STRAMA_2_LECTURE_2022(31)

STRAMA LECTURE
2022
STRATEGIC MANAGEMENT TWO

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Strategy Formulation
Development of long-range
plans for effective management
of environmental variables
VISION
MISSION
GOALS
OBJECTIVES
STRATEGIES
POLICIES
Developing Strategy Vision
Vision – dream created during
waking hours
“THE WHAT”
• What do we want to
create?
• What is the realistic,
credible, attractive
future for our
organization?
• What recognizable
conditions will be in
place several years
from now?
Strategy Vision
• What we want to become
• Articulation of destination
• Better, more successful future
• A word picture of what we stand for
• How we want to work with our clients
• How we want to work with each other
“Elements of Strategic Vision”
CHANGE
GOAL
PEOPLE
Developing Strategy Mission
“THE WHy”
• Why do we exist?
• Who are our primary clients?
• What are their needs and demands which
we are attempting to fill?
• What are our major products or services?
• What technologies or methods will we
use?
• What are our core competencies?
• What contribution is our organization
making to society?
• What is the core purpose for which we
were created?
Mission Statement
Declaration of attitude and outlook
NARROW Defines organization’s

primary business but limits
scope of activities
ELECTRONIC DATA SYSTEMS:

Designing and operating
information systems for both
public and private organizations
Mission Statement
BROAD Widens the scope in products,

markets, technologies but no
clear business emphasis
GENERAL MOTORS:
To provide products and services
of such quality that our customers
will receive superior value, our
employees and business partners
will share in our success and our
stockholders will receive a
sustained, superior return on their
investment.
Mission Statement
Good statement generates the impression that a firm is successful, knows
where it is going, and is worthy of one’s time, support and investment
CUSTOMERS Who are the organization’s clients?

PRODUCTS/SERVICES What are the major products/services?
MARKETS Where does the organization compete geographically?
TECHNOLOGY What is the basic technology?
CONCERN What is the attitude towards economic/higher goals?
PHILOSOPHY What are the fundamental beliefs, values, aspirations?
SELF-CONCEPT What are the major strengths and competitive advantage?
PUBLIC IMAGE What is the desired public image?
EFFECTIVENESS Does the mission address the desires of stakeholders?
INSPIRING QUALITY Does the mission motivate and stimulate its reader to
action?
Mission Statement
Our mission is to advance the quality of life by delivering the best solutions to the
communications-based needs of out subscribing public.
We take the lead of the industry as the service provider of choice. We secure our competitive
advantage by packaging solutions enhanced by pioneering innovations in service delivery,
customer care and best appropriate technologies.
We acknowledge the importance of our key stakeholders. In fulfilling our mission we create value
for:
Customers: Customer Satisfaction is the key to our success. We help individuals improve their way
of life and organizations do their business better.
Stakeholders: Our business is sustained by the commitment of Ayala Corporation and Singapore
Telecom International. We take pride and build on the value of shareholders provide. In return,
we maximize the value of their investments.
Employees: Our human resources are our most valuable assets. We provide gainful employment
that promotes the dignity of work and professional growth and thus attract and retain best-in-
market talent.
Community: Community support is vital. We will act as a responsible citizen in the communities in
which we operate.
Government: We are the partners of government in nation building. We support and participate
in the formation of policies, programs and actions that promote fair competition, judicious
regulation and economic prosperity.
The pursuit of our mission is guided by the company’s vision and actualizes our corporate values.
Setting Goals
What one wishes to accomplish with no quantification of what is to
be achieved, and no time horizon for completion
OPEN-ENDED STATEMENT
• What long-term results do we want to achieve?
• In what critical areas do we want to produce
results?
• What will be the potential results that will move
the organization closer to its vision and mission?
Setting Goals
• Performance targets
relating to long-term
endeavors
• What organization want to
have and become in the
future
• Broad, general statements PROFITABILITY
of what the organization is EFFICIENCY
trying to attain GROWTH
SHAREHOLDER WEALTH
RESOURCE UTILIZATION
EMPLOYEES’
CONTRIBUTION
SOCIETY’S CONTRIBUTION
MARKET LEADERSHIP
Setting Objectives
What is to be accomplished by when, and should
be quantified
END RESULTS OF
PLANNED ACTIVITY
(SMART)
Setting Objectives
NET PROFITS
LOW COSTS
INCREASE IN SALES
DIVIDENDS
ROI
WAGES
TAXES PAID
MARKET SHARE
Crafting Strategies
Comprehensive plan how the
organization will achieve its mission,
goals and objectives
• Means by which long-
“THE HOW” term goals will be
• How do we intend to achieved
• Series or groups of
get there?
activities that are carried
• How are we going to
out by organization
achieve our purpose? members to reach the
• What will be the desired goals
means for producing • General approach or
the long-term results? major course of action for
achieving the purpose of
the organization
Strategy Evaluation
Is it right to use this kind of

APPROPRIATENESS
strategy?
Will this strategy make enough of a

ADEQUACY difference to make it worth doing?
How successful will this strategy be in

EFFECTIVENESS reaching the stated goals?
How costly is the strategy compared

EFFICIENCY to the benefits obtained?
What good or bad side effects might

SIDE EFFECTS occur as a result of this strategy?
Strategy Evaluation
Is it right to use this kind of

APPROPRIATENESS
strategy?
External Internal
Conditions STRATEGY
Conditions
Derivation of Potential Strategies
1. Case background
2. Environment Analysis
A. General Environment List of SWOT
B. Operating Environment Conditions
C. Internal Environment
D. EFE Matrix Internal
Key Strategic External
E. IFE Matrix
Factors/Scores (4O/4T) (4S/4W)
F. Competitive Profile Matrix
G. Assumptions “DERIVE”
3. Problem Statement
4. Alternative Courses of Action
H. TOWS Matrix Potential ACAs
I. Internal-External Matrix (Strategies)
J. Grand Strategy Matrix
K. Summary of Strategies
3 ACAs
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TOWS Matrix
M AT C H I N G O F K E Y I N T E R N A L A N D E X T E R N A L FA C T O R S
STRENGTHS WEAKNESSES
(S) (W)
OPPORTUNITIES SO Strategies: WO Strategies:

(O) Use strengths to take Take advantage of
advantage of opportunities opportunities by
overcoming weaknesses
THREATS ST Strategies: WT Strategies:

