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Strategic Management
Module - 5
Strategy Analysis & Choice
MISSION VISION CORE VALUES
CHRIST is a nurturing ground for an individual’s Excellence and Service Faith in God | Moral Uprightness
holistic development to make effective contribution to Love of Fellow Beings
the society in a dynamic environment Social Responsibility | Pursuit of Excellence
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Strategy Analysis & Choice
Nature of Strategy Analysis & Choice
– Establishing long-term objectives
Generating alternative strategies
– Selecting strategies to pursue
– Best alternative – achieve mission & objectives
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Strategy Analysis & Choice
Alternative Strategies Derive From –
n Vision
n Mission
n Objectives
n External audit
n Internal audit
n Past successful strategies
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The Process of Generating and Selecting Strategies
n 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.
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The Process of Generating and Selecting Strategies
n 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.
n 3. Participant should have firm’s internal and
external information in their hands. Alternative
strategies proposed by participants should be
considered and discussed in a meeting or series
of meetings.
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Strategy Analysis & Choice
Generating Alternatives
–
Participation in generating alternative
strategies should be as broad as
possible
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A Comprehensive Strategy-Formulation Framework
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Comprehensive Strategy-Formulation
Framework
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Strategy-Formulation Analytical Framework
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Stage 1: The Input Stage
§Basic input information for the matching &
decision stage matrices
§Requires strategists to quantify subjectivity
early in the process
§Good intuitive judgment always needed
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Strategy-Formulation Analytical
Framework
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Stage 2: The Matching Stage
§Match between organization’s internal
resources & skills and the opportunities & risks
created by its external factors
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Stage 2: The Matching Stage
SWOT Matrix
§Strengths
§Weaknesses
§Opportunities
§Threats
Ch 6 -١٧
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SWOT Matrix
Four Types of Strategies
§Strengths-Opportunities (SO)
§Weaknesses-Opportunities (WO)
§Strengths-Threats (ST)
§Weaknesses-Threats (WT)
Ch 6 -١٨
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SO Strategies
Strengths
Weaknesses Use a firm’s
internal strengths
Opportunities
to take advantage
Threats SO of external
Strategies opportunities
SWOT
Ch 6 -١٩
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WO Strategies
Strengths
Weaknesses Improving internal
weaknesses by
Opportunities
taking advantage
Threats WO of external
Strategies opportunities
SWOT
Ch 6 -٢٠
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ST Strategies
Strengths Use a firm’s
Weaknesses strengths
Opportunities to avoid or
Threats reduce the impact
ST of external
Strategies threats
SWOT
Copyright © 2009 Pearson
Education, Inc. Publishing as
Prentice Hall
Ch 6 -٢١
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WT Strategies
Defensive tactics
Strengths aimed at reducing
Weaknesses internal
Opportunities weaknesses &
Threats avoiding
WT environmental
Strategies threats
SWOT
Ch 6 -٢٢
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SWOT Matrix
Developing the SWOT
§List firm’s key internal Strengths
§List firm’s key internal Weaknesses
§List firm’s key external Opportunities
§List firm’s key external Threats
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SWOT Matrix
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Limitations with SWOT Matrix
n Does not show how to achieve a competitive
advantage
n Provides a static assessment in time
n May lead the firm to overemphasize a single
internal or external factor in formulating
strategies
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SPACE Matrix
● Two Internal Dimensions
ü Financial Strength (FS)
ü Competitive Advantage (CA)
● Two External Dimensions
ü Environmental Stability (ES)
ü Industry Strength (IS)
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SPACE Analysis for
● IKEA
● Netflix
● Toyota
● Philips
● Starbucks
● Amazon
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What is business ethics?
“Business ethics is the study of business situations, activities, and
decisions where issues of right and wrong are addressed”.
In business ethics right or wrong means morally right or wrong as
opposed to, for example commercially, financially, or strategically right
or wrong.
Business ethics is not only for commercial businesses, but also for not-for-
profit businesses, government organizations, pressure groups,
charities and other organizations.
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Ethics and the law
Law is also about issues of right or wrong but there is overlap between law and
ethics.
The law is essentially an institutionalization or codification of ethics into specific
social rules and regulations.
Both are not equivalent and the best way of thinking the ethics and the law is in
terms of two intersecting domains.
Law might be said it to be a definition of minimum acceptable standards of
behavior. It is not widely covered for businesses.
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Ethics and the law
Ethics
grey
area
Law
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Nature of Business Ethics
Code of conduct :
Business ethics is a code of conduct. It tells what to do and what not to do for the
welfare of the society. All businessmen must follow this code of conduct
Based on moral and social values : Business ethics is based on moral and
social values. It contains moral and social principles (rules) for doing business.
This includes self-control, consumer protection and welfare, service to society,
fair treatment to social groups, not to exploit others, etc.
Gives protection to social groups : Business ethics give protection to
different social groups such as consumers, employees, small businessmen,
government, shareholders, creditors, etc.
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Nature of Business Ethics - cont
Provides basic framework : Business ethics provide a basic framework for
doing business. It gives the social, cultural, economic, legal and other limits of
business. Business must be conducted within these limits.
Voluntary : Business ethics must be voluntary. The businessmen must accept
business ethics on their own. Business ethics must be like self-discipline. It must
not be enforced by law.
Requires education and guidance : Businessmen must be given proper
education and guidance before introducing business ethics. The businessmen
must be motivated to use business ethics. They must be informed about the
advantages of using business ethics. Trade Associations and Chambers of
Commerce must also play an active role in this matter.
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Nature of Business Ethics - cont
Relative Term : Business ethics is a relative term. That is, it changes from one
business to another. It also changes from one country to another. What is
considered as good in one country may be taboo in another country.
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Why is business ethics important?
1. Business has huge Power within society
2. Potential to provide major contribution to society
3. Potential to inflict harm
4. Increasing demands from stakeholders
5. Lack of business ethics education or training
6. Continued occurrence of ethical infractions
7. Evaluating different ways of managing business ethics
8. Interesting and rewarding
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