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Chapter 6: Strategy Analysis and Choice
CHAPTER 6
STRATEGY ANALYSIS AND CHOICE

CHAPTER OUTLINE
 The Nature of Strategy Analysis and Choice

 A Comprehensive Strategy-Formulation Framework
 The Input Stage
 The Matching Stage
 The Decision Stage
 Cultural Aspects of Strategy Choice
 The Politics of Strategy Choice
 Governance Issues
CHAPTER OBJECTIVES
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 SWOT 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.
CHAPTER OVERVIEW
Strategic analysis and choice largely involve making subjective decisions based on objective
information. Chapter 6 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.
Excellent Strategic Management Showcased – The Coca-Cola Company

TCCC is the world’s largest global manufacturer, retailer, and marketer of non-alcoholic
beverage concentrates and syrups. TCCC has operated using excellent strategic management for
many decades.
EXTENDED CHAPTER OUTLINE WITH TEACHING TIPS
I. THE NATURE OF STRATEGY ANALYSIS AND CHOICE
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Copyright © 2013 Pearson Education
A. Figure 6-1 illustrates this chapter’s focus on establishing long-term objectives, generating
alternative strategies, and selecting strategies to pursue.
B. The Process of Generating and Selecting Strategies
1. 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.
2. 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.
3. Alternative strategies proposed by participants should be considered and discussed in a

meeting or series of meetings.
II. A COMPREHENSIVE STRATEGY-FORMULATION FRAMEWORK
A. Important Strategy-Formulation Techniques
1. Important strategy-formulation techniques can be integrated into a three-stage

decision-making framework, as shown in Figure 6-2 of the textbook. The tools
presented in this framework are applicable to all sizes and types of organizations and
can help strategists identify, evaluate, and select strategies.
2. The framework described above has three stages:
a. Stage 1: The Input Stage summarizes the basic input information needed to
formulate strategies. It consists of the EFE Matrix, the IFE Matrix, and the CPM
b. Stage 2: The Matching Stage focuses upon generating feasible alternative
strategies by aligning key external and internal factors. It includes the SWOT
Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix.
c. Stage 3: The Decision Stage uses the GSPM to reveal the relative attractiveness of
alternative strategies.
3. All nine techniques included in the strategy-formulation framework require integration

of intuition and analysis.
III. THE INPUT STAGE
A. Procedures for developing an EFE Matrix, an IFE Matrix, and a CPM were presented
earlier.
123
B. The input tools require strategists to quantify subjectively during early stages of the
strategy-formulation process. Making small decisions in the input matrices regarding the
relative importance of external and internal factors allows strategists to generate and
evaluate alternative strategies more effectively.
IV. THE MATCHING STAGE
A. The Matching Stage
1. The Matching Stage includes the Strengths-Weaknesses-Opportunities-Threats

(SWOT) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the
Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and the
Grand Strategy Matrix.
2. Any organization, whether military, product-oriented, service-oriented, governmental,

or even athletic must develop and execute good strategies to win.
3. Table 6-1 provides the basic concept of matching.
B. The SWOT Matrix
1. The SWOT Matrix is an important matching tool that helps managers develop four
types of strategies:
a. SO strategies—use a firm’s internal strengths to take advantage of external

opportunities.
b. WO strategies—are aimed at improving internal weaknesses by taking advantage
of external opportunities.
c. ST strategies—use a firm’s strengths to avoid or reduce the impact of external
threats.
d. WT strategies—are defensive tactics directed at reducing internal weaknesses and
avoiding external threats.
2. A schematic representation of the SWOT Matrix is provided in Figure 6-3 in the

textbook.
3. There are eight steps to constructing a SWOT Matrix:
a. List the firm’s key external opportunities.

b. List the firm’s key external threats.
c. List the firm’s key internal strengths.
d. List the firm’s key internal weaknesses.
e. Match internal strengths with external opportunities and record the resulting SO
strategies in the appropriate cell.
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f. Match internal weaknesses with external opportunities and record the resulting
WO strategies.
g. Match internal strengths with external threats and record the resultant ST
strategies.
h. Match internal weaknesses with external threats and record the resulting WT
strategies.
4. Although the SWOT matrix is widely used in strategic planning, the analysis does
have some limitations.
a. SWOT does not show how to achieve a competitive advantage.

b. A SWOT matrix is a static assessment.
c. SWOT analysis may lead to firm to overemphasize certain internal or external
factors.
VTN (Visit the Net): http://www.planware.org/strategicsample.htm provides a sample strategic plan

as well as the basis for a SWOT matrix.
Teaching Tip: There is an excellent article about SWOT analysis located at

http://www.mindtools.com/pages/article/newTMC_05.htm including a downloadable template.
VTN (Visit the Net): http://www.mindtools.com gives excellent information about the need for
planning.
C. The SPACE Matrix
1. The SPACE Matrix, another important Stage 2 matching tool, is illustrated in Figure
6-4. Its four-quadrant framework indicates whether aggressive, conservative,
defensive, or competitive strategies are more appropriate for a given organization.
2. The axes of a space matrix represent two internal dimensions (financial position and
competitive position), and two external dimensions (stability position and industry
position)
3. Depending on the type of organization, numerous variables could make up each of the
dimensions represented on the axes of the SPACE Matrix.
4. The steps to develop a SPACE Matrix include:
a. Select a set of variables to define financial position (FP), competitive position

