strategy: A startup might have a financial strategy of securing
additional capital to fuel its rapid growth.
 There are six functional areas in an
organization
• Strategy.
• Marketing.
• Finance.
• Human Resources.
• Technology and Equipment.
• Operations.