Strategy Tools

Copyright © 2011 Pearson Education Ch 3 -2

Copyright © 2011 Pearson Education Ch 3 -3
 External Factor Analysis Summary (EFAS)
Maytag Example

Weighted
External Factors Weight Rating Score Comments
Opportunities 1 2 3 4 5
• Economic integration of .20 4 .80 Acquisition of
European Community Hoover
• Demographics favor quality .10 4 .40 Maytag quality
appliances
• Economic development of Asia .05 1 .05 Low Maytag presence
• Opening of Eastern Europe .05 2 .10 Will take time
• Trend to “Super Stores” .10 2 .20 Maytag weak in this
Threats channel

• Increasing government regulations .10 4 .40 Well positioned

• Strong U.S. competition .10 4 .40 Well positioned
• Whirlpool and Electrolux strong .15 3 .45 Hoover weak globally
globally
• New product advances .05 1 .05 Questionable
• Japanese appliance companies .10 2 .20 Only Asian presence is
Australia
Total Scores 1.00 3.05

4
 External Factor Analysis Summary (EFAS)

External Weighted
Factors Weight Rating Score Comments
1 2 3 4 5
Opportunities

Threats

Total Weighted Score 1.00

5
 EFE Matrix Steps

1. List key external factors

2. Weight from 0 to 1
3. Rate effectiveness of current strategies
4. Multiply weight * rating
5. Sum weighted scores
 Internal Factor Analysis Summary (IFAS)

Weighted
Internal Factors Weight Rating Score Comments
1 2 3 4 5
Strengths
Well trained employees
Advanced technology machines

Weaknesses
80% of employees are above 50 Y
Limited number of SKUs (10SKUs)

1.00
Total Weighted Score

7
 Internal Factor Evaluation (IFE) Matrix

1. List key internal factors

2. Assign a weight ranging from 0.0 to 1.0
3. Assign a 1 to 4 rating to each factor
4. Multiply the weight times the rating
5. Sum the weighted scores
 Internal Factor Analysis Summary (IFAS):
Maytag as Example

Internal
Weighted
Factors
Weight Rating Score Comments
Strengths
• Quality Maytag culture 1 2 3 4 5
• Experienced top management .15 4 .6 Quality key to success
• Vertical integration .05 4 .20 Know appliances
• Employee relations .10 4 .40 Dedicated factories
• Hoover’s international orientation .05 3 .15 Good, but deteriorating
.15 3 .45 Hoover name in cleaners
Weaknesses
• Process-oriented R&D
• Distribution channels .05 2 .10 Slow on new products
.05 2 .10 Superstores replacing
• Financial position small dealers
• Global positioning .15 2 .30 High debt load
.20 2 .40 Hoover weak outside the
United Kingdom and
• Manufacturing facilities Australia
.05 4 .20 Investing now
Total Weighted Score

1.00 3.05

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Competitive Profile Matrix CPM
 SWOT Analysis

Strengths How maximize them

Internal
Weaknesses How minimize their effects

Opportunities How you capitalize on them

External
Threats How you avoid them
 Strengths/Weaknesses
• Products
• Employees
• Company
 Opportunity / threats
• Competitors
• Customers
• Market size
• Political environment
• Economic environment
• Governmental regulations
• Others
TOWS analysis
 Strengths Weakness
1. Availability of Time 1. No links in other parts
2. Good Reputation of of the Government.
Researcher 2. Small Skill base
3. Links with Ministry 3. Little alternative in
case of absentees.

Opportunities Maxi Max S1O2 Mini Max

1. Working on topical
issue.
2. Government support
to NGO.
3. NGO support.

Threats Maxi Min Mini Min

1. Reaction to Report.
2. Chances of
Nullification of
Findings by
Government
Departments
BCG Matrix
Ch 6 -19
BCG Matrix

Relative Market Share Position

Ratio of a division’s own market share in an industry

to the market share held by the largest rival firm in
that industry
 BCG Matrix

Question Marks
Low relative market share, competes in high-growth industry
 Cash needs are high
 Case generation is low

Decision to strengthen (intensive strategies) or divest

 BCG Matrix

Stars
High relative market share and high growth rate
 Best long-run opportunities for growth & profitability

Substantial investment to maintain or strengthen dominant position

 Integration strategies, intensive strategies, joint ventures
 BCG Matrix

Cash Cows
High relative market share, competes in low-growth industry
 Generate cash in excess of their needs
 Milked for other purposes
Maintain strong position as long as possible
 Product development, concentric diversification
 If weakens – retrenchment or divestiture
 BCG Matrix

Dogs

Low relative market share, competes in slow or no market growth

 Weak internal & external position

Liquidation, divestiture, retrenchment

Grand strategy matrix
Issue priority matrix