(CP), stability position (SP), and industry position (IP).
b. Assign a numerical value ranging from +1 (worst) to +7 (best) for the variables
that make up the FP and IP dimensions. Assign a number between –1 (best) to –7
(worst) for variables that make up the SP and CP dimensions. On the FP and CP
axes, make comparison to competitors. On the IP and SP axes, make comparison
to other industries.
125
c. Compute an average score for FP, CP, IP, and SP by summing the values given to
the variables and dividing by the number of variables included in each dimension.
d. Plot the average scores for FP, IP, SP, and CP on the appropriate axis in the
SPACE Matrix.
e. Add the two scores 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.
f. 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, competitive, defensive, or conservative.
3. Table 6-2 shows other variables commonly included in the SPACE Matrix. Figure 6-5
provides examples of the strategy profiles. Table 6-3 provides an example of a
SPACE matrix analysis for a bank. Table 6-4 and Figure 6-6 provide an actual
SPACE Matrix for Krispy Kreme.
D. The BCG Matrix
1. Autonomous divisions (or profit centers) of an organization make up what is called a

business portfolio.
2. The BCG Matrix graphically portrays differences among divisions (of a firm) in terms
of relative market share position and industry growth rate.
3. Table 6-5 identifies reasons to disclose or not disclose financial information by

division.
4. Table 6-6 presents market share data for selected industries in 2011.
5. The BCG Matrix appears in Figure 6-7. Divisions in the respective circles in the BCG
Matrix are called Question Marks, Stars, Cash Cows, and Dogs.
4. The four quadrants represent the following:
a. Question Marks—Divisions in Quadrant I have a low relative market share

position, yet compete in a high-growth industry. Generally these firms’ cash needs
are high and their cash generation is low.
b. Stars—Quadrant II businesses represent the organization’s best long-run

opportunities for growth and profitability. These businesses have a high relative
market share and compete in high growth rate industries.
c. Cash Cows—Divisions positioned in Quadrant III have a high relative market

position, but compete in a low-growth industry. They are called Cash Cows
because they generate cash in excess of their needs.
126
d. Dogs—Quadrant IV divisions of the organization have a low relative market share
position and compete in a slowed or no-growth industry; they are Dogs in a firm’s
portfolio.
4. Figures 6-8 and 6-9 provide examples of the BCG Matrix.
E. The IE Matrix
1. The IE Matrix positions an organization’s various divisions in a nine-cell display

illustrated in Figure 6-10.
2. The IE Matrix is similar to the BCG Matrix in that both tools involve plotting
organization divisions in a schematic diagram; this is why they are called portfolio
matrices.
3. Differences between the IE Matrix and the BCG Matrix

a. Axes are different.
b. IE Matrix requires more information about divisions than BCG.
c. Strategic implications of each matrix are different.
4. 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.
5. The IE Matrix can be divided into three major regions, as shown in Figure 6-11:
a. Divisions 1, 2, and 3 can be described as grow and build.

b. Divisions IV is a candidate for harvest or divest.
c. Divisions VI, VIII, or IX should use harvest or divest strategies.
6. As indicated in Figure 6-12, the IE Matrix has five product segments. Division I has
the largest revenues and the largest profits in the matrix.
F. The Grand Strategy Matrix
1. In addition to the SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the
Grand Strategy Matrix has become a popular tool for formulating alternative
strategies. All organizations can be positioned in one of the Grand Strategy Matrix’s
four strategy quadrants.
2. The Grand Strategy Matrix is pictured in Figure 6-13.
3. It is based on two evaluative dimensions: competitive position and market growth.
a. Firms located in Quadrant I of the Grand Strategy Matrix are in excellent strategic
position.
127
b. Firms positioned in Quadrant II need to evaluate their present approach to the
marketplace.
c. Quadrant III organizations compete in slow-growth industries and have weak
competitors.
d. Quadrant IV businesses have strong competitive position but are in a slow growth
industry.
V. THE DECISION STAGE
A. The Quantitative Strategic Planning Matrix (QSPM)
1. Other than ranking strategies to achieve the prioritized list, there is only one analytical
technique in the literature designed to determine the relative attractiveness of feasible
alternative actions.
2. This technique is the QSPM, which comprises Stage 3 of the strategy-formulation

analytical framework. This technique objectively indicates which alternative strategies
are best.
3. The basic format of the QSPM is illustrated in Table 6-7. The left column consists of
key external and internal factors, and the top row consists of feasible alternative
strategies.
4. A QSPM for a retail computer store is provided in Table 6-8.
5. Six steps to developing a QSPM:
a. Make a list of the firm’s key external opportunities/threats and internal

strengths/weaknesses in the left column of the QSPM.
b. Assign weights to each key external and internal factor.
c. Examine the Stage 2 matrices and identify alternative strategies that the
organization should consider implementing.
d. Determine the Attractiveness Scores (AS).
e. Compute the total AS.
f. Compute the sum Total AS.
6. An example QSPM for UPS is given in Table 6-9.
B. Positive Features and Limitations of the QSPM
1. A positive feature of the QSPM is that sets of strategies can be examined sequentially
or simultaneously. Another positive feature of the QSPM is that it requires strategists
to integrate pertinent external and internal factors into the decision process.
Developing a QSPM makes it less likely that key factors will be overlooked or
weighted inappropriately.
128
2. The QSPM is not without some limitations. First, it always requires intuitive
judgment. Second, it can only be as good as the prerequisite information and
matching analyses upon which it is based.
VI. CULTURAL ASPECTS OF STRATEGY CHOICE
A. Culture includes the set of shared values, beliefs, attitudes, customs, norms, personalities,
heroes, and heroines that describe a firm.
B. It is beneficial to view strategic management from a cultural perspective because success

often rests on the degree of support that strategies receive from a firm’s culture.
1. If a firm’s strategies are supported by cultural products such as values, beliefs, rites,
rituals, ceremonies, stories, symbols, language, heroes, and heroines, then managers
often can implement changes swiftly and easily.
2. Strategies that require fewer cultural changes may be more attractive because
extensive changes can take considerable time and effort.
VII. THE POLITICS OF STRATEGY CHOICE
A. In the absence of objective analyses, strategy decisions too often are based on the politics
of the moment. With development of improved strategy-formulation tools, political factors
become less important in making strategic decisions.
B. Tactics to aid in strategy:
1. Equifinality – It is often possible to achieve similar results using different means or

