STRATEGY ANALYSIS AND CHOICE

IMT Bandung

Dosen : Drs. HA. ROMADLON, MM, CTP

Competitive Profile Matrix (CPM)

The CPM identifies a firms major competitor and its

particular strength and weaknesses.

CPM include both external and internal factors the rating

refer : 4 = major strength, 3 = minor strength, 2 = minor

weaknesses, 1 = major weaknesses

The critical success factors are broader

An Example CPM
Critical Success Factors
1. Advertising 2. Product Quality 3. Price Competitiveness 4. Management 5. Financial Position 6. Customer Loyalty 7. Market Share
Weight

Company 1
Rating

Company 2
Rating 4 3 2 3 2 3 1

Company 3
Rating 3 2 4 3 3 2 2

Score
0,20 0,40 0,30 0,40 0,60 0,60 0,80 3,30

Score
0,80 0,30 0,20 0,30 0,30 0,45 0,20 2,55

Score
0,60 0,20 0,40 0,30 0,45 0,30 0,40 2,65

0,20 0,10 0,10 0,10 0,15 0,15 0,20 1,00

1 4 3 4 4 4 4

The Nature
Strategy Analysis and Choices

To Achieve Mission & Objective

External Env Analysis

Vision & Mission

Internal Env Analysis

Establish Long term Objective

Generate, Evaluate, Select Strategies

The Strategy Formulation

STAGE 1 : The Input Stage
External Factor Evaluation (EFE) Competitor Profile Matrix (CPM)

Internal Factor Evaluation (IFE)

STAGE 2 : Matching Stage

SWOT Matrix Strategic Position and Action Evaluation Boston Consulting Group (BCG) Internal External (IE) Matrix Grand Strategy Matrix

STAGE 3 : Decision Stage

Quantitative Strategic Planning Matrix (QSPM)

SWOT Matrix
Strength
1. 2. 3. 4. 5. 6. 7. 8. Inventory turn over up to 6,7% Average customer purchase up to $ 128 Employee morale is excellent In store promotion = 20% increase in sale Revenue up to 16% Newspaper adv expense down 10% Technical support has MIS degree Debt to total asset down 34%
2.

Weaknesses
1. Software revenue down 12%
Location of store hurt by new highway

Opportunities
1. 2. 3. 4. 5. 6. Population growing 10% Rival store opening 1 km away Vehicle traffic up 12% Computer user growing 8% Small business growth 10% Desire for Website up 18%

3. 4. 5. 6. 7. 8.

Total store revenue down 8% Carpet in store must be repaired Store have no Website Bathroom need refurbishing Supplier time delivery up 2 days Cust checkout process too slow

7. Vendor average six new product

1. Add 4 new in store promotion monthly (S4, O3) 2. Add 2 new repair/service person (S5, O4) 3. Send flyer to senior over age 55 (S6, O4)

1. Purchase land to built new store (W2, O2) 2. Up Website service by 50% (W5, O6) 3. Launch mail out to all realtors in city (W3, O6)

1. Best buy opening new store 2. Local Univ offer computer repair 3. New bypass hwy will divert traffic 4. New mall being built nearby 5. Vendor raising price 8% 6. Gas prices up 14%

1. Hire 2 more repair person and market the new service (S5, S7, T1) 2. Purchase land to built new store (S8, T3) 3. Raise out-of-store service call from $60 to $80 (S5, T6)

1. Hire 2 new cashier (W8,T1,T4) 2. Install new carpet /paint bath (W4.6, T1)

Threats

Strategic Position and Action Evaluation (SPACE)

FS
Conservative :
1. 2. 3. 4. Market Penetration Market Development Product Development Related Diversification

Financial Strength
Aggressive :
1. 2. 3. 4. 5. B, F, H Integration Market Penetration Market Development Product Development Diversification

Competitive Advantage CA Defensive :

1. Retrenchment 2. Divestiture 3. Liquidation

Industry IS Strength Competitive :

1. 2. 3. 4. B, F, H Integration Market Penetration Market Development Product Development

Environmental Stability

ES

Example Factors of SPACE

Internal Strategic Position

Financial Strength (FS) :

External Strategic Position

Environmental Stability (ES) : Technological change, Rate of Inflation, Demand variability, Price range of competing product, Barrier to entry into market, Competitive pressure, Ease of exit from market, Price elasticity of demand, Risk involve in business.

