Presented by:
I. Strategic Vision & Business Mission
A Vision is a description of what competitive position the company wants to attain over a given period of time, & what core competencies it will need to acquire to get there. It can be summarizes a company’s broad strategic focus for the future (De Kluyver)
A vision statements reflect what the future course and path of development should be like (Thompson)
Something seen in a dream (Merriam-Webster)
An Example:
☺ Eastman Kodak: To be the world’s best in chemical & electronic imaging
☺ Compaq Computer: To be the leading supplier of PCs & PC servers in all customer segments
☺ Visi BNI: Menjadi Bank kebanggaan nasional yang Unggul, Terkemuka dan Terdepan dalam Layanan dan Kinerja
☺ Visi Bank Mandiri: Bank terpercaya pilihan anda
☺ Visi Pegadaian: PEGADAIAN PADA TAHUN 2010 MENJADI
Mission is the reason for the organization’s existence (Boseman)
Mission is basic purposes of the organization and show out the reason why and organization exist (Rue)
Mission is answer the question “what is our business?” (Thompson)
An Example:
☺ Avis rent a car: Our business is renting cars, our mission is total customer satisfaction
☺ Ritz Carlton Hotel is a place where the genuine care & comfort of our quest is our highest mission
☺ Misi BNI: Memaksimalkan stakeholder value dengan menyediakan solusi
keuangan yang fokus pada segmen pasar korporasi, komersial dan konsumer
☺ Misi Bank Mandiri:
Berorientasi pada pemenuhan kebutuhan pasar
Mengembangkan sumber daya manusia professional
Memberi keuntungan yang maksimal bagi stakeholder Melaksanakan manajemen terbuka
Peduli terhadap kepentingan masyarakat dan lingkungan
☺ Misi Pegadaian: IKUT MEMBANTU PROGRAM PEMERINTAH DALAM UPAYA
II. External Audit
۩ Remote Environment PEST Analysis
☼ Industry Environment Five Forces Model
Operating Environment
-Creditor -Labor Union -Government
FIVE FORCES MODEL BY MICHAEL PORTER
Potential New entrants
Suppliers Industry Competitors Buyers
Industry Analysis: The External Factor Evaluation (EFE)
The EFE Matrix can be developed in five steps:
1. List key external factors as identified in the external audit process. List the opportunities first and then the threat.
2. Assign each factor a weight that ranges from 0,0 (not important) to 1,0 (very important). The weight indicates the relative importance of that factor to being successful in the firm’s industry. The sum of all weights assigned to the factors must equal 1,0.
4. Multiply each factor’s weight by its rating to determine a weighted score.
The Competitive Profile Matrix
The competitive Profile Matrix (CPM) identifies a firm’s major
competitors and its particular strengths and weaknesses in relation to a sample firm’s strategic position.
The weight & total weighted score in both CPM and EFE have the same meaning. However, critical success factor in a CPM include both internal & external issues; therefore the ratings refer to
strengths and weaknesses; where 4= major strength; 3=minor strength; 2= minor weaknesses; & 1 = major weaknesses.
An example of CPM for Gateway computer company (the best price) compare with apple (the best product quality & management
III. Internal Audit
Based on The Resources Based View (RBV) contend that
organizational performance determined by internal resources:
- Physical Resources (Plant & equipment; location, technology; raw material; machines)
- Human Resources (all employee; training; experience; intelligence; knowledge, skill, abilities)
- Organizational Resources (firm structure; information system; patents; trade mark; copyrights, database, etc)
Industry Analysis: The Internal Factor Evaluation (IFE)
The IFE Matrix can be developed in five steps:
1. List key internal factors as identified in the internal audit process. List the strengths first and then the weaknesses.
2. Assign each factor a weight that ranges from 0,0 (not important) to 1,0 (very important). The weight indicates the relative importance of that factor to being successful in the firm’s industry. The sum of all weights assigned to the factors must equal 1,0.
4. Multiply each factor’s weight by its rating to determine a weighted score.
IV. Setting Objective
Establish Long Term Objective
The Nature of Long Term Objective: 1. Quantifiable
2. Measurable 3. Realistic
4. Understandable 5. Challenging 6. Attainable
IV. Evaluate & Select Strategies
STAGE I: THE INPUT STAGE
EFE Matrix Competitive Profile Matrix (CPM) IFE Matrix STAGE II: THE MATCHING STAGE
TOWS SPACE BCG IE Grand Strategy
Matrix Matrix Matrix Matrix Matrix
STAGE II: THE DECISION STAGE
TOWS Matrix
TOWS Matrix consist of four type of strategies: 1. SO (Strength – Opportunities) Strategy
2. WO (Weakness – Opportunities) Strategy 3. ST (Strength – Threat) Strategy
The TOWS Matrix can be developed in eight steps: 1. List the firm key external opportunities
2. List the firm key external threats 3. List the firm key internal strengths 4. List the firm key internal weakness
5. Match internal strength with external opportunities, & record the resultant SO Strategies in the appropriate cell.
6. Match internal weakness with external opportunities, & record the resultant WO Strategies.
7. Match internal strength with external threat, & record the resultant ST Strategies.
SPACE Matrix
The Strategic Position and Action Evaluation (SPACE) Matrix consist of four quadrant framework indicate whether aggressive, conservative, defensive, or competitive strategies are most appropriate for a
given organization.
