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Strategy Analysis and Choice
Strategy Analysis and Choice
Growth
Increases in sales, assets, net income
Competitive Position
Market Share
Technological Leadership
Shareholder Wealth
EPS; Dividends; Shareholder Value
(stock)
Industry specific metrics
Qualitative Areas
Employee Relations
Social Responsibility
Reputation
Related
Diversification
into new
Businesses
Unrelated
Modes of Growth
Internal development
Acquiring firms/businesses
Collaborative arrangements
Strategic Alliances
Joint Ventures
Licensing
Repositioning Strategies
Retrenchment
Assets and/or costs
Divestiture
Spin-offs
Termination Strategies
Liquidation
Merger
Being acquired
Tools
for Formulating and Choosing
Corporate Strategies
1. Portfolio Analysis
The BCG Matrix
Low -20
GE Competitive Position (1. Market Share; 2. Technological
MATRIX Know-How; 3. Product Quality; 4. Service Network;
5. Price Competitiveness; 6. Operating Costs
Industry Attractiveness
Profit
Low Loser
Producer Loser
1. Market growth; 2. market size; 3. Capital requirements;
4. Competitive Intensity
PRODUCT/MARKET EVOLUTION PORTFOLIO MATRIX
Development B1
Growth
Stage B4
of
Industry Shakeout
Maturity/ B2
Saturation
B3
Decline
Competitive Position Strong Average Weak
Market Share; Technological Know-How; Product Quality
Service Network; Price competitiveness; operating costs
Advantages of Portfolio Analyses
Encourages top management to evaluate
each business individually; to set objectives;
and consider resources.
It stimulates use of external data to
supplement management’s judgment.
Its graphic representation makes
interpretation and communication easier.
Limitations of Portfolio Analyses
Defining product/market segments isn’t
easy.
Using standard strategies may miss
opportunities or be impractical.
Providing an illusion of scientific rigor
masks the reality that positions are based on
subjective judgments.
Determining what makes an industry
attractive isn’t always possible.
More Tools
2. Past Performance
% increase in sales
Contribution Margin
Sales or profit (gross, operating, net)
Continue to do what doing
3. Mission and Long Term Objectives
More Tools
4. Matrices
SWOT or TOWS Matrix
SO Strategies
Strengths Opportunities
ST Strategies WO Strategies
WT Strategies
Weaknesses Threats
Matching Key External and Internal Factors to
Formulate Alternative Strategies (Table 6-2)