paths.
2. Satisfying – Achieving satisfactory results with an acceptable strategy is far better than
failing to achieve optimal results with an unpopular strategy.
3. Generalization – Shifting focus from specific issues to more general ones may
increase options for gaining organizational commitment.
4. Focus on Higher-Order Issues – By raising an issue to a higher level, many short-term
interests can be postponed in favor of long-term interests.
5. Provide Political Access on Important Issues – Strategy and policy decisions with
significant negative consequences for middle managers will motivate intervention
behavior from them.
VIII. GOVERNANCE ISSUES
129
A. A director is one of a group of persons entrusted with the overall direction of a corporate
enterprise. A board of directors is a group of persons elected by the ownership of a
corporation to have oversight and guidance over management and to look out for the
shareholders’ interests.
B. Table 6-10 gives the duties and responsibilities of boards of directors.
C. The recent recession and credit crunch prompted shareholders to become more wary of
boards of directors. Shareholders are now demanding that their boards do a better job of
governing corporate America. Shareholders are also upset with boards for allowing CEOs
to receive huge end-of-year bonuses when the stock price drops drastically during the
year.
D. Business Week recently evaluated the boards of most large American companies and
provided the following “principles of good governance:”
1. No more than two directors are current or former company executives.

2. The audit, compensation, and nominating committees are made up solely of outside
directors.
3. Each director owns a large equity stake in the company, excluding stock options.
4. Each director attends at least 75% of all meetings.
5. The board meets regularly without management present and evaluates its own
performance annually.
6. The CEO is not also the Chairperson of the Board.
7. Stock options are considered a corporate expense.
8. There are no interlocking directorships (where a director or CEO sits on another
director’s board).
E. The Sarbanes-Oxley Act of 2002 resulted in scores of boardroom overhauls among

publicly traded companies.
1. The jobs of chief executive and chairman are now held by separate persons.
2. Board audit committees must have at least one financial expert as a member.
3. Board audit committees must meet 10 or more times per year rather than 3-4 times per
year.
4. A direct response of increased pressure on directors to stay informed and execute their
responsibilities is that audit committees are becoming more commonplace.
VTN (Visit the Net): http://www.allianceonline.org/content/index.php?pid=160 provides answers to

“Frequently Asked Questions About Strategic Planning.”
130
Teaching Tip: Visit the text’s website at www.pearsonglobaleditions.com/david for this chapter’s
web exercises.
ISSUES FOR REVIEW AND DISCUSSION
1. The Coca-Cola Company (TCCC) has done really well for decades. How does TCCC
do so well and how can they continue to prosper?
Answer: TCCC has operated using excellent strategic management for many decades
helping them to do well. The comprehensive strategy-formulation technique is found on
page 204.
2. Give an internal and external strength of TCCC and show how those two factors can
be matched to reveal a feasible alternative strategy.
Answer: Student answers may vary. See Table 6-1 “Matching Key External and Internal
Factors to Formulate Alternative Strategies.”
3. What do you believe are the three major external opportunities facing TCCC?
Answer: Student answers may vary; however the three major external opportunities could
be:
• Changing consumer taste – growth of consumers
• Exit of competitors
• Opening of new markets – mergers and acquisitions
4. Develop a SPACE Matrix for TCCC. Explain the implications of your Matrix.
Answer: Students should have a clear understanding of the four quadrants in this Matrix.
Students should give a reason for their answer.
5. Develop a BCG Matrix for TCCC. Explain the implications of your Matrix.
Answer: Students may develop different compositions within the BCG Matrix: Question
Marks, Stars, Cash Cows and Dogs. Students should give their rationale of the respective
quadrant.
6. Develop a QSPM for TCCC that includes two strategies, six internal factors, and six
external factors. What strategy appears to be best for TCCC to pursue?
131
Answer: Students’ answer may vary. They will have to refer to page 221, Table 6-7 “The
Quantitative Strategic Planning Matrix – QSPM”.
Six Internal Factors:

• Management
• Marketing
• Finance
• Production
• Research & Development
• Management Information Systems
Six External Factors:

• Economy
• Political
• Social
• Demographic
• Technological
• Competitive
7. Do a Google search using the key terms “boards of directors.” What new information
did you learn that was not given in the chapter?
Answer: Students’ answer will vary depending on their searches.
8. In preparing a SPACE Matrix, which axis would the European political and economic
unrest fall under?
Answer: In the lower right or competitive quadrant.
9. In preparing a BCG Matrix, what would be the best range for the IGR axis as applied
to the beverage industry?
Answer: Students’ answers may vary. See page 212; “The Boston Consulting Group (BCG)
Matrix.”
10. List four reasons why the IE Matrix is widely considered to be superior to the BCG
Matrix.
Answer:
• The IE Matrix is based on 2 key dimensions: the IFE total weighted scores on the x
axis and the EFE total weighted scores on the y axis.
• IE Matrix can be divided into 3 major regions that have different strategy
implications
• IE Matrix has five product segments
132
• IE Matrices are more effective to formulate strategies and allocate resources among
divisions.
11. Is there a limit to the number of strategies that could be examined in a QSPM? Why?
Answer: There is no limit because strategies may be examined sequentially or

