Unit 5 - Strategy Analysis and Choice
Strategy Analysis and Choice Process
Purpose:
Select the best-fit strategies aligned with the organization’s vision, mission, and
internal/external environment
Key Steps:
1. Involve Key Personnel
o Include managers & employees who contributed to audits and goal setting
2. Evaluate Strategic Options
o Assess pros, cons, costs, benefits, trade-offs of each strategy
3. Collaborative Discussions
o Conduct meetings to review, debate, and refine strategies
4. Document Strategies
o Write down strategies for clarity, communication, and accountability
5. Rank Strategies
o Prioritize based on effectiveness, feasibility, and alignment with goals
Outcome:
A well-informed, participative, and goal-aligned strategy ready for implementation
Strategy-Formulation Analytical Framework
The strategic formulation process is structured into three interconnected stages that guide
organizations from gathering information to selecting optimal strategies:
1. Input Stage
This initial stage involves collecting and summarizing essential internal and external information
necessary for strategy formulation. Key tools used include:
External Factor Evaluation (EFE) Matrix: Assesses external opportunities and threats.
Internal Factor Evaluation (IFE) Matrix: Analyzes internal strengths and weaknesses.
Competitive Profile Matrix (CPM): Compares the organization’s competitive position against
key competitors.
These matrices provide a quantitative basis for understanding the organization’s current strategic
position.
2. Matching Stage
The focus here is on generating feasible strategies by aligning internal strengths and weaknesses with
external opportunities and threats. Techniques include:
, SWOT Matrix: Matches internal and external factors to develop strategic options.
SPACE Matrix: Assesses strategic posture based on internal and external dimensions.
BCG Matrix: Evaluates product or division portfolio based on market share and industry
growth.
IE Matrix: Classifies divisions into strategic regions based on internal and external scores.
Grand Strategy Matrix: Guides strategic directions based on competitive position and market
growth.
This stage helps identify strategic options suited to the organization’s internal capabilities and
external environment.
3. Decision Stage
The final stage involves objectively evaluating and selecting strategies using the Quantitative
Strategic Planning Matrix (QSPM). This tool:
Uses input from earlier analyses.
Assigns weights and attractiveness scores to each strategy.
Calculates total scores to determine the most attractive options.
Supports decision-making with an objective, data-driven approach.
The QSPM facilitates selecting strategies that offer the best fit and potential for success.
SWOT Matrix
The SWOT Matrix is a fundamental strategic tool that helps organizations develop strategies by
analyzing internal strengths and weaknesses against external opportunities and threats. The process
involves:
Listing key internal strengths and weaknesses and external opportunities and threats.
Matching internal strengths with external opportunities to identify SO strategies, which
leverage strengths to capitalize on opportunities.
Matching internal weaknesses with external opportunities to formulate WO strategies,
aimed at improving weaknesses by exploiting opportunities.
Matching internal strengths with external threats to develop ST strategies, which use
strengths to mitigate threats.
Matching internal weaknesses with external threats to create WT strategies, focusing on
defensive tactics to minimize vulnerabilities and risks.
Types of Strategies:
SO Strategies: Use internal strengths to seize external opportunities.
WO Strategies: Improve internal weaknesses by taking advantage of external opportunities.
ST Strategies: Use strengths to avoid or reduce external threats.
Strategy Analysis and Choice Process
Purpose:
Select the best-fit strategies aligned with the organization’s vision, mission, and
internal/external environment
Key Steps:
1. Involve Key Personnel
o Include managers & employees who contributed to audits and goal setting
2. Evaluate Strategic Options
o Assess pros, cons, costs, benefits, trade-offs of each strategy
3. Collaborative Discussions
o Conduct meetings to review, debate, and refine strategies
4. Document Strategies
o Write down strategies for clarity, communication, and accountability
5. Rank Strategies
o Prioritize based on effectiveness, feasibility, and alignment with goals
Outcome:
A well-informed, participative, and goal-aligned strategy ready for implementation
Strategy-Formulation Analytical Framework
The strategic formulation process is structured into three interconnected stages that guide
organizations from gathering information to selecting optimal strategies:
1. Input Stage
This initial stage involves collecting and summarizing essential internal and external information
necessary for strategy formulation. Key tools used include:
External Factor Evaluation (EFE) Matrix: Assesses external opportunities and threats.
Internal Factor Evaluation (IFE) Matrix: Analyzes internal strengths and weaknesses.
Competitive Profile Matrix (CPM): Compares the organization’s competitive position against
key competitors.
These matrices provide a quantitative basis for understanding the organization’s current strategic
position.
2. Matching Stage
The focus here is on generating feasible strategies by aligning internal strengths and weaknesses with
external opportunities and threats. Techniques include:
, SWOT Matrix: Matches internal and external factors to develop strategic options.
SPACE Matrix: Assesses strategic posture based on internal and external dimensions.
BCG Matrix: Evaluates product or division portfolio based on market share and industry
growth.
IE Matrix: Classifies divisions into strategic regions based on internal and external scores.
Grand Strategy Matrix: Guides strategic directions based on competitive position and market
growth.
This stage helps identify strategic options suited to the organization’s internal capabilities and
external environment.
3. Decision Stage
The final stage involves objectively evaluating and selecting strategies using the Quantitative
Strategic Planning Matrix (QSPM). This tool:
Uses input from earlier analyses.
Assigns weights and attractiveness scores to each strategy.
Calculates total scores to determine the most attractive options.
Supports decision-making with an objective, data-driven approach.
The QSPM facilitates selecting strategies that offer the best fit and potential for success.
SWOT Matrix
The SWOT Matrix is a fundamental strategic tool that helps organizations develop strategies by
analyzing internal strengths and weaknesses against external opportunities and threats. The process
involves:
Listing key internal strengths and weaknesses and external opportunities and threats.
Matching internal strengths with external opportunities to identify SO strategies, which
leverage strengths to capitalize on opportunities.
Matching internal weaknesses with external opportunities to formulate WO strategies,
aimed at improving weaknesses by exploiting opportunities.
Matching internal strengths with external threats to develop ST strategies, which use
strengths to mitigate threats.
Matching internal weaknesses with external threats to create WT strategies, focusing on
defensive tactics to minimize vulnerabilities and risks.
Types of Strategies:
SO Strategies: Use internal strengths to seize external opportunities.
WO Strategies: Improve internal weaknesses by taking advantage of external opportunities.
ST Strategies: Use strengths to avoid or reduce external threats.
