Strategy Analysis and Choice
The Nature of Strategy Analysis and Choice
The Process of Generating and Selecting Strategies
A Comprehensive Strategy-Formulation Framework
The Input Stage
The Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix
The Boston Consulting Group (BCG) Matrix
The Internal-External (IE) Matrix
The Grand Strategy Matrix
The Decision Stage
The Quantitative Strategic Planning Matrix (QSPM)
Positive Features and Limitations of the QSPM
Cultural Aspects of Strategy Choice
The Role of a Board of Directors
Strategic analysis and choice largely involves making subjective decisions based on objective information. This chapter introduces important concepts that can help strategists generate feasible alternatives, evaluate those alternatives, and choose a specific course of action. Behavioral aspects of strategy formulation are described, including politics, culture, ethics, and social responsibility considerations. Modern tools for formulating strategies are described, and the appropriate role of a board of directors is discussed.
After studying this chapter, you should be able to do the following: 1.
Describe a three-stage framework for choosing among alternative strategies. 2.
Explain how to develop a TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and QSPM. 3.
Identify important behavioral, political, ethical, and social responsibility considerations in strategy analysis and choice. 4.
Discuss the role of intuition in strategic analysis and choice. 5.
Discuss the role of organizational culture in strategic analysis and choice. 6.
Discuss the role of a board of directors in choosing among alternative strategies.
Nature of Strategy Analysis and Choice
As indicated by Figure 6-1, this chapter focuses on establishing long-term objectives, generating alternative strategies, and selecting strategies to pursue. Strategy analysis and choice seeks to determine alternative courses of action that could best enable the firm to achieve its mission and objectives. The firm's present strategies, objectives, and mission, coupled with the external and internal audit information, provide a basis for generating and evaluating feasible alternative strategies.
A Comprehensive Strategic-Management Model
Unless a desperate situation faces the firm, alternative strategies will likely represent incremental steps to move the firm from its present position to a desired future position. Alternative strategies do not come out of the wild blue yonder; they are derived from the firm's mission, objectives, external audit, and internal audit; they are consistent with, or build upon, past strategies that have worked well! THE PROCESS OF GENERATING AND SELECTING STRATEGIES
Strategists never consider all feasible alternatives that could benefit the firm, because there are an infinite number of possible actions and an infinite number of ways to implement those actions. Therefore, a manageable set of the most attractive alternative strategies must be developed. The advantages, disadvantages, trade-offs, costs, and benefits of these strategies should be determined. This section discusses the process that many firms use to determine an appropriate set of alternative strategies. Identifying and evaluating alternative strategies should involve many of the managers and employees who earlier assembled the organizational mission statement, performed the external audit, and conducted the internal audit. Representatives from each department and division of the firm should be included in this process, as was the case in previous strategy-formulation activities. Recall that involvement provides the best opportunity for managers and employees to gain an understanding of what the firm is doing and why, and to become committed to helping...
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