simultaneously.
12. Go to Adidas’ website and examine what you can find about the company’s board of
directors. Evaluate Adidas’ board based on guidelines presented in the chapter.
Answer: Students’ answers will vary, depending on how the students interpret the website.
13. Explain why the CEO of a firm should not also be chairperson of the board of
directors.
Answer: The CEO should not be the chairperson of the Board of Directors because they are
responsible to effectively managing the Company. If they were Chair they could cover up
any wrongdoings.
14. In preparing a QSPM, what should be done if the TAS for each strategy turns out to
be identical?
Answer: Students’ answers may vary, depending on their interpretation. See page 221, ”The
Quantitative Strategic Planning Matrix.”
15. Summarize in your own words the “Special Note to Students” section given at the end
of the chapter.
Answer: Students must not only know the financial aspects/calculations but must be able to
interpret and analyze these findings.
16. Develop a Grand Strategy Matrix for TCCC and include PepsiCo and Dr. Pepper
Snapple.
Answer: Students’ answers will vary, however, they will base their answer on page 219
“The Grand Strategy Mix.”
17. Explain what should be done if the SPACE vector coordinate point is (0,0).
Answer: Students’ answer will vary.
18. Why on a QSPM should you work row by row instead of column by column?
133
Answer: QSPM is designed to determine the relative attractiveness of feasible alternative
actions. Hence it moves from Stage 1 to Stage 2 etc which is row by row and not column by
column.
19. When constructing a SPACE Matrix, would it be appropriate to use a 1 to 10 scale for
all axes?
Answer: It is not appropriate as it depends on the type of organizations and the industry.
20. If TCCC has the leading market share in Russia, where along the top axis of a BCG
would their Russia Operations be plotted?
Answer: Students’ answer may vary, however, they should know the “Boston Consulting
Group (BCG) Matrix” as detailed on page 212.
21. Develop a SWOT Matrix for yourself.
Answer: Students’ answers will vary, however they should show an understanding of:
Strengths, Weaknesses, Opportunities and Threats
22. Why is “matching” internal with external factors such an important strategic
management activity?
Answer: To enable the organization to know whether they have the capabilities to meet
external changes.
23. Diagram the strategy formulation framework that includes three stages and nine
analytical tools. Which stage and tool do you feel is most important? Why?
Answer: Student answers will vary depending on the product/industry chosen. Hence, the
importance of each stage and tool will vary. However, the students’ diagram on the three
stages and nine analytical tools are similar for all students.
24. Develop an example SWOT Matrix for your college or university with two items in
each quadrant. Make sure your strategies clearly exemplify “matching” and show this
with (S1, T2) type notation.
Answer: Student answers will vary. However, students should demonstrate their
understanding of:
• SWOT matrix namely: Strengths; Weaknesses; Opportunities
• SO Strategies
• WO Strategies
• Threats & the ST Strategies
• WT Strategies.
134
25. Develop an example SPACE Matrix for a global company that you are familiar with.
Include two factors for each of the four axes (SP, IP, SP, and CP).
Answer: Student answers may vary, depending on their choice. However, students should
demonstrate their understanding on configuration of Space Matrix, namely, Conservative;
Aggressive; Defensive; Competitive.
26. What would be an appropriate SP rating for TCCC?
Answer: SP stands for stability position; an external dimension.
27. Discuss the pros and cons of divulging divisional information to stakeholders.
Answer: The pros and cons can be found on page 213 - see Table 6-5 “Reasons to (Not to)
Disclose Financial Information by Segment (By Division).”
28. Develop an example BCG Matrix for a company that has three divisions with revenues
of 4, 8, and 12 and profits of 5, 3, and 2, respectively.
Answer: BCG matrix comprises of two major components:

• horizontal axis – Relative Market Share Position
• vertical axis – Industry Sales Growth Rate
In these two components, there are: Stars, Question Marks, Cash Cows, and Dogs. Students
may plot revenue of 4, profit 5 as Stars; 8 and profits 3 as Cash Cows and lastly Dogs.
29. Develop a SPACE Matrix for a firm that is a weak competitor competing in a slow
growing and unstable industry. Label axes and quadrants clearly.
Answer: Students will generally plot the firm in the Competitive quadrant of the SPACE
MATRIX. Students should demonstrate understanding of the 4 quadrant of the SPACE
Matrix.
30. Discuss the limitations of a BCG analysis and the limitations of a SPACE analysis.
Answer: BCG Analysis views every business as a Star, Cash Cow, Dog or Question Mark
which is an oversimplification. Many businesses fall right into the middle of the BCG
Matrix and thus are not easily classified. Furthermore, it does not reflect whether or not
various divisions or their industries are growing over time; that is, the matrix has no
temporal qualities, but rather it is a snapshot of an organization at a given point of time.
SPACE Analysis requires numerous variables which sometimes are confusing and cause
errors. Furthermore, SPACE Analysis is tailored only to a particular organization being
135
studied and based on actual information as much as possible – sometimes may not be
possible.
31. Prepare an IE Matrix for a company with two divisions that have 30 and 60 in
revenues to go with 10 and 15 in profits.
Answer: The IE (Internal External) Matrix is designed for multidivisional firms with
different business units to compete in different industries. IE Matrix is based on two key
dimensions: the IFE total weighted scores and EFE total weighted scores. Each division of
an organization should construct an IFE Matrix and an EFE Matrix for its part of the
organization. Bearing this, students will then plot the IE Matrix chart.
32. Develop a Grand Strategy Matrix with two example companies in each quadrant, i.e.,
companies that you know something about and that you would place in those
quadrants.
Answer: Grand Matrix is a four-quadrant matrix. The companies may be placed in

different quadrants. Students should understand the different quadrants:
• Quadrant 1: firms are in excellent strategic position
• Quadrant 2: firms need to evaluate their present approach to the market place
seriously
• Quadrant 3: firms compete in slow-growth industries and have weak competitors
• Quadrant 4: firms have a very strong competitive position but in a slow growth
industry.
33. Develop a QSPM for yourself—given two strategies: 1) go to graduate school or 2)