Return on Investment, Leverage, Liquidity, Working Capital, Cash Flow, Inventory turn over, Earning per share, Price earning ratio.
Competitive Advantage (CA) :

Market share, Product quality, Product Life cycle, Customer Loyalty, Competitions capacity utilization, Technological know-how, Control over supplier and distributor

Industry Strength (IS) :

Growth potential, Profit potential, Financial Stability, Technological knowhow, Resource utilization, Ease to entry into market, Productivity, Capacity Utilization.

Boston Consulting Group (BCG)

Cash Generation (Market Share)
High
1. Backward Integration 2. Forward Integration 3. Horizontal Integration 4. Market Penetration 5. Market Development 6. Product Development

Low

Cash Use (Growth Rate)

High

1. 2. 3. 4.

Market Penetration Market Development Product Development Divestiture

Star

Question Mark

*
Cash Cow Rp
Low
1. 2. 3. 4.

??

Market Share : Sales relative to those of other competitors in the market (dividing point is usually selected to have only two three largest competitors in any market fall into the high market share region).

Dog X

Diversification 1. Retrenchment Product Development 2. Liquidation Divestiture 3. Divestiture Retrenchment

Growth Rate : Industry Growth rate in constant dollars (dividing point is typically GNPs growth rate)

BCG Matrix Example

Division
1. Victoria Secret 2. Bath & Body Works 3. Express 4. Limited Stores 5. Henri Bendel & Mast TOTAL
Sales (MilyardRp)

% Sales 51,5 25,6 17,5 4,9 0,5 100

Profit (Juta Rp) 799 400 12 4 -188 1,027

% Profit 68,0 39,0 1,2 0,1 -18,3 100

Market Share 0,8 0,4 0,2 0,5 0.02

Growth Rate (%) 10 05 00 -0,5 -10

5,139 2,556 1,749 0,493 0,042 9,979

Buatlah BCG Matrix nya

The Internal-External (IE) Matrix

B, F, H Integration Market Penetration Market Development Product Development The IFE Total Weighted Score

Strong 3.0 4.0 4.0

3.0

Average 2.0 3.0

2.0

Weak 1.0 2.0

1.0

High 3.0 4.0 3.0 The EFE Total Weighted Score Medium 2.0 3.0

II

III

IV
2.0

VI

Low 1.0 2.0 1.0 Hold and Maintain Market Penetration Product Development

VII

VIII

IX

Harvest or Divest Retrenchment Divestiture

IE Matrix Example
Division
Sales (MilyardRp)

% Sales

Profit (Juta Rp)

% Profit

IFE Score

EFE

I II III IV
TOTAL

100 200 50 50
400

25.0 50.0 12.5 12.5

100

10 5 4 1
20

50 25 20 5
100

3,6 2,1 3,1 1,8

3,2 3,5 2,1 2,5

Buatlah IE Matrix nya

Model of Grand Strategy Matrix

Rapid Market Growth
1. Market Development 2. Market penetration 3. Product Development 4. Forward Integration 5. Backward Integration 6. Horizontal Integration 7. Vertical Integration 8. Related Diversification

Weak Competitive Position

1. 2. 3. 4. 5. 6.

Market Development Market Penetration Product Development Horizontal Integration Divestiture Liquidation

1. 2. 3. 4. 5.

Retrenchment Related Diversification Unrelated Diversification Divestiture Liquidation

1. 2. 3.

Related diversification Unrelated Diversification Joint Venture

Strong Competitive Position

Slow Market Growth

The Decision Stage

Step 1 : Make a list of the firms external opportunities/threats and Internal strength/weaknesses in the left column of the QSPM, information from EFE and IFE minimum 10 key success factor.

Step 2 : Assign weights to each external and internal factors

Step 3 : Examine the stage 2 (matching) matrices, and identify alternative strategies that the organization should consider implementing. Step 4 : Identify the attractiveness scores (AS), AS are determined by examining each key factors and asking : Does this factor effect the choice of strategies being made ? AS is 1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive and 4 = highly attractive

The Quantitative Strategic Planning Matrix QSPM

Step 5 : Compute the Total Attractive Scores (TAS)

Step 6 : Compute the Sum Total Attractive Scores

Perhatikan Tabel QSPM di Buku 1 hal 240.