(T) Use strengths to avoid or Defensive tactics directed
reduce the impact of to minimize weaknesses
threats and avoid threats
TOWS Matrix
• M AT C H I N G O F E F E ? I F E K E Y S T R AT E G I C
FA C T O R S
• O P E N - E N D E D S T R AT E G Y F O R M U L AT I O N
“IFE KSF”
1. 1.
2. 2.
3. 3.
4. 4.
OPPORTUNITIES
1.
2.
3.
4. FORMULATE 2-3
“EFE KSF” THREATS
STRATEGIES
1. ONLY
2.
3.
4.
1. Case background
E. IFE Matrix
3. Problem Statement with evidences
4. Alternative Courses of Action
3 ACAs
1. Strong brand image 1. Too many brands
2. Strict quality control 2. Different level franchisers
3. Strong culture of 3. Lack of global marketing
innovation experience
4. Good corporate image 4. Limited promotion
OPPORTUNITIES SO Strategies: WO Strategies:
1. Growing China economy 1. Expand domestic market 1. Improve product structure
2. Unique brewing processes (S1, S2, O3, O4) to gain more market shares
3. Political stability 2. Introduce new product (W1, O4)
4. Large population for regional market (S1,
S3, O1)
THREATS ST Strategies: WT Strategies:
1. Rising costs of raw 1. Improve products’ cost by 1. Strengthen promotion to
materials combining traditional with absorb and educate excellent
2. Environment/water modern technology (S3, T1) franchisers (W2, T4)
pollution
3. Local protectionism
4. Increased competitors ads
TOWS STRATEGIES
NOT TO BE PRESENTED IN
DETAILS
OPPORTUNITIES
1. Growing China economy MARKET DEVELOPMENT
2. Unique brewing processes (S1, S2, O1, O4)
MARKET PENETRATION
3. Political stability (W1, O4)
4. Large population PRODUCT DEVELOPMENT
(S1, S3, O1)
THREATS
1. Rising costs of raw
materials
PRODUCT DEVELOPMENT MARKET PENETRATION
2. Environment/water
(S3, T1) (W2, T4)
pollution
TOWS STRATEGIES
NOT TO BE PRESENTED IN
DETAILS
TOWS Matrix
• P R E PA R E P R O F O R M A TA B L E
1. 1.
2. 2.
3. 3.
4. 4.
OPPORTUNITIES
1.
2.
3.
4.
THREATS
1.
2.
3.
4.
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Internal-External Matrix
KEY DIMENSIONS:
• IFE TOTAL WEIGHTED SCORE ON THE
X-AXIS
• EFE TOTAL WEIGHTED SCORE ON THE
Y-AXIS
• RECOMMENDED STRATEGIES AT
INTERSECTION POINT
1. Grow and Build
2. Hold and Maintain
3. Harvest and Digest
IFE TOTAL WEIGHTED SCORE

Strong Average Weak
(3.0-4.0) (2.0-2.99) (1.0-1.99)
High
I II III
EFE (3.0-4.0)
TOTAL Medium
IV V VI
WEIGHTED (2.0-2.99)
SCORE Low
VII VIII IX
(1.0-1.99)
G R O W A N D B U I L D ( C E L L I , I I , I V ) – I N T E N S I V E , I N T E G R AT I V E
H O L D A N D M A I N TA I N ( C E L L I I I , V, V I I ) – M A R K E T
P E N E T R AT I O N , P R O D U C T D E V ’ T.
H A RV E S T A N D D I G E S T ( C E L L V I , V I I I , I X ) – R E T R E N C H M E N T,
DIVESTITURE
1. Case background
E. IFE Matrix
3. Problem Statement EFE = 3.37
4. Alternative Courses of Action IFE = 2.97
3 ACAs
• Plotting of EFE/IFE total weighted score EFE = 3.37
• Close-ended strategy formulation IFE = 2.97

Strong Average Weak
(3.0-4.0) (2.0-2.99) (1.0-1.99)
High
I II III
(3.0-4.0)
EFE
TOTAL Medium
IV V VI
WEIGHTED (2.0-2.99)
SCORE
Low
VII VIII IX
(1.0-1.99)
H O L D A N D M A I N TA I N ( C E L L I I I , V, V I I ) – M A R K E T P E N E T R AT I O N ,
P R O D U C T D E V ’ T.
H A R V E S T A N D D I G E S T ( C E L L V I , V I I I , I X ) – R E T R E N C H M E N T, D I V E S T I T U R E
4.B - Internal-External Matrix
• Prepare proforma table

Strong Average Weak
(3.0-4.0) (2.0-2.99) (1.0-1.99)
High
I II III
EFE (3.0-4.0)
TOTAL Medium
IV V VI
WEIGHTED (2.0-2.99)
SCORE Low
VII VIII IX
(1.0-1.99)
H O L D A N D M A I N TA I N ( C E L L I I I , V, V I I ) – M A R K E T
P E N E T R AT I O N , P R O D U C T D E V ’ T.
H A RV E S T A N D D I G E S T ( C E L L V I , V I I I , I X ) – R E T R E N C H M E N T,
DIVESTITURE
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Grand Strategy Matrix
• T O O L F O R F O R M U L AT I N G A LT E R N AT I V E S T R AT E G I E S
B A S E D O N T W O E VA L U AT E D I M E N S I O N S – C O M P E T I T I V E
POSITION AND MARKET GROWTH
QUADRANT II RAPID MARKET GROWTH QUADRANT I
1. Market development 1. Market development

2. Market penetration 2. Market penetration
3. Product development 3. Product development
4. Horizontal integration 4. Forward integration
5. Divestiture 5. Backward integration
6. Liquidation 6. Horizontal integration
7. Concentric diversification
WEAK STRONG
COMPETITIVE
POSITION
1. Retrenchment 1. Concentric diversification COMPETITIVE
2. Concentric diversification 2. Horizontal diversification POSITION
3. Horizontal diversification 3. Conglomerate diversification
4. Conglomerate diversification 4. Joint venture
5. Divestiture
6. Liquidation
QUADRANT III QUADRANT IV

SLOW MARKET GROWTH
• X-AXIS DETERMINED THE IFE SCORE
• Y- A X I S D E C I D E D T H R U A S S U M P T I O N G . 2 I N D U S T RY G R O W T H
PROSPECTS’ EFFECT TO PRODUCT DEMAND
• C L O S E - E N D E D S T R AT E G Y F O R M U L AT I O N

WEAK STRONG
COMPETITIVE
POSITION
1. Retrenchment 1. Concentric diversification COMPETITIVE
2. Concentric diversification 2. Horizontal diversification POSITION
5. Divestiture
6. Liquidation
QUADRANT III QUADRANT IV

SLOW MARKET GROWTH
1. Case background
E. IFE Matrix
3 ACAs
G . 2 I N D U S T RY G R O W T H P R O S P E C T S :
T H E M A R K E T P R E S E N T S A P R O M I S I N G O P P O RT U N I T Y D U E T O T H E 5 %
P R O J E C T E D I N D U S T RY G R O W T H A N D T H E C L O S E O F C O M P E T I T O R S .
“Analyze and decide effect of assumption to product’s demand
RAPID MARKET GROWTH
QUADRANT II QUADRANT I

WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION
1. Retrenchment 1. Concentric diversification
2. Concentric diversification 2. Horizontal diversification
5. Divestiture
6. Liquidation
QUADRANT III SLOW MARKET GROWTH QUADRANT IV

• Firms need to evaluate present approach • Firms in excellent strategic position
• Although industry growing, unable to • Strategy on continued concentration on
compete effectively, thus need changes in current markets and products
competitiveness • Unwise to shift from established competitive
• First option is intensive strategy due to rapid- advantages
market growing industry • If excessive resources, integration effective
• If lacking competitive advantage – horizontal • If committed to single product, may be take
• Last resort is divestiture or liquidation to concentric to reduce risk with narrow
provide funds need to acquire other product line
businesses, buy stocks
WEAK STRONG
COMPETITIVE
COMPETITIVE
POSITION
POSITION
• Firms compete in slow-growth industries and • Firms in strong competitive position but are in
weak competitive positions slow-growth industry
• Must make drastic changes quickly to avoid • Have strength to launch diversified programs
further decline and possible liquidation into more promising growth areas
• First pursue extensive cost and asset • Have high cash-flow levels and limited internal
reduction (retrenchment) growth needs
• Alternative is to shift resources away from the • Pursue diversification strategies
current business into different areas • May also undertake joint venture
(diversify)
• If all fails, final option are
divestiture/liquidation

4.C – Grand Strategy Matrix
• Prepare proforma table

WEAK STRONG
POSITION 1. Retrenchment 1. Concentric diversification POSITION
5. Divestiture
6. Liquidation

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Summary of Strategies
• IDENTIFY 3 ACAS WITH HIGHEST
T O TA L S
STRATEGY OPTIONS TOWS IEM GSM TOTAL

A. INTEGRATION STRATEGIES
1. Forward Integration
2. Backward Integration
3. Horizontal Integration
B. INTENSIVE STRATEGIES
1. Market Penetration
2. Market Development
3. Product Development
C. DIVERSIFICATION STRATEGIES
1. Concentric Diversification
2. Conglomerate Diversification
3. Horizontal Diversification
D. DEFENSIVE STRATEGIES
1. Joint Venture
2. Retrenchment
3. Divestiture
4. Liquidation
1. Case background
E. IFE Matrix
3 ACAs
TOWS Matrix O U T P U T O F A N A LY S I S
OPPORTUNITIES
1. Growing China economy MARKET DEVELOPMENT
2. Unique brewing processes (S1, S2, O1, O4)
MARKET PENETRATION
3. Political stability (W1, O4)
4. Large population PRODUCT DEVELOPMENT
(S1, S3, O1)
THREATS
1. Rising costs of raw
materials
2. Environment/water PRODUCT DEVELOPMENT MARKET PENETRATION
pollution (S3, T1) (W2, T4)
Internal-External Matrix OUTPUT OF ANALYSIS

Strong Average Weak
(3.0-4.0) (2.0-2.99) (1.0-1.99)
High
I II III
(3.0-4.0)
EFE
TOTAL Medium
IV V VI
WEIGHTED (2.0-2.99)
SCORE
Low
VII VIII IX
(1.0-1.99)
H O L D A N D M A I N TA I N ( C E L L I I I , V, V I I ) – M A R K E T P E N E T R AT I O N ,
P R O D U C T D E V ’ T.
H A R V E S T A N D D I G E S T ( C E L L V I , V I I I , I X ) – R E T R E N C H M E N T, D I V E S T I T U R E
RAPID MARKET GROWTH
QUADRANT II QUADRANT I

WEAK STRONG
POSITION POSITION
1. Retrenchment 1. Concentric diversification
5. Divestiture
6. Liquidation

Summary of Strategies
• IDENTIFY 3 ACAS WITH HIGHEST
T O TA L S
1. Forward Integration 1 1 2
2. Backward Integration 1 1 2
3. Horizontal Integration 1 1 2
1. Market Penetration 1 1 1 3
2. Market Development 1 1 1 3 3 ACAs
3. Product Development 1 1 1 3
1. Concentric Diversification 1 1
2. Conglomerate Diversification SUMMARY
RESULTS:
• Less 3 ACAs –
add in TOWS
1. Joint Venture
• More than 3
2. Retrenchment
ACAs –
3. Divestiture delete
4. Liquidation
4.D - Summary of Strategies
• P R EPA R E P R O F O R M A TA B L E
1. Forward Integration
2. Backward Integration
3. Horizontal Integration
1. Market Penetration
2. Market Development
3. Product Development
1. Concentric Diversification
2. Conglomerate Diversification
1. Joint Venture
2. Retrenchment
3. Divestiture
4. Liquidation
Alternative Courses of Action
• D I S C U S S I O N G U I D E F O R T H E F O R M U L AT I O N O F T H E A P P R O P R I AT E
COURSES OF ACTION
Alternative Courses of Action
The proposed courses of action (ACA) were identified based from the
Strategic Factor Analysis, Competitive Profile Matrix, TOWS Matrix,
Internal-External Matrix and further validated through the evaluative
dimensions of the Grand Strategy Matrix. The Strategic Factor Analysis
revealed that ________. The Competitive Profile Matrix indicated that
_____. TOWS Matrix pointed out that _______. The Internal-External
Matrix revealed that ________. Moreover, the analysis of the market
growth and competitive position of the company from the Grand
Strategy Matrix indicated that the appropriate strategies that must be
pursued by the company fell under Quadrant (?). Theses findings could
be attributed to the _________ (results of the analysis of the market
growth and competitive strength of the company) _________. In
totality, the Summary of Strategies Matrix confirmed that the most
feasible alternatives are A, B, and C. therefore strategies A, b & c woud
be best addressed the major problem of the firm under study.
#5 RNATI V E &
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M E N P L A
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REC A C T I
Strategy Evaluation
STAGE 1:
• Strategic Factor Evaluation (EFE/IFE Matrix)
• Competitive Profile Matrix
STAGE 2:
• TOWS Matrix
• Internal-External Matrix
• Grand Strategy Matrix
STAGE 3:
Quantitative
Strategic Planning
Matrix
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#5.A – Quantitative Strategic Planning Matrix
• Determine the relative attractiveness of feasible alternative actions
STRATEGY A STRATEGY B STRATEGY C
KEY STRATEGIC FACTORS WEIGHT
Rating Weighted Rating Weighted Rating Weighted
Score Score Score
OPPORTUNITIES:
1.
2.
3.
4.
THREATS:
1.
2.
3.
4.
SUB-TOTAL 1.00
STRENGTHS:
1.
2.
3.
4.
WEAKNESSES:
1.
2.
3.
4.
SUB-TOTAL 1.00
OVERALL SCORE - - - -
1. Case background
E. IFE Matrix
K. Summary of Strategies 3 ACAs
5. Recommended Alternative & Action Plan
L. Quantitative Strategic Planning Best ACA
Matrix
M. Action plan
Quantitative Strategic Planning Matrix
1. MAKE A LIST OF THE FIRM’S KEY EXTERNAL
O P P O RT U N I T I E S / T H R E AT S A N D I N T E R N A L S T R E N G T H S / W E A K N E S S E S .
I N F O R M AT I O N S H O U L D B E TA K E N D I R E C T LY F R O M T H E S T R AT E G I C
FA C T O R E VA L U AT I O N .
2. A S S I G N W E I G H T S T O E A C H K E Y E X T E R N A L A N D I N T E R N A L FA C T O R .
T H E S E W E I G H T S A R E I D E N T I C A L T O T H O S E I N T H E S T R AT E G I C
FA C T O R E VA L U AT I O N .
3. I D E N T I F Y C O R P O R AT E S T R AT E G I E S T H AT T H E F I R M S H O U L D
C O N S I D E R I M P L E M E N T I N G . C O N S I D E R T H E R E S U LT S O F T H E
S U M M A RY O F S T R AT E G I E S M AT R I X .
4. D E T E R M I N E T H E AT T R A C T I V E N E S S S C O R E R AT I N G , W H I C H I S T H E
N U M E R I C A L VA L U E T H AT I N D I C AT E T H E R E L AT I V E AT T R A C T I V E N E S S
O F E A C H S T R AT E G Y. A N A LY Z E B Y A S K I N G “ D O E S T H I S FA C T O R
A F F E C T T H E C H O I C E O F S T R AT E G I E S B E I N G M A D E ? ” I F A N S W E R I S
‘ Y E S ’ A S S I G N R AT I N G B U T I F ‘ N O ’ D O N ’ T A S S I G N R AT I N G . T H E
R A N G E F O R AT T R A C T I V E N E S S S C O R E : ( 1 ) N O T AT T R A C T I V E , ( 2 )
S O M E W H AT AT T R A C T I V E , ( 3 ) R E A S O N A B LY AT T R A C T I V E , A N D ( 4 )
H I G H LY AT T R A C T I V E .
5. C O M P U T E T H E T O TA L AT T R A C T I V E N E S S S C O R E , O R W E I G H T E D
SCORE.
6. O B TA I N T H E S U M T O TA L AT T R A C T I V E N E S S S C O R E , O R T H E O V E R A L L
WEIGHTED SCORE.
Score Score Score
OPPORTUNITIES:
1.
2.
3.
EFE external factors ? ? ?
4. and weights
THREATS:
1.
2.
3.
EFE external factors
4. and weights
SUB-TOTAL 1.00
STRENGTHS:
1.
2.
3.
IFE internal factors
4. and weights
WEAKNESSES:
1.
2.
3.
IFE internal factors
4. and weights
SUB-TOTAL 1.00
Rating Values: 4 = highly attractive, 3 = reasonably attractive