begin working full-time.
Answer: Student answers may vary. Students should bear the following steps in mind
when developing their strategies:
• Step 1 Make a list of the firm’s key external opportunities / threats and internal
strengths / weaknesses in the left column of the QSPM
• Step 2 Assign weights to each key external opportunities / threats and internal
• Step 3 Examine the Stage 2 (matching) matrices, and identify alternative
strategies that the organization should consider implementing
• Step 4 Determine the Attractiveness Scores (AS)
• Step 5 Compute the Total Attractiveness Scores
• Step 6 Compute the Sum Total Attractiveness Score
34. Would a QSPM analysis be useful without the weight column? Why or why not?
Answer: A QSPM analysis would not be so useful without the weight column. This is
because the weights would indicate the relative importance of each factor that will
eventually be the basis of specific strategy formulation.
136
35. Discuss the characteristics of successful strategists in terms of political actions within
the firm.
Answer: The characteristics are:
• Successful strategists were found to let weakly supported ideas and proposals die
through inaction and to establish additional tests for strongly supported ideas
considered unacceptable but not openly opposed.
• Successful strategists kept a low political profile on unacceptable proposals and
strive to let most negative decisions come from subordinates or a group
consensus, reserving their personal vetoes for big issues and crucial moments.
• Successful strategists did a lot of chatting and informal questioning to stay abreast
of how things were progressing and to know when to intervene; led strategy but
did not dictate it. They gave few orders, announced few decisions, depended
heavily on informal questioning, and sought to probe and clarify until a consensus
emerged.
• Successful strategists ensured that all major power bases within an organization
were represented in, or had access to, top management.
• Successful strategists minimized their own political exposure on highly
controversial issues.
36. In order of attractiveness to you, rank the political tactics presented on page 227.
Answer: Students may rank the political tactics according to their individual perception of
attractiveness. The political tactics are:
• Equifinality – achieve similar results using different means of paths
• Satisfying – achieving satisfactory results with an acceptable strategy
• Generalization – shifting focus from specific issues to more general ones
• Focus on Higher –Order Issues – raising an issue to a higher level, many short –
term interests can be postponed in favor of long term interests
• Provide Political Access on Important issues – Strategy and policy decisions with
significant negative consequences for middle managers will motivate
interventions behavior from them. If middle managers do not have an opportunity
to take a position on such decisions in appropriate political reforms, they are
capable of successfully resisting the decisions after they are made.
37. For a business in your city, list in order of importance the top eight board-of-director
duties and responsibilities listed in the chapter.
Answer: Student answers may vary, depending on their perception of duties and
responsibilities of top eight board of directors.
38. Discuss the pros and cons of Sweden’s new board-of-director rule regarding women.
137
Answer: Student answers may vary. Some of the pros include women ask different
questions and make different suggestions in boardrooms which is helpful because women
form a significant number of consumers worldwide. However, imposing a minimal
percentage of women as directors may result in unqualified women being appointed board
members to meet quotas.
39. Develop a SPACE Matrix for your college or university.
Answer: Student answers may vary. However, students should have a clear understanding
of the 4 quadrant in this Matrix, and to place his/her College into the respective quadrant to
be supported by the reasoning.
40. Develop a BCG Matrix for your college or university.
Answer: Depending on the student college, different students may develop different
compositions within the BCG Matrix: Question Marks, Stars, Cash Cows and Dogs.
Students should give their rationale in putting their college or university into the respective
quadrant.
41. Explain the limitations of the BCG, SPACE, and SWOT.
Answer: Business is dynamic and not static. Viewing every business as a Star, Cash Cow,
Dog or Question Mark is an oversimplification; many businesses fall right in the middle of
the BCG matrix and thus not easily classified.
The BCG Matrix does not reflect whether or not various divisions or their industries are
growing over time; that is the matrix has no temporal qualities but rather it is a snapshot of
an organization at a given point in time. Other variables, such as market size and
competitive advantages are important in making strategic decisions about various divisions.
SPACE: Makes use of numerous variables which may be confusing and difficult in practical
situation. SPACE Matrix also depends on gathering as much factual information as
possible, though sometimes it may not be possible.
SWOT: The analysis does not show how to achieve a competitive advantage, so it must
not be an end in itself. SWOT is a static assessment in time. As circumstances,
capabilities, threats and strategies change, the dynamics of a competitive environment
may not be revealed in a single matrix. SWOT analysis may lead the firm to
overemphasize a single internal or external factor in formulating strategies.
42. Develop a QSPM for a local company that you are familiar with.
Answer: Students should use the factors of QSPM in developing a QSPM for a local
company. The basic format considers key external and internal factors and top row
consists of feasible alternative strategies. Students should understand this concept and its
weight in QSPM.
138
43. Write a short essay that reveals your recommendation to firms regarding disclosure
of financial information.
Answer: Student answers will encompass the two broad categories: reasons to disclose
and reasons not to disclose. Basically, the followings are the points for considerations:
Reasons to disclose:
1. Transparency is a good thing in today’s world
2. Investors will better understand the firm which can lead to greater support
3. Managers/employers will better understand the firm, which should lead to greater
commitment
4. Disclosure enhances the communication process both within the firm and with
outsiders
Reasons NOT to disclose:

1. Can become free competitive information for rival firms
2. Can hide performance failures
3. Can reduce rivalry among segments
44. Explain why a before and after BCG and IE analysis can be so useful in presenting a
strategic plan for consideration.
Answer: BCG and IE are designed specifically to enhance a multidivisional firm’s efforts to
formulate strategies. BCG portrays differences among divisions in terms of relative market
share position and industry growth rate. It allows a multidivisional organization to manage
its portfolio of businesses by examining the relative market share position and the industry
growth rate of each division relative to all other divisions in the organization.
IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization
divisions in a schematic diagram. However, there are some important differences. A
common practice is to develop a BCG Matrix and an IE Matrix for the present and then
develop projected matrices to reflect expectations of the future.
45. Find an example company on the Internet that has both a Cash Cow and a Question
Mark division.
Answer: Students will give different examples, depending on their search from the net.
46. Regarding a Grand Strategy Matrix, identify two companies that would be located in
your judgment in each quadrant—identify eight firms total.
Answer: Student answers will vary.
47. For a non-profit company, list in order of importance the top 10 board-of-director
duties and responsibilities.
139
Answer: Student answers may vary; however, students must indicate the rationale in the
selection of listing the order of importance of the duties and responsibilities.
48. Regarding the principles of good governance in the chapter, list in order of importance
the top seven guidelines.
Answer: Student answers may vary; however, students should understand the reasons for
choosing the top seven guidelines out of the 14 guidelines as presented in the book.
140
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»Sen vietävä, veit multa varman paistin.»
— »Vai minä, kun tuulta vain haistin»,
se siihen kettu, »on syyttää somaa, kun on syy ja tyhmyys

