Page 166 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Strategic Management

Notes 9.2 Strategic Analysis

Fred R David has developed a comprehensive strategy formulation and analytical framework
which is very useful for strategic analysis and choice. We now discuss the framework briefly.

This framework consists of three stages:
1. Input stage
2. Matching stage

3. Decision stage
The following table summarises the basic information needed at each stage of the analytical
framework.

Figure 9.3: Strategy Formulation and Analytical Framework

Stage 1: Input Stage Stage 2: Matching Stage Stage 3: Decision Stage

External Factor SWOT matrix Quantitative Strategic
Evaluation (EFE) matrix SPACE matrix Planning Matrix (QSPM)
Competitive Profile BCG matrix
Matrix (CPM) Internal-External
Internal Factor (IE) matrix
Evaluation (IFE) matrix Grand strategy matrix

Input Stage

This stage summarises the basic input information needed to generate alternative strategies.
This basic input information relates to the opportunities and threats, strengths and weaknesses
as also the competitive profile of the firm. This information can be obtained from the following
three matrices:
1. External Factor Evaluation Matrix (EFE Matrix)

2. Internal Factor Evaluation Matrix (IFE Matrix)
3. Competitive Profile Matrix (CPM Matrix)
Making small decisions on the relative importance of external and internal factors allows
strategists to generate and evaluate alternative strategies more effectively. Besides, good intuitive
judgment is always needed in determining appropriate weights and ratings.

Matching Stage

This stage involves the match between the internal resources and skills and the external
opportunities and threats of an organisation. The following matrices can be used for the purpose:
1. SWOT Matrix (Already discussed in unit 5)

2. SPACE Matrix
3. BCG matrix
4. Internal-External Matrix
5. Grand Strategy Matrix

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