2 = somewhat attractive 1 = not attractive
• Test of ACA’s appropriateness to key
strategic factors
“BEST”
External Internal
STRATEGY
Conditions Conditions
“APPROPRIATE”
EFE KSF: IFE KSF:
“O/T” “S/W”
Descriptive Rating:
Attractive = Appropriate
= Suited
= Fit
Strategic alternatives
4. Determine the WEIGHT
KEY FACTORS Market Penetration Market Development
Attractiveness Score
Weighted Weighted
Rating, which is the Rating Rating
Score Score
numerical value that OPPORTUNITIES:
indicate the relative
1. Growing China economy 0.21 4 0.84 2 0.42
attractiveness of each 2. Unique brewing processes 0.13 4 0.52 2 0.26
strategy. Analyze by 3. Political stability 0.12 - - - -
4. Low liquor consumption 0.08 4 0.32 3 0.24
asking “Does this
factor affect the THREATS:
choice of strategies 1. Rising costs of raw materials 0.19 - - - -
being made?” If 2. Environment/water pollution 0.11 - - - -
3. Local protectionism 0.09 4 0.36 2 0.18
answer is ‘yes’ assign 4. Increased competitors ads 0.07 3 0.21 3 0.21
rating but if ‘no’ don’t
SUB-TOTAL 1.00 - 2.25 - 1.31
assign rating. The
STRENGTHS:
range for
attractiveness score: 1. Strong brand image 0.30 4 1.20 3 0.90
2. Aggressive advertising 0.15 3 0.45 3 0.45
(1) not attractive, (2) 3. Strict quality control 0.12 - - - -
4. Strong culture of innovation 0.10 4 0.40 3 0.30
somewhat attractive,
(3) reasonably WEAKNESSES:
attractive, and (4) 1. Too many brands 0.14 2 0.28 2 0.28
2. Different level franchisers 0.10 1 0.10 2 0.20
highly attractive. 3. Lack of global mktg. 0.07 2 0.14 1 0.07
experience 0.02 2 0.04 1 0.02
4. Limited promotion
Note: If factor is SUB-TOTAL 1.00 2.61 2.22
irrelevant assign a OVERALL SCORE - - 4.86 - 3.53
rating of “1”
Market Penetration Market Dev’t Product Dev’t
Key Strategic Factor WEIGHT
RATING WT. S RATING WT. S RATING WT. S
OPPORTUNITIES:
1. The European heavyweight motorcycle market is roughly 80% of the size of the US 0.29 2 0.58 4 1.16 1 0.29
market
2. Traditional US-style ?ouring moorcycle represent less than 5% of the European 0.20 3 0.60 4 0.80 1 0.20
heavyweight motorcycle market
3. Growing upper class in India 0.08 3 0.24 4 0.32 1 0.08
4. Competitors are diversified in the automotive market 0.06 4 0.24 3 0.18 1 0.06
Threats:
1. Hundreds of buyers and dealers cannot obtain financing and hundreds more default 0.14 1 0.14 4 0.56 2 0.28
on loans.
2. Discretionary spending on high-end consumer goods. 0.10 2 0.20 4 0.40 3 0.30
3. High import tariffs of 90% on motorcycle 0.07 1 0.07 4 0.28 2 0.14
4. The heavyweight (651+cc) motorcycle market is highly competitive 0.05 3 0.15 4 0.20 2 0.10
Sub-Total 1.00 - 2.08 - 3.90 - 1.98
Strengths:
1. American icon 0.22 3 0.66 4 0.88 1 0.22
2. With international distribution channels 0.18 3 0.54 4 0.72 1 0.18
3. Licensed products 0.12 3 0.36 4 0.48 1 0.12
4. Suggested retail price for its motorcycles is generally higher than its competitors’ 0.08 3 0.21 4 0.32 1 0.08
Weaknesses:
1. Its motorcycle sales decreased 13% during first two months of 2009 0.21 3 0.63 4 0.84 2 0.42
2. Credit losses have risen to 3.41% 0.08 2 0.16 4 0.32 1 0.08
3. Its 2nd quarter 2009 profits declined 91% 0.06 2 0.12 4 0.24 1 0.06
4. Stock declined per share 0.05 3 0.15 4 0.20 1 0.05
Sub-Total 1.00 - 2.86 - 4.00 - 1.21
Overall score - - 4.94 - 7.90 - 3.19
• Prepare a proforma table with pre-computed weights
Score Score Score
OPPORTUNITIES:
1. 0.31
2. 0.16
3. 0.10
4. 0.05
THREATS:
1. 0.20
2. 0.08
3. 0.06
4. 0.04
SUB-TOTAL 1.00
STRENGTHS:
1. 0.31
2. 0.17
3. 0.11
4. 0.04
WEAKNESSES:
1. 0.21
2. 0.09
3. 0.05
4. 0.03
SUB-TOTAL 1.00
Recommended Alternative
• Guide to discussion for the evaluation of the ACAs in view of the