The axes of the SPACE Matrix represent two internal dimension:
Financial Strength (FS) and Competitive Advantage (CA); and two external dimension: Environmental Stability (ES) and Industry
The SPACE Matrix can be developed in sixth steps: 1. Select a set of variable to define FS, CA, ES and IS.
2. Assign a numerical value ranging from +1 (worst) to +6 (best) to each of variables that make up the FS and IS dimensions. Assign a numerical value ranging from -1 (best) to -6 (worst) to each the
variables that make up the ES and CA dimension. On the FS & CA axes, make comparison to competitor. On the IS & ES, make
comparison to other industries.
5. Add the two score on the X axis and plot the resultant point on X. add the two scores on the Y axis and plot the resultant point on Y. Plot the intersection of the new XY point.
6. Draw a directional vector from the origin of the SPACE matrix
through the new intersection point . This vector reveals the type of strategies recommended for the organization: aggressive,
An Example:
CA IS FS
ES FS = 2,29 & ES = -1,71
CA = -1,43 & IS = 4,25
Y-axis = 2,29 + (-1,71) = 0,58 X-axis = 4,25 + (-1,43) = 2,82
Aggresive
Competitive Defensive
BCG Matrix
The BCG matrix or also called BCG model relates to marketing. The BCG model is a well-known portfolio management tool used in product life cycle theory. BCG matrix is often used to prioritize which products within company product mix get more funding and attention.
The BCG matrix model is a portfolio planning model developed by Bruce Henderson of the Boston Consulting Group in the early 1970's.
The BCG model is based on classification of products (and
The BCG matrix
Market Growth = Sales Industryt – Sales Industryt-1 Sales Industryt-1
BCG Matrix closed related with Product/Business Life Cycle
BCG STARS (high growth, high market share)
- Stars are defined by having high market share in a growing market.
- Stars are the leaders in the business but still need a lot of support for promotion a placement.
- If market share is kept, Stars are likely to grow into cash cows.
BCG QUESTION MARKS (high growth, low market share)
- These products are in growing markets but have low market share.
- Question marks are essentially new products where buyers have yet to discover them.
- The marketing strategy is to get markets to adopt these products. - Question marks have high demands and low returns due to low market share.
BCG CASH COWS (low growth, high market share)
- Cash cows are in a position of high market share in a mature market.
- If competitive advantage has been achieved, cash cows have high profit margins and generate a lot of cash flow.
- Because of the low growth, promotion and placement investments are low.
- Investments into supporting infrastructure can improve efficiency and increase cash flow more.
- Cash cows are the products that businesses strive for.
BCG DOGS (low growth, low market share)
- Dogs are in low growth markets and have low market share. - Dogs should be avoided and minimized.
Internal External (IE) Matrix
The IE matrix helps to make more sense out of the EFE and IFE matrixes. The IE matrix is based on two criteria the score from the EFE for its y-axis and the score from the IFE for its x-axis. After you plot the point, the IE then provides a strategy for the company to follow.
The Internal-External (IE) Matrix positions an organization's
But there are some important differences between the BCG Matrix and IE Matrix.
First, the axes are different. Also, the IF Matrix requires more information about the divisions than the BCG Matrix.
Further, the strategic implications of each matrix are different. For these reasons, strategists in multidivisional firms often develop both the BCG Matrix and the IE Matrix in formulating alternative strategies.
The IE Matrix is based on two key dimensions: the IFE total weighted scores on the x-axis and the EFE total weighted scores on the y-axis. Recall that each division of an organization should construct an IFE Matrix and an EFE Matrix for its part of the organization.
The total weighted scores derived from the divisions allow construction of the corporate-level IE Matrix.
On the x-axis of the IE Matrix, an IFE total weighted score of 1.0 to 1.99 represents a weak internal position; a score of 2.0 to 2.99 is considered average; and a score of 3.0 to 4.0 is strong.
The IF Matrix can be divided into three major regions that have different strategy implications.