omaa. Kuka käskikin veräjäks aukoa suuta, olis viisas tehnyt
muuta:
olis henkeä vetäin ihan sydämestä vain virkkanut:

iitäisestä!»
KÄRÄJILLÄ
Oli kilua, kalua pihamaa taas käräjäpaikan täynnä, meni

sisälle toiset synkkinä ja toiset jo oli käynnä.
Ja toiset portaissa tupakoi

ja vuoroa vaiti vuotti,
ja nurkan takana supattain
joku advokaattiaan juotti.
Sudet, asianajajat, salkkuineen

eestaas ne tärkeinä kulki,
ja närhi, käräjäpukari,
taas oli juopunut julki.
Se rentona olla terhenti

koko pihan sankarina,
kun juuri esille huudettiin
se ketun ja karhun kina.
Ovi aukes: pöllö-laamanni

näkyi tuomaripöydän takaa,
lakikirjat ja kynttilät edessään.
Mies muuten viisas ja vakaa,
sadesäällä vaan kovin kärttyisä,
kun vaivas se vanha leini.
Oli kriivariks viereen kivunnut
— jopa jotain! — jo varpus-teini
Ja lautamiehet, varikset,
ne nuokkui penkkejä pitkin,
väsyneinä seistä nuuhotti
jo korpit, viskaalitkin.
Niin kettu esihin viipotti

ja vilhui lautakuntaan;
tuli tassutti perässä karhu, kuin
heränneenä kesken untaan.
Rykäs tuomari, korjas pänsneitään,

»no», sanoi, »no kuulla antaa,
mite teille on, vanhat skurkit, taas,
mite kantaja peelle-kantaa?!»
— »Sitä vaan, hyvä laki ja oikeus,

sitä vaan», sanoi nöyränä kettu,
»täss' anoisin, että kuoma tää
olis sakkoon langetettu.
Se herjas mua, paki paraastaan

minut rosvoks ja ryöväriks pani,
ketun leikkas kansalaiskunniaa,
niin rehellistä ani.»
Oven suussa karhu hämillään

käsissänsä lakkia käänsi.
Jo suuttui: »Ja varas sinä oletkin.»
Se lähemmäs astua väänsi.
»Jo lyö, hyvät miehet auttakaa»,

huus kettu ja tieltä väisti —
»Veit muorin kesävoin», nyrkillään
jo karhu sanoja säisti.
»Suu poikki», kiljaisi tuomari,

»sinull' ollako vierastamiestä?»
Mut karhu vihelsi halveksuin:
»Koko oikeus pitäis piestä.»
— »Mite sano sinä lurjus, hunsvotti,

ja mite se on kieltä, sinä keyte»,
ihan sähisi tuomari, — »fiskaali,
pane kiinni se, kyllä minä näytä.»
Ne panivat karhun rautoihin

ja kettu sai kannetta ajaa,
ja ketulla oli monta myös
valan päältä todistajaa.
Ne muistivat kaikki kuin eilisen

saman tapauksen: sanaharkan
ja loukatun kansalaiskunnian,
selon tehden tiukan, tarkan.
Tuli tuomio: varojen puutteessa

pääs karhu kärsimähän,
ketun kunnia maksoi paljon näät
ja oikeudenkin vähän.
Ja niin oli vedelle ja leivälle
siks karhu langetettu,
kun karhun muorilta kesävoin
vei petoksella kettu.
VIISI JYVÄÄ
»Niin, tervetultua vierahaks!

Olis meille se suureks kunniaks —
jos muuten tulla passaa.»
Kana-emo vieraaks joutsenen pyys nöyrästi, syvään

niiaten, kädet esiliinan alla.
Oli pidot nähkääs. Mitämaks, tuli joutsen kanan vierahaks.
Kanat tervehti hymyin makein —
ja siinäkös sitten niiattiin ja kaarreltiin ja kursailtiin, emot

vilkas tyttärihinsä.
Mut kana se vast' oli olevinaan

— aiai! — ja pöyhkeä vieraastaan
»Sukulainen!» suhkas se muille.
Ja kukko löi olalle joutsenen:

» Veli, saatpas herkut herkkujen —
tuo meidän muija se osaa!»
Oli lasten nenät niistetyt.
Kana raapaisi jalkaa: »Pöytään nyt,
hyvät vieraat, joutsen ensin!»
Mitkä kestit luona purtilon

ja konverseeraus kohta on!
On ruokaakin monta jyvää.
»Ja olkaa hyvät ja vassakuu!»

kana pyytelee ja punastuu
omanarvon tärkeyttään.
»Ei kiitos, söin jo kylliksein,

ihan koko jyvästä selvän tein»,
kananeidit hienostelee.
Mut silloin sattuu jotakin.

Kaikk' katsovat vaiti toisihin:
syö joutsen — viisi jyvää.
Pojat tyrskii ja tyrkkii toisiaan.

Kana-emäntä katsoo kauhuissaan:
kokonaista viisi jyvää!
Mikä riettaus, puolet ateriaa!

No onkos kuultu mokomaa —
se on häpeäks koko perheen!
Mikä tahdittomuus! Mikä nolaus!