Quantitative Strategic Planning Matrix outcome
The Quantitative Strategic Planning Matrix results indicated that

ACA ____ obtained the highest overall score which means that this
is the best alternative course of action that could significantly
address the identified major problem. Evaluation indicated that
______ (justification of best ACA in qualitative form) _______.
#5 . B
PL A N
T I ON
AC
Action Plan
• B E S T A C A S H O U L D B E T R A N S F O R M E D I N TO
REALITY THROUGH THE ACTION PLAN
• OBJECTIVE/S PER FUNCTIONAL UNIT SHOULD
B E I N A C C O R D A N C E W I T H T H E R E A L I Z AT I O N
OF THE BEST ACA
• S T R AT E G I E S TO O P E R AT I O N A L I Z E T H E
FUNCTIONAL OBJECTIVES SHOULD BE ALIGNED
WITH THE BEST ACA
• TIME FRAME SHOULD CONSIDER A PERIOD OF
NOT LESS THAN 3 YEARS
• T H E B U D G E T S H O U L D B E L I N K E D TO T H E
VA L U E S O F I T E M S L I S T E D I N T H E F I N A N C I A L
S TAT E M E N T S
Action Plan
• D E V E L O P A N A C T I O N P L A N M AT R I X
TIME
FUNCTIONAL AREA OBJECTIVE STRATEGIES BUDGET
FRAME
Marketing
Production/Operations
Finance
Org’n & Mgt.
Human Resources
Research & Dev’t
Information Systems
Action Plan
DIRECTED TO From forecasted

R E A L I Z AT I O N
OF BEST
financial
S T R AT E G Y statements
TIME
FRAME
Marketing Attain obj. 3 years Selling expenses
Production/Operations Cost of sales
Finance Addt’t fund req’d.
Org’n & Mgt.
Human Resources
Research & Dev’t
Information Systems
Functional Strategies
GOAL-DIRECTED DECISIONS
AND ACTIONS OF THE
O R G A N I Z AT I O N ’ S F U N C T I O N A L
UNITS BASED ON RESOURCES,
C A PA B I L I T I E S A N D
COMPETENCIES
• Marketing
• Production Operations
• Organizational & Management
• Finance
• Human Resources
• Research & Development
• Information Systems
Marketing Strategies
• Satisfy needs and wants

PRODUCT
of target market
• Make product affordable and

PRICE reflect value
• Make product available and

PLACE accessible
• Build and improve consumer

PROMOTION demand
Production/Operations Strategies
• Size of facility
CAPACITY • Efficient use of facility
• Job specialization
• Work methods
WORK DESIGN • Motivation-incentive systems
• Standard-output levels
• Purchasing procedures
PRODUCTION • Inventory management
MANAGEMENT • Maintenance management
Finance Strategies
FINANCE MIX • Sources of funds
DECISIONS • Control of costs

Human Resources Strategies
• Organize for efficiency,

WORK FLOWS control and flexibility
• Internal or external
STAFFING recruitment
• Hiring decisions
• Buy or develop skills

• Individual or team-based
TRAINING
• On-the-job or external
R & D Strategies
• Process development
EMPHASIS • Product development
• Separate R&D
FOCUS department
• Cross-functional team
Information Systems Strategies
SYSTEM • Manual or computer-

TECHNOLOGY based
• Office automation system

• Management info system
INFORMATION • Decision support system
SYSTEMS • Electronic data sharing
• Internet & world wide
web
Action Plan
B E S T A C A : L O W - C O S T S T R AT E G Y
FUNCTIONAL TIME
OBJECTIVE STRATEGIES BUDGET
AREA FRAME
Marketing Low cost Reduce cost in

advertising and
distribution
Production/ Efficiency in Capital-labor

Operations operation substitution
Finance Low financial cost Borrowing when

credit costs are low
R&D Reduce operations’ Process R&D aimed

cost at lowering cost
Information Cheap information Timely and relevant

Systems transfer info on costs of
operations
Action Plan
• P R E PA R E P R O F O R M A TA B L E
TIME
FRAME
Marketing
Production/Operations
Finance
Org’n & Mgt.
Human Resources
Research & Dev’t
Information Systems
#6 t io n s
r o je c
ia l P
n a n c
F i
Financial Projections
• Formulate a 5-year financial forecasts

• Present the financial assumptions that will
support the projections
• The forecasted sales level must have a valid
basis vis-à-vis the case facts
• Budget in the action plan should be reflected in
the financial statements
• Line items in the financial statements should
be closely linked to the given financial position
of the company
• Compute the financial ratios of the forecast in
terms of profitability, liquidity, activity,
leverage, and market ratios whenever
applicable
Business Performance
• Financial performance measures by area and viewpoint
MANAGEMENT OWNERS LENDERS

Assess the efficiency and Key interest on returns Assess the risk or recovering
profitability of operations; achieved on funds invested; the original funds extended
judge how effectively the and how much is reinvested in
firm’s resources are used business and paid as
dividends
Operational Analysis – Profitability – watches the Liquidity - test the degree of

percentage analysis of income relationship of profits earned protection of lenders; focus
statement to shareholders’ stated on short-term credit
• Gross margin investment • Current ratio
• Profit margin • Return on total net worth • Acid test (quick ratio)
• Operating expense • Return on common equity • Inventory to net working
analysis • Earnings per share capital
• Share price appreciation
• Cash flow per share
Business Performance
MANAGEMENT OWNERS LENDERS
Assess the efficiency and Key interest on returns Assess the risk or recovering the
profitability of operations; achieved on funds invested; original funds extended
judge how effectively the firm’s and how much is reinvested in
resources are used business and paid as dividends
Resource Management – judge Disposition of Earning – assess Financial Leverage – measure

the effectiveness of asset the periodic separation of lenders’ risk exposure in relation
utilization earnings into dividends paid to available asset values against
• Asset turnover and earnings retained which all claims are valid
• Working capital • Dividends yield per share • Debt to assets
management • Dividends yield • Debt to capitalization
• Inventory turnover • Payout/retention of • Debt to equity
• Accounts payable patterns earnings
• Accounts receivable patters • Dividends to assets
Profitability – relate net profit Market Indicators – evaluate Debt Service – debt proportion
to the assets utilized in stock market values analysis
generating the profit • Price/earnings ratio • Interest coverage
• Return on assets • Market to book value • Cash flow analysis
• Return before interest taxes
at i o s
ia l R
Fin anc
Profitability Ratios
• Measure the overall effectiveness of management to generate a profit
RATIO FORMULA DESCRIPTION

