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Strategic Management

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Strategic Management ­ MGT603
VU
Lesson 30
GRAND STRATEGY MATRIX
Learning objective
Grand strategy matrix is a last matrix of matching strategy formulation framework. It same as important
as BCG, IE and other matrices. This chapter enables you to understand the preparation of GS matrix.
The Quantitative Strategic Planning Matrix (QSPM)
The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most
appropriate or which alternative strategy should be select. This stage contains QSPM that is only tool
for objective evaluation of alternative strategies. A quantitative method used to collect data and prepare
a matrix for strategic planning. It is based on identified internal and external crucial success factors.
That is only technique designed to determine the relative attractiveness of feasible alternative action.
This technique objectively indicates which alternative strategies are best. The QSPM uses input from
Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative
strategies. That is, the EFE Matrix, IFE Matrix, and Competitive Profile Matrix that make up Stage 1,
coupled with the TOWS Matrix, SPACE Analysis, BCG Matrix, IE Matrix, and Grand Strategy Matrix
that make up Stage 2, provide the needed information for setting up the QSPM (Stage 3).
Preparation of matrix
Now the question is that how to prepare QSPM matrix. First it contains key internal and external
factors. An internal factor contains (strength and weakness) and external factor include (opportunities
and threats). It relates to previously IFE and EFE in which weight to all factors. Weight means
importance to internal and external factor. The sum of weight must be equal to one. After assigning the
weights examine stage-2 matrices and identify alternatives strategies that the organization should
consider implementing. The top row of a QSPM consists of alternative strategies derived from the
TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix. These matching
tools usually generate similar feasible alternatives. However, not every strategy suggested by the
matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive judgment in
selecting strategies to include in a QSPM. After assigning the weight to strategy, determine the
attractiveness score of each and afterwards total attractiveness score. The highest total attractiveness
score strategy is most feasible.
Steps in preparation of QSPM
1. List of the firm's key external opportunities/threats and internal strengths/weaknesses in the left
column of the QSPM.
2. Assign weights to each key external and internal factor
3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization
should consider implementing
4. Determine the Attractiveness Scores (AS)
5. Compute the Total Attractiveness Scores
6. Compute the Sum Total Attractiveness Score
110
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Strategic Management ­ MGT603
VU
Strategy 1  Strategy 2
Strategy 3
Weight
AS
TAS AS
TAS
AS
TAS
Key External Factors
Economy conditions
Social/Cultural/Demographic
/Environmental
Political/Legal/Governmental
Competitive
Technological
Consumer attitude
Key Internal Factors
Research and Development
Computer Information
Finance/Accounting
Production/Operations
Management
Marketing
Systems
Limitations
1. Requires intuitive judgments and educated assumptions
2. Only as good as the prerequisite inputs
3. Only strategies within a given set are evaluated relative to each other
Advantages
1. Sets of strategies considered simultaneously or sequentially
2. Integration of pertinent external and internal factors in the decision making process
111
Table of Contents:
  1. NATURE OF STRATEGIC MANAGEMENT:Interpretation, Strategy evaluation
  2. KEY TERMS IN STRATEGIC MANAGEMENT:Adapting to change, Mission Statements
  3. INTERNAL FACTORS & LONG TERM GOALS:Strategies, Annual Objectives
  4. BENEFITS OF STRATEGIC MANAGEMENT:Non- financial Benefits, Nature of global competition
  5. COMPREHENSIVE STRATEGIC MODEL:Mission statement, Narrow Mission:
  6. CHARACTERISTICS OF A MISSION STATEMENT:A Declaration of Attitude
  7. EXTERNAL ASSESSMENT:The Nature of an External Audit, Economic Forces
  8. KEY EXTERNAL FACTORS:Economic Forces, Trends for the 2000ís USA
  9. EXTERNAL ASSESSMENT (KEY EXTERNAL FACTORS):Political, Governmental, and Legal Forces
  10. TECHNOLOGICAL FORCES:Technology-based issues
  11. INDUSTRY ANALYSIS:Global challenge, The Competitive Profile Matrix (CPM)
  12. IFE MATRIX:The Internal Factor Evaluation (IFE) Matrix, Internal Audit
  13. FUNCTIONS OF MANAGEMENT:Planning, Organizing, Motivating, Staffing
  14. FUNCTIONS OF MANAGEMENT:Customer Analysis, Product and Service Planning, Pricing
  15. INTERNAL ASSESSMENT (FINANCE/ACCOUNTING):Basic Types of Financial Ratios
  16. ANALYTICAL TOOLS:Research and Development, The functional support role
  17. THE INTERNAL FACTOR EVALUATION (IFE) MATRIX:Explanation
  18. TYPES OF STRATEGIES:The Nature of Long-Term Objectives, Integration Strategies
  19. TYPES OF STRATEGIES:Horizontal Integration, Michael Porterís Generic Strategies
  20. TYPES OF STRATEGIES:Intensive Strategies, Market Development, Product Development
  21. TYPES OF STRATEGIES:Diversification Strategies, Conglomerate Diversification
  22. TYPES OF STRATEGIES:Guidelines for Divestiture, Guidelines for Liquidation
  23. STRATEGY-FORMULATION FRAMEWORK:A Comprehensive Strategy-Formulation Framework
  24. THREATS-OPPORTUNITIES-WEAKNESSES-STRENGTHS (TOWS) MATRIX:WT Strategies
  25. THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
  26. THE STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
  27. BOSTON CONSULTING GROUP (BCG) MATRIX:Cash cows, Question marks
  28. BOSTON CONSULTING GROUP (BCG) MATRIX:Steps for the development of IE matrix
  29. GRAND STRATEGY MATRIX:RAPID MARKET GROWTH, SLOW MARKET GROWTH
  30. GRAND STRATEGY MATRIX:Preparation of matrix, Key External Factors
  31. THE NATURE OF STRATEGY IMPLEMENTATION:Management Perspectives, The SMART criteria
  32. RESOURCE ALLOCATION
  33. ORGANIZATIONAL STRUCTURE:Divisional Structure, The Matrix Structure
  34. RESTRUCTURING:Characteristics, Results, Reengineering
  35. PRODUCTION/OPERATIONS CONCERNS WHEN IMPLEMENTING STRATEGIES:Philosophy
  36. MARKET SEGMENTATION:Demographic Segmentation, Behavioralistic Segmentation
  37. MARKET SEGMENTATION:Product Decisions, Distribution (Place) Decisions, Product Positioning
  38. FINANCE/ACCOUNTING ISSUES:DEBIT, USES OF PRO FORMA STATEMENTS
  39. RESEARCH AND DEVELOPMENT ISSUES
  40. STRATEGY REVIEW, EVALUATION AND CONTROL:Evaluation, The threat of new entrants
  41. PORTER SUPPLY CHAIN MODEL:The activities of the Value Chain, Support activities
  42. STRATEGY EVALUATION:Consistency, The process of evaluating Strategies
  43. REVIEWING BASES OF STRATEGY:Measuring Organizational Performance
  44. MEASURING ORGANIZATIONAL PERFORMANCE
  45. CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM:Contingency Planning