Mikä hienojen tapojen kolaus!
Tämä ihan vatsahan koskee!
»Sukulainen!» nauraa naapurit.
»Syö muutamat niinkuin ryövärit»,
kana ähkyy… »en tarkoita ketään!»
Mut joutsen ei ole tietääkseen:

»Miks syö ei toiset? Ma parhaani teen,
tässä juuri aioin alkaa.»
» Voi taivas!» kana kiljahtaa…

»niin tietysti… alkakaa, alkakaa!»
Kana katsoo tiukasti kukkoon.
Mut kukko väistää katsehen.

Muut kaikki vaihtavat silmäyksen.
Kana pahoin voi ja poistuu.
Syö, juo ja lähtee joutsenkin.

Muut katsein viilein ja säälivin
sen vastaa kumarrukseen.
Mikä kaakatus, mikä kotkotus,

kun vihdoin päättyy surkeus
ja joutsen on varmasti poissa!
»Tuo ukkokin niitä ystäviään —

Ei sukua ole se ensinkään!»
huus parantunut kana.
Kaikk' käyvät lähemmä toisiaan

Ei nouse joutsen kunniaan.
Ajatelkaa, viisi jyvää!
Mikä hyvien tapojen häväistys!
Mikä rakkaan nuorison villitys!
Kokonaista viisi jyvää!
Koko päivän kanat kaakattaa:

ihan vaarassa on isänmaa,
ajatelkaa — viisi jyvää!
YKSIMIELISYYS ON VOIMAA
Oli susien puoluekokous. »Pois karhu asemastaan!» oli tehty

jo ponsi ja huudettu koko harvainvaltaa vastaan.
Vai karhu se vaan tässä mettä jois

ja karhun vaan olis valta!
Ja sudet sais rehkiä yksinään —
työn orjat, sorron alta!
Vai karhu se vaan tässä yksin sais

koko talven vetää unta!
On laiskuus kunnallistettava!
Pois, alas koko yhteiskunta!
Tämä huutoäänin päätettiin.

Soraääntä ei ollut väärää.
Ain' eläköön yksimielisyys!
— »Mutta kuka se sitten määrää?»
huus joku, »ja kuka saa hunajan?»

huus siihen heti joku toinen.
Puheenjohtaja koputti nuijallaan —
Oli melu ihan hurjanmoinen.
Ja yhä vaan alkoi sakeammat
sanat sinkoilla ja soida…
Sitä kaikkea oikein hävettää
näin lehtiin referoida.
Ja siitä on paras ihan vaieta,

mitä tehtiin vielä muuta.
Vaan totuushan ei pala! — paikalle
jäi monta leukaluuta.
LAHORASTAS JA RÄKÄTTIRASTAS
Lahorastas metsässä laulupuullaan

se lauloi Jumalan suomalla suullaan.
Koko kuulaan keväisen yön ja ehtoon

sen sävelet soi ja satoi lehtoon.
Mut ottipas parvessa kuulijakuoron

nuor' räkättirastas myös suunvuoron.
Ja arvostelunsa se juoksutti julki,

näin viisaina, vuolaina sen sanat kulki:
»No jaa, miksei! Kyllä serkkukin laulaa!

Kukin tietysti laulaa kuinka on kaulaa!
On heleänlainen jo pianissimo,
mut vahveta paljon saa fortissimo.
On sijoitus heikko ja tukea puuttuu,

taka-äänet ne vielä kurkkuhun juuttuu.
Yhä kurkku siis kaipaa koulutusta,

alaleuan käyttökin ohjausta.
Suru sanoa, lisäks ei persoonallinen
ole oikein laulu, vaan muiden mallinen:
sehän soi kuin soikin riemua mielen,

haa! — selvästi aihe myös satakielen!
Pahin viimeiseks, hyvät herrasväet!

Miten sanoisinkaan, mutta minusta, näet,
kovin pitkään serkku lauleskeli,

ihan liian hyvä oli kielen keli!
Jos ei niin leikiten laulu soisi,

tosi konstia vasta silloin se oisi!»
HAUTAJAISET
Oli kaste viel' yli kukkien, kun kuoli päiväperhonen, joka lensi
tuokion vain… Niin niin Ja se aamulla haudattiin.
Koko ihanan päivän se elänyt ois…

jo aamulla sen piti pois.
On murhe saleissa ruohiston.

Surutaloon ystävät tulleet on.
Ja ne katsovat pientä vainajaa ja sen siipien kultaa

koskettaa ne hiljaa, hellävaroin, ja kuiskaa äänin aroin, päät
nyökkyen, silmin kostehin: »Miten kaunis vieläkin!»
Surusaatto lähtee verkalleen läpi heinien metsän

matkalleen. Vaikk' aurinko juuri koittaa, niin murheinen on
taivas, maa, sinikellot hiljaa humajaa, surumarssia sirkat
soittaa.
Tien varsilla vaiti on naapurit. Kaikk' kasteen kirkkaat

timantit kukat koruiksi arkulle antaa. Sitä muurahaiset kantaa.
Havuneuloin peitetty on tie, joka vainajain viitaan vie.
Kas, pappi, suruperhonen, jo vartoo ja vaihtaa jalkaa, ja
kuoro leppäkerttujen veräjällä virren alkaa. Se aamunsuuhun
väräjää;
joku saattojoukossa nyyhkyttää. ja heinät murhein huhuu…

Sh! hiljaa! pappi puhuu — Kaikk' katsoo ääneti hautahan… Ja
turilaan, haudankaivajan, — joka karski ja paljon nähnyt on —
käsi pyyhkii selkäpuolla pois salaa kyynelkarpalon: »On
kovaa niin aamulla kuolla!»
KIURUN TUPA
Suviyö oli valkea, hiljainen.