Gross Profit Margin Sales (IS) – Cost of Goods Sold Indication of total margin available to cover
- Industry average (IS)/ Sales (IS) operating expenses and yield a profit
Operating Profit Margin Profits Before Taxes and Indication of firm’s profitability from
(Return on Sales) Before Interest (IS)/ Sales (IS) current operations without regard to the
- Industry average interest charges accruing from capital
structure
Net Profit Margin Profits After Taxes (IS)/ Sales Shows after tax profits per dollar of sales.
(Net Return on Sales) (IS) Subpar profit margins indicate that the
- Industry average firm’s sales prices are relatively low or that
costs are relatively high, or both
Return on Total Assets Profits After Taxes (IS)/ Total Measure of the return on total investment
- Equal to or higher than Assets (BS) in the firm. Sometimes desirable to add
the market rate of return Or interest to after tax profits to form the
on treasury bills during the Profits After Taxes (IS) + numerator of the ratio since total assets
time period in questions Interest (IS)/ Total Assets (BS) are financed by creditors as well as by
stockholders, hence it is accurate to
measure the productivity of assets by the
returns provided to both classes of
investors
• Measure the overall effectiveness of management to generate a profit

Return on Stockholder’s Profits After Taxes (IS)/ Total Measure of the rate of return on
Equity Stockholder’s Equity (BS) stockholders’ investment in enterprise
(Return on Net Worth)
- Higher than ROI
Return on Common Equity Profits After Taxes (IS) – Measure of the rate of return on the
Preferred Stock Dividends/ investment which the owners of the
Total Stockholder’s Equity common stock have made in the enterprise
(BS) – Par Value of Preferred
Stock
Earning per Share Profits After Taxes (IS) – Shows the earnings available to owners of
- Industry Average Preferred Stock Dividends/ each share of common stock
Number of Shares of
Common Stock Outstanding
(BS)
Liquidity Ratios
• Measure the ability of the company to meet its short-term debts

Current Ratio Current Assets (BS)/Current Indicates the extent to which the claims of
- At least 2:1 but ratio Liabilities (BS) short-term creditors are covered by assets
above 4 would indicate that are expected to be converted to cash
ineffective utilization of in a period roughly corresponding to the
short-term assets maturity of the liabilities
Quick Ratio Current Assets (BS) – Measure of the firm’s ability to pay-off
(Acid Test Ratio) Inventory (BS)/Current short-term obligations without relying on
- At least 1:1 Liabilities (BS) the sale of its inventories
Inventory to Net Working Inventory (BS)/Current Assets Measure of the extent to which the firm’s
Capital (BS) –Current Liabilities (BS) working capital is tied up in inventory
Leverage Ratios
• Measure the relative amount of long-term debt the firm carries and its ability to service it

Debt-to-Asset Ratio Total Debt (BS)/ Total Assets Measure the extent to which borrowed
- Industry Average funds have been used to finance the firm’s
operations
Debt-to-Equity Ratio Total Debt (BS)/ Total Measure of the funds provided by creditors
- Less 1 means Stockholders Equity (BS) versus the funds provided by owners
stockholders’ remain
major source
Long-Term Debt-to-Equity Long-Term Debt (BS)/ Total Measure of the balance between debt and
Ratio Shareholders Equity (BS) equity in the firm’s long-term capital
- At least 2:1 structure
Times-Interest-Earned Profits Before Interest and Measure the extent to which earnings can
Ratio Taxes (IS)/Total Interest decline without the firm becoming unable
- At least 2:1 Charges (IS) to meet its annual interest costs
Fixed-Charge Coverage Profits Before Interest and Indications of the firm’s ability to meet all
Taxes (IS) + Lease Obligations of its fixed-charge obligations
(BS)/Total Interest Charges
(IS) + Lease Obligations (BS)
Activity Ratios
• Measure how efficiently the firm’s resources are being utilized; focus on the generation of
sales with given asset base
Inventory Turnover Cost of Goods Sold Indication of whether a firm has excessive of
- Industry Average (IS)/Inventory of Finished perhaps inadequate finished goods inventory,
Goods (BS) when compared to industry averages
Fixed Asset Turnover Sales (IS)/Fixed Assets (BS) Measures of the sales productivity and
- High value preferred utilization of plant and equipment
Total Asset Turnover Sales (IS)/Total Assets (BS) Measure of the authority of all the firm’s
- Industry Average assets; ratio below the industry average
indicates firm is not generating a sufficient
volume of business given the asset investment
Accounts Receivable Annual Credit Sales Measure of the average length of time it takes
Turnover (IS)/Accounts Receivable the firm to collect the sales made on credit
- Equal to credit period (BS)
Average Collection Period Accounts Receivable Indicate the average length of time the firm
- Equal to or less than (BS)/Average Daily Credit must wait after making a sale before it
credit period extended to Sales (IS) receives payment
customers
Market Ratios
• Measure the performance of the common stock of a firm

Dividend Yield on Annual Dividends per Measure of the return to owner’s received in
Common Stock Share (BS)/ Current Market the form of dividends
- Industry Average Price per Share (BS)
Price-Earnings Ratio Current Market Price per Faster-growing or less-risky firms tend to have
- High value indicate firm Share (BS)/ After Tax higher price-earnings ratio than slower
is growing and stable Earnings per Share (BS) growing or more risky firms
Dividend Payout Ratio Annual Dividends per Indicate amount of common share available
- Low value preferred Share (BS)/ After Tax to stockholders if firm’s assets are sold at their
Earnings per Share (BS) book value, and firm’s liabilities are paid off
Price to Book Value Price per Share (BS)/Book Amount stockholders are willing to pay for
Value per Share (BS) each dollar of common stock book value
Cash Flow per Share After Tax Profits (IS) + Measure the discretionary funds over and
- Industry Average Depreciation (IS)/ Number above expenses that are available for use by
of Common Shares the firm
Outstanding (BS)
a t i o s
ia l R
n a n c n s
F i t at io
e r p r e
I n t
Ratio Interpretations
• R E L AT E T O A C C E P TA B L E VA L U E S
• C O M PA R E W I T H I N D U S T RY
AV E R A G E S
• M AT C H W I T H S I M I L A R
C O M PA N I E S
MOODY’S – data provided by industry

and include income statements, ratio’s
capital stock and long-term debt
STANDARD & POOR’S CORP. RECORDS