First, the prescription for divisions that fall into cells- I, II, or IV can be described as grow and build. Intensive (market penetration, market development, and product development) or integrative (backward integration, forward integration, and horizontal integration) strategies can be most appropriate for these divisions.
Second, divisions that fall into cells III, V, or VII can be managed best with hold and maintain strategies; market penetration and product development are two commonly employed strategies for these types of divisions.
An Example :IE Matrix for Morgan Stanley Dean Witter
IFE = 3,4 and EFE 3,4
An example of a completed IE Matrix is given in Figure 6-10, which depicts an organization composed of four divisions.
As indicated by the positioning of the circles, grow and build strategies are appropriate for Division 1, Division 2, and Division 3.
Division 4 is a candidate for harvest or divert.
Division 2 contributes the greatest percentage of company sales and thus is represented by the largest circle.
Grand Strategy Matrix
In addition to the TOWS matrix, SPACE Matrix, BCG Matrix & IE Matrix, the Grand Strategy Matrix has become a popular tool for
formulating alternative strategies. The Grand Strategy Matrix is based on two evaluative dimensions: Competitive Position and Market Growth.
Firm in Quadrant I are in an excellent strategic position. For these firms, continued concentration on current market (market
penetration & market development) and product (product development) is an appropriate strategy. When a quadrant I organization have excessive resources, then backward, forward or horizontal integration may be
Firm in Quadrant II need to evaluate their present approach to the marketplace seriously. Although their industry growing, they are
unable to compete effectively.
Firm in Q-II are in rapid market growth industry, an intensive strategy (as opposed to integrative or diversification) is usually the first option that should be considered.
However, if the firm is lacking a distinctive competence or competitive advantage, then horizontal integration is often a desirable alternative.
Quadrant III firm compete in slow growth industries and have weak competitive position. Theses firms must make some drastic changes quickly to avoid further decline and possible liquidation.
Extensive cost and asset reduction (retrenchment) should be pursued first. An alternative strategy is to shift resources away from the current business into different areas (diversify).
Finally, Quadrant IV firm have strong competitive position but are in slow growth industry. These firms have the strength to launch diversified programs into more promising growth areas.
Q-IV firms have characteristically high cash flow levels and
limited internal growth needs and often can pursue concentric, horizontal, or conglomerate diversification successfully.
Quantitative Strategic Planning Matrix (QSPM)
Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic management approach for evaluating possible strategies.
Quantitative Strategic Planning Matrix or a QSPM provides an analytical method for comparing feasible alternative actions.
The QSPM method falls within so-called stage 3 of the strategy formulation analytical framework.
The Quantitative Strategic Planning Matrix or a QSPM approach attempts to objectively select the best strategy using input from other management techniques and some easy computations.
Stage 1 strategic management tools...
The first step in the overall strategic management analysis is used to identify key strategic factors. This can be done using, for example, the EFE matrix and IFE matrix.
Stage 2 strategic management tools...
After we identify and analyze key strategic factors as inputs for
QSPM, we can formulate the type of the strategy we would like to pursue. This can be done using the stage 2 strategic management tools, for
example the SWOT analysis (or TOWS), SPACE matrix analysis, BCG matrix model, or the IE matrix model.
Stage 3 strategic management tools...
The stage 1 strategic management methods provided us with key strategic factors. Based on their analysis, we formulated possible
QSPM Step by Step
1.Provide a list of internal factors -- strengths and weaknesses.
Then generate a list of the firm's key external factors -- opportunities and threats. These will be included in the left column of the QSPM. You can take these factors from the EFE matrix and the IFE matrix.
2. Having the factors ready, identify strategy alternatives that will be further evaluated. These strategies are displayed at the top of the table. Strategies evaluated in the QSPM should be mutually exclusive if possible.
4. Attractiveness Scores (AS) in the QSPM indicate how each factor is important or attractive to each alternative strategy. Attractiveness Scores are determined by examining each key external and internal factor separately, one at a time, and asking the following question:
Does this factor make a difference in our decision about which strategy to pursue?
If the answer to this question is yes, then the strategies should be compared relative to that key factor. The range for Attractiveness
Scores is 1 = not attractive, 2 = somewhat attractive, 3 =
5. Calculate the Total Attractiveness Scores (TAS) in the QSPM. Total Attractiveness Scores are defined as the product of multiplying the weights (step 3) by the Attractiveness Scores (step 4) in each row.
The Total Attractiveness Scores indicate the relative attractiveness of each key factor and related individual strategy. The higher the Total Attractiveness Score, the more attractive the strategic alternative or critical factor.
6. Calculate the Sum Total Attractiveness Score by adding all Total Attractiveness Scores in each strategy column of the QSPM.
The QSPM Sum Total Attractiveness Scores reveal which strategy is most attractive.
An Example QSPM Matrix