Jo vaikeni laulut lintujen.
Sadat aarteet kukkain aarnion

ne kasteen hopeahelmiss' on.
Vähän häilyy metsä heinien,

joku käy ohi kiurun tupasen.
Joku kulkee kautta kesäyön.

Ihan säikkyin lyö emo kiurun syön.
Emo kiuru raotti oveaan:

»Kuka siellä? — meillä jo nukutaan.»
Kävi polkua neito ja onneaan

hän lauloi yöhön valkeaan.
Kukat taipui alla askelen

ja laulun onnenkylläisen.
Sydän pienen kiurun värähtää

sitä kuullen laulun helinää…
kunis sävelet hiljaa häipyy pois
kuin hopeiset tiu'ut soineet ois.
»Hän laulaa laulua armaalleen»,

hymys kiuru tupaansa pienoiseen.
Yli sinisen salmen rantahan

joku souti neitoa vastahan.
Ja yö oli vaiti ja valkea niin.

Taas kiurun tuvassa nukuttiin.
PELTOSIRKKU
– Miks maantien tomussa laulatkaan? Mikäs kylän arkiseen

pauhinaan sa säveles soida annat? Miks vaihdoit peltoon
harmaaseen sinimetsät runon-saleineen ja ihanat ilmain
rannat?
– Tomu maantien, pelto harmahin runon-sali on mulle

armahin, siks sävelten soida annan! Liki sen ma majani
pienen tein – ja miss' on majani, ylitsein nään ihanan ilmain
rannan!
HEINÄ
Sua, Tahdon laulain kiittää, ettäs olemahan loit sa mun.

Vaikka viikate mun kohta niittää, näinhän sentään, tunsin
sentään sun
aamutuuli, kiuru taivahalla, suven sade — mikä kohtalo!

Laulan vielä viikattehen alla: ylistetty olkoon aurinko!
SYKSY
Kaksi vanhaa, vanhaa varista

nuokkuu hiljaa pellon aidalla.
Ruskea on rinta kaisliston,

taivas harmaa. Sataa. Syksy on.
»Kurkikin jo lähti», veljelleen

toinen virkkaa niinkuin itsekseen.
Pitkä hiljaisuus. Jo toinenkin

»niin maar; lähti», sanoo takaisin.
Sitten vanhukset taas vaikenee.

Järven pintaan sade soittelee.
Sukii siivenselkää toisen pää.

Toinen joskus silmää siristää.
Höyhenihin niskat kyyristyy.

Sataa. Hiljaista on. Hämärtyy
yli pellon mustan kynnöksen.

Tuntuu riihen tuoksu etäinen.

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Strategic Management A Competitive Advantage Approach

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Strategic Management Concepts and Cases 13th Edition

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Strategic Management Concepts and Cases Arab World 1st

STRATEGY ANALYSIS AND CHOICE

 The Nature of Strategy Analysis and Choice

After studying this chapter, you should be able to do the following:

1. Describe a three-stage framework for choosing among alternative strategies.

Excellent Strategic Management Showcased – The Coca-Cola Company

EXTENDED CHAPTER OUTLINE WITH TEACHING TIPS

I. THE NATURE OF STRATEGY ANALYSIS AND CHOICE

B. The Process of Generating and Selecting Strategies

3. Alternative strategies proposed by participants should be considered and discussed in a

II. A COMPREHENSIVE STRATEGY-FORMULATION FRAMEWORK

A. Important Strategy-Formulation Techniques

1. Important strategy-formulation techniques can be integrated into a three-stage

2. The framework described above has three stages:

3. All nine techniques included in the strategy-formulation framework require integration

III. THE INPUT STAGE

IV. THE MATCHING STAGE

A. The Matching Stage

1. The Matching Stage includes the Strengths-Weaknesses-Opportunities-Threats

2. Any organization, whether military, product-oriented, service-oriented, governmental,

3. Table 6-1 provides the basic concept of matching.

B. The SWOT Matrix

a. SO strategies—use a firm’s internal strengths to take advantage of external

2. A schematic representation of the SWOT Matrix is provided in Figure 6-3 in the

3. There are eight steps to constructing a SWOT Matrix:

a. List the firm’s key external opportunities.

a. SWOT does not show how to achieve a competitive advantage.

VTN (Visit the Net): http://www.planware.org/strategicsample.htm provides a sample strategic plan

Teaching Tip: There is an excellent article about SWOT analysis located at

C. The SPACE Matrix

4. The steps to develop a SPACE Matrix include:

a. Select a set of variables to define financial position (FP), competitive position

D. The BCG Matrix

1. Autonomous divisions (or profit centers) of an organization make up what is called a

3. Table 6-5 identifies reasons to disclose or not disclose financial information by

4. The four quadrants represent the following:

a. Question Marks—Divisions in Quadrant I have a low relative market share

b. Stars—Quadrant II businesses represent the organization’s best long-run

c. Cash Cows—Divisions positioned in Quadrant III have a high relative market

4. Figures 6-8 and 6-9 provide examples of the BCG Matrix.

1. The IE Matrix positions an organization’s various divisions in a nine-cell display

3. Differences between the IE Matrix and the BCG Matrix

a. Divisions 1, 2, and 3 can be described as grow and build.

F. The Grand Strategy Matrix

2. The Grand Strategy Matrix is pictured in Figure 6-13.

3. It is based on two evaluative dimensions: competitive position and market growth.

V. THE DECISION STAGE

A. The Quantitative Strategic Planning Matrix (QSPM)

2. This technique is the QSPM, which comprises Stage 3 of the strategy-formulation

4. A QSPM for a retail computer store is provided in Table 6-8.

5. Six steps to developing a QSPM:

a. Make a list of the firm’s key external opportunities/threats and internal

6. An example QSPM for UPS is given in Table 6-9.

B. Positive Features and Limitations of the QSPM

VI. CULTURAL ASPECTS OF STRATEGY CHOICE