– same as Moody’s but includes one-
page fact sheet for each company
RATIO FORMULA INTERPRETATION RULE OF THUMB
Gross Profit Margin Gross Profit (IS) amount if gross profit Industry average,
----------- generated per dollar when applicable
Total Sales (IS) sales
Operating Profit Operating Income (IS) Amount of profit from Industry average,
Margin -------------- operations generated when applicable
Total Sales (IS) per dollar sales
Net Profit Margin Net Income After Taxes (IS) Amount of after tax Industry average,
--------------- profit per dollar sales when applicable
Total Sales (IS)
Return on Net Income After Taxes (IS) Rate of return on total Should be equal to, or
Investment ---------------- assets employed – mgt.’s higher than market
Total Assets (BS) overall performance in rate of return on
generating a profit Treasury bills during
the time period
Return on Equity Net Income After Taxes (IS) Rate of return on Should be higher than
----------------- --- stockholders’ investment return on investment
Stockholder’s Equity (BS) in firm – mgt.’s
performance in
generating a profit for
the owners of the
company
Liquidity Ratios

Current Ratio Current Assets (BS) Ability to cover short- At least 2:1, but a ratio
----------- term debt as it comes above 4 would indicate
Current Liabilities (BS) due that firm may not be
using its short-term
assets effectively
Quick Ratio Current Assets (BS) – Expresses degree to At least 1:1

Inventories (BS) which a firm’s current
-------------- liabilities are covered by
Current Liabilities (BS) the most liquid current
assets
Activity Ratios

Average Collection Accounts Receivable (BS) Average collection Equal or less than
Period ----------- period per accounts credit period extended
Ave. Daily Credit Sales (IS) receivable to customers by firm
Average Payment Accounts Payable (BS) Average payment period Equal to credit period
Period -------------- per accounts receivable extended to the firm
Ave. Daily Credit Purchases by its creditors
(IS)
Inventory Turnover Cost of Goods Sold (IS) Indicates liquidity or Industry average,
---------------- activity of firm’s when applicable
Inventories (BS) inventory
Total Asset Turnover Sales (IS) Indicate how efficiently Industry average,
----------- firm is utilizing its assets when applicable
Total Assets (BS) to generate sales
Fixed Asset Turnover Sales (IS) Extent to which fixed High value indicates
----------- assets are used in productive use of fixed
Net Fixed Assets (BS) generating sales assets
Leverage Ratios
Debt-to-Assets Total Liabilities (BS) Extent to which funds are Industry average,
----------- provided by creditors when applicable
Total Assets (BS)
Long-Term Debt to Long-Term Debt (BS) Extent to which funds are Historical norm
Equity -------------- provided by long-term basis tends to be 40:60
Stockholders’ Equity (BS) by creditors versus owners
Debt to Capital Long-Term Liabilities (BS) Percentage of firm’s Industry average,

--------------- capitalization package that when applicable
Long-Term Debt + is made up of long-term
Stockholders’ Equity (BS) debt
Short-Term Current Liabilities (BS) Percentage of total debt Industry average,

Liabilities to Total ----------- borrowed from short-term when applicable
Debt Total Liabilities (BS) creditors
Times Interest Earnings Before Interest and Extent to which earnings At least 2:1
Earned Taxes (IS) can decline without firm
----------- becoming unable to meet
Interest (IS) the interest expense –
measure of degree of
security to bondholders
Market Ratios
Earnings per Share Net Income Available to Common Net income per share available to Industry average, when
Stockholders (IS) common stockholders applicable
----------------------
No. of Common Stock Shares
Outstanding (BS)
Dividend Payout Dividend per Share of Common Stock Percentage of net earnings paid out Growth companies have
(BS) to common stockholders generally low payout
---------------------- ratios because they
Earnings per Share (BS) reinvest most of their
earnings
Dividend Yield Dividend per Share of Common Stock Shows rate or return stockholders will Industry average, when
(BS) receive from their investment in the applicable
---------------------- short-run
Price per Share (BS)
Price/Earnings Price per Share (BS) Measure of current price of stock to High value indicates that
Ratio ---------------------- earnings per share firm is growing and/or is
Earnings per Share (BS) a stable enterprise
Book Value per Common Stockholders’ Equity (BS) Indicate amount of common share None exists
Share ---------------------- available to stockholders if firm’s
No. of Common Stock Shares assets are sold at their book value
Outstanding (BS) and firm’s liabilities are paid off
Price to Book Price per Share (BS) Amount stockholders are willing to None exists
Value ---------------------- pay to each dollar of common stock
Book Value per Share (BS) book values
Compre Solution Guide
1. Case background
D. EFE Matrix
E. IFE Matrix Key Strategic External Internal
F. Competitive Profile Matrix Factors/Scores (4O/4T) (4S/4W)
G. Assumptions
“DERIVE” EFE = 3.37
3. Problem Statement
K. Summary of Strategies 3 ACAs
5. Recommended Alternative & Action Plan
L. Quantitative Strategic Planning Matrix
M. Action plan Best ACA
6. Financial Projections
N. Sales Forecast
O. Income Statement Forecast
P. Balance Sheet Forecast
Q. Cash Flow Forecast
.A s t
#6 e c a
F o r
e s
S al
6.A – Sales Forecast
• BASED ON CASE FACTS
CASE SCENARIO 1:
• Sales forecast given as case facts
• Ex. 10% for next 3 years
Year Sales, US$ million
2010 34
2011 40
2012 46
Forecast:
2013 46 x 1.10 = 51
2014 51 x 1.10 = 56
2015 56 x 1.10 = 62
CASE SCENARIO 2:
• Sales forecast not given as case fact with One-Period Present - Past
increasing sales trend Growth = -----------
• Use one-period growth rate Rate Past
Year Sales, US$ million Growth Rate

2010 34 (40-34)/34 = 0.18
2011 40 (46-40)/40 = 0.15
2012 46
Forecast: Ave. Growth Rate = 0.17

