Page 183 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 9: Strategic Analysis and Choice

Competitive Quadrant Notes

When a directional vector falls in the “competitive quadrant”, the firm should follow competitive
strategies, which include backward, forward, and horizontal integration, market penetration;
market development, product development, joint ventures and strategic alliances.

Task Discuss the space matrix for McDonalds and Wal-Mart.

Quantitative Strategic Planning Matrix (QSPM)

The basic format of QSPM is as follows:
Table 9.2: Basic Format of QSPM

Key Factors Weight Strategy 1 Strategy 2 Strategy 3
Key external factors
Economic
Political, legal and governmental
Social, cultural and demographic
Technological
Competitive
Key internal factors
Management
Marketing
Finance
Production
HR
R&D

The QSPM is a tool that allows strategists to evaluate alternative strategies objectively, based on
key internal and external success factors. Like other analytical tools, QSPM requires good intuitive
judgment.

The six steps required to develop a QSPM are:
Step 1: Make a list of the firm’s external opportunities/threats and internal strengths/
weaknesses.

Step 2: Assign weights to each key factor.
Step 3: Identify alternative strategies that the organisation wants to pursue.
Step 4: Determine the attractiveness scores. They are numerical values that indicate the relative
attractiveness of each strategy in a given set of strategies.
Step 5: Compute the total attractiveness scores, which are obtained by multiplying the weights
by the attractiveness scores in each row.
Step 6: Compute the sum total attractiveness scores in each strategy column of QPSM.
The sum total attractiveness scores reveal which strategy is most attractive.

9.5 Contingency Strategies

Strategic choice is made on the basis of certain assumptions and conditions. If the conditions
change drastically, the chosen strategies may have to be discarded altogether. If they are not too
radical, the strategies may have to be modified suitably. But changes do not occur in a sequential

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