2013 46 x 1.17 = 54
2014 51 x 1.17 = 63
2015 56 x 1.17 = 74
CASE SCENARIO 3:
• Sales forecast not given as case fact
with decreasing sales trend
• Refer to other relevant case facts such
as:
a. Industry growth
b. Economic growth
c. Other sales-related information
(tables/figures)
Sales History:
2010 46
2011 40
2012 34
.B e n t
#6 t e m
S t a t
m e a s
c o r e c
In Fo
6.B – Income Statement
Sales (Revenues) Tips:
a. Understand basic
Cost of Sales (Cost of Goods Sold) (-) format of income
statement;
Gross Profit (Gross Contribution Margin) (=) b. Compare basic format
and case-given income
Operating Expenses: (-) statement;
General & Administrative Expenses c. Re-compute given
Selling and Marketing Expenses values;
Research & Development d. Expense items to be
Salaries & Wages deducted;
Employee Benefits e. Gains (other income)
Utility Services from non-primary
Repairs & Maintenance business to be added;
Total Operating Expenses f. Income tax rate
derived from dividing
Tax by Income Before
Operating Income (Income from Operations) (=) Tax.
Interest Expenses (-)
Other Income (+)
Income Before Tax (=)
Tax (-)
Net Income (=)
Forecast Basis 1:
• Item proportional to sales

• Use percentage of sales method (ratio)
SALES forecast
ITEM Forecast = - - - - - - - - - - - - x ITEM present
SALES present
Forecast Basis 2:
• Item not proportional to sales, but

with reference values
• Use one-period growth rate (rate
increase/decrease)
ITEM forecast = ITEM present + [ITEM present x (growth rate)]
Where:
ITEM present – ITEM past
Growth Rate = - - - - - - - - - - - - - - - - - - - - - - -
ITEM past
Forecast Basis 3:

without reference values
• Use as value in present year
“NO CHANGE”
Income Statement ($000)
2001 Forecast Basis 2002
Net Sales 7781 Given 20% growth rate 9337
Cost of Goods Sold 3155 Ratio of CGS/Sales 3786
Gross Profit on Sales 4626 5551
Operating Expenses 3290 Ratio OE/Sales 3948
Income from Operations 1336 1603
Other Income 694 Same as 2001 694
Interest Expense 10 Rate increase = 0.25 13
Income Before Tax 2020 2284
Provision for Tax 707 Tax rate = (707/2020) = 0.35 799
Net Income After Tax 1313 1489
Reference Value:
Interest Expense = US $8,000 for year 2000
.C e t
# 6 Sh e
c e t
la n a s
B a e c
Fo r
6.C – Balance Sheet
ASSETS: TIPS: LIABILITIES & OWNER’S
a. Understand basic format EQUITY
of balance sheet;
Current Assets b. Compare basic format Current Liabilities
Cash and case-given balance Accounts Payable
sheet;
Accounts c. Re-compute given Accrued Expenses
Receivables values; Income Tax Payable
Inventories d. Funds required for Short-Term Debt
Prepaid Expenses forecast year derived by
(Rent) subtracting last year’s
total assets;
e. Fund requirement to be
Fixed Assets sourced-out from Non-Current Liabilities
Land & Building current liabilities. Bonds Payable
Equipment Long-Term
Borrowings
Investments Owner’s Equity

Common Stock
Goodwill Retained Earnings
6.C – Balance Sheet Forecast
Forecast Basis 1:
• Item proportional to sales

• Use percentage of sales method (ratio)
SALES forecast
ITEM Forecast = - - - - - - - - - - - - x ITEM present
SALES present
Forecast Basis 2:

with reference values
• Use one-period growth rate (rate
increase/decrease)
ITEM forecast = ITEM present + [ITEM present x (growth rate)]
Where:
ITEM present – ITEM past
Growth Rate = - - - - - - - - - - - - - - - - - - - - - - -
ITEM past
Forecast Basis 3:

without reference values
• Use as value in present year
“NO CHANGE”
Balance Sheet ($000)
2001 Forecast Basis 2002
ASSETS:
Cash 1292 20% growth rate 1550
Accounts Receivables 1392 Ratio of Receivables/Sales 1670
Inventory 1218 Ratio of Inventory/Sales 1462
TOTAL CURRENT ASSETS 3902 4682
Other Noncurrent Assets 1796 No change over 2001 1796
Fixed Assets 869 Reduced by dep. (5%) 826
TOTA ASSETS 6567 7304
LIABILITIES:
Current Liabilities 333 Financing source 1070
Networth 6234 Same as 2001 6234
TOTAL LIABILITITES & NETWORTH 6567 7304
------- NOTHING
FOLLOWS -------

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STRAMA LECTURE

STRATEGIC MANAGEMENT TWO

“Elements of Strategic Vision”

NARROW Defines organization’s

ELECTRONIC DATA SYSTEMS:

BROAD Widens the scope in products,

CUSTOMERS Who are the organization’s clients?

Is it right to use this kind of

Will this strategy make enough of a

How successful will this strategy be in

How costly is the strategy compared

What good or bad side effects might

Is it right to use this kind of

OPPORTUNITIES SO Strategies: WO Strategies:

THREATS ST Strategies: WT Strategies:

IFE TOTAL WEIGHTED SCORE

IFE TOTAL WEIGHTED SCORE

IFE TOTAL WEIGHTED SCORE

QUADRANT II RAPID MARKET GROWTH QUADRANT I

1. Market development 1. Market development

QUADRANT III QUADRANT IV

1. Market development 1. Market development

QUADRANT III QUADRANT IV

1. Market development 1. Market development

QUADRANT III SLOW MARKET GROWTH QUADRANT IV

QUADRANT III SLOW MARKET GROWTH QUADRANT IV

QUADRANT II RAPID MARKET GROWTH QUADRANT I

1. Market development 1. Market development

QUADRANT III SLOW MARKET GROWTH QUADRANT IV

STRATEGY OPTIONS TOWS IEM GSM TOTAL

IFE TOTAL WEIGHTED SCORE

1. Market development 1. Market development

QUADRANT III SLOW MARKET GROWTH QUADRANT IV

Alternative Courses of Action

Rating Values: 4 = highly attractive, 3 = reasonably attractive

• Guide to discussion for the evaluation of the ACAs in view of the

The Quantitative Strategic Planning Matrix results indicated that

DIRECTED TO From forecasted

• Satisfy needs and wants

• Make product affordable and

• Make product available and

• Build and improve consumer

FINANCE MIX • Sources of funds

DECISIONS • Control of costs

• Organize for efficiency,

• Buy or develop skills

SYSTEM • Manual or computer-

• Office automation system

Marketing Low cost Reduce cost in

Production/ Efficiency in Capital-labor

Finance Low financial cost Borrowing when

R&D Reduce operations’ Process R&D aimed

Information Cheap information Timely and relevant

• Formulate a 5-year financial forecasts

MANAGEMENT OWNERS LENDERS

Operational Analysis – Profitability – watches the Liquidity - test the degree of

Resource Management – judge Disposition of Earning – assess Financial Leverage – measure

RATIO FORMULA DESCRIPTION

RATIO FORMULA DESCRIPTION

RATIO FORMULA DESCRIPTION

RATIO FORMULA DESCRIPTION

RATIO FORMULA DESCRIPTION

MOODY’S – data provided by industry

STANDARD & POOR’S CORP. RECORDS