Swot Employee Termination

							            Chapter 6
Strategy Analysis and
       Choice
Strategic Analysis & Choice
   Re-visit the Mission
     Revise,   create, or maintain mission
 Set Long-Term Objectives
 Generate feasible alternatives
 Evaluate alternatives
 Choose courses of action
    The Strategy Formulation Analytical
          Framework (Figure 6-2)

              Stage 1: The Input Stage
External Analysis                           Internal Analysis
                         SWOT Analysis

         Stage 2: The Matching Stage
Re-visit Mission and Set Long Term Objectives
         Generate feasible alternative Corporate Strategies

           Stage 3: The Decision Stage
      Evaluate and Choose Corporate Strategies
Create, revise Mission Statement
  Statement of the purpose of the organization
  Describes the organization in terms of:
      Customers
      Products   or services
      Markets
      Basicbeliefs about growth, public image,
       employees
    Remember Hershey’s evolving Mission Statement
    Purpose of Mission:
      Communication Tool
      Decision-Making Tool
                       Quantitative Areas
   Profitability
     Net   profit margin; ROI; ROE
   Productivity
     Lower  costs (% of sales CGS, S&A)
     Activity ratios

   Growth
     Increases   in sales, assets, net income
   Competitive Position
     Market   Share
 Technological Leadership
 Shareholder Wealth
   EPS; Dividends; Shareholder Value
    (stock)
 Industry specific metrics
Qualitative Areas

 Employee Relations
 Social Responsibility
 Reputation


   These areas have long term objectives that
    can be measured.
Corporate Strategies

   Theoverall managerial game plan.
   How management plans to achieve
       mission and objectives.
Alternatives for Growth
                                 Market Penetration
                                 Market Development
                                 Product Development
                Expansion
                of existing
                Businesses       Vertical
                                 Integration -
Alternatives                     Forward & Backward
for Growth

                                  Related
               Diversification
               into new
                Businesses
                                 Unrelated
Modes of Growth
 Internal development
 Acquiring firms/businesses
 Collaborative arrangements
     StrategicAlliances
     Joint Ventures
     Licensing
Repositioning Strategies
   Retrenchment
     Assets   and/or costs
 Divestiture
 Spin-offs
Termination Strategies
 Liquidation
 Merger
 Being acquired
           Tools
for Formulating and Choosing
     Corporate Strategies
      1. Portfolio Analysis
                             The BCG Matrix

              Relative Market Share Position in the Industry
                           High                     Medium                        Low
                           1.0                      .50                           0.0
            High     +20
                                  Stars (II)                 Question Marks (I)
Industry
Sales
Growth                                                             ?
Rate        Medium     0
(Percent)                         Cash Cows (III)              Dogs (IV)




            Low      -20
GE     Competitive Position (1. Market Share; 2. Technological
MATRIX Know-How; 3. Product Quality; 4. Service Network;
       5. Price Competitiveness; 6. Operating Costs
  Industry Attractiveness

                                        Good     Medium     Poor


                            High     Winner     Winner    ???????



                            Medium    Winner   Average    Loser
                                               Business

                         Profit                            Loser
             Low         Producer           Loser
1. Market growth; 2. market size; 3. Capital requirements;
4. Competitive Intensity
PRODUCT/MARKET EVOLUTION PORTFOLIO MATRIX



           Development        B1

            Growth
Stage                                  B4
of
Industry    Shakeout


           Maturity/            B2
           Saturation
                                                    B3
           Decline
Competitive Position       Strong       Average         Weak
Market Share; Technological Know-How; Product Quality
Service Network; Price competitiveness; operating costs
Advantages of Portfolio Analyses
 Encourages top management to evaluate
  each business individually; to set objectives;
  and consider resources.
 It stimulates use of external data to
  supplement management’s judgment.
 Its graphic representation makes
  interpretation and communication easier.
    Limitations of Portfolio Analyses
 Defining product/market segments isn’t
  easy.
 Using standard strategies may miss
  opportunities or be impractical.
 Providing an illusion of scientific rigor
  masks the reality that positions are based on
  subjective judgments.
 Determining what makes an industry
  attractive isn’t always possible.
More Tools
 2.   Past Performance
  %  increase in sales
   Contribution Margin
        Sales   or profit (gross, operating, net)
   Continue       to do what doing
 3.   Mission and Long Term Objectives
More Tools

             4. Matrices
                     SWOT or TOWS Matrix

Internal Analysis                  External Analysis

                 SO Strategies
Strengths                          Opportunities

 ST Strategies                   WO Strategies



                 WT Strategies
Weaknesses                         Threats
     Matching Key External and Internal Factors to
      Formulate Alternative Strategies (Table 6-2)

Key Internal Factor         Key External Factor               Resultant Strategy

Excess working              20% annual growth in the
                                                               Acquire
capacity (an internal   +   cablevision industry (an    =
                                                               Visioncable
strength)                   external opportunity)

                            Exit of two major foreign       Buy competitors’
Insufficient capacity
                        +   competitors from the        =   facilities
(an internal
                            industry (an external
weakness)
                            opportunity
                            Decreasing numbers of           Develop new
Strong R & D
                        +   young adults (an external       products for older
expertise (an                                           =
                            threat)                         adults
internal strength)

Poor employee               Strong union activity (an       Develop a new
                        +                               =
morale (an internal         external threat)                employee-benefits
weakness)                                                   package
      The TOWS Matrix (Figure 6-3)
                       STRENGTHS - S           WEAKNESSES - W


                        List strengths           List weaknesses


OPPORTUNITIES - O     SO STRATEGIES            WO STRATEGIES


                     Use strengths to take    Overcome weaknesses
List opportunities      advantage of          by taking advantage of
                        opportunities              opportunities

   THREATS - T         ST STRATEGIES            WT STRATEGIES

    List threats     Use strengths to avoid    Minimize weaknesses
                             threats            and avoid threats
            Other Matrices
 Internal Factor Evaluation (IFE) p.165
 External Factor Evaluation (EFE) p. 130
 Competitive Profile Matrix (CPM) p. 131
 Strategic Position and Action Evaluation
  (SPACE) p. 184
 Internal-External p. 190
 Grand Strategy p. 192
Other Tools Con’t
 5.   Economic Value Added (EVA)
 6.   Scenario Analysis
 7.   Game Theory
 8.   Quantitative Decision Techniques
     Linear   Programming, etc.
   9. Computer Assisted
     Decision   Support Systems (DSS)
     Artificial Intelligence (AI)
Behavioral Aspects/Tools
 Propensity for risk
 Personal Agendas
 Personalities
 Time Pressures
 Reputation/Integrity
 Imagination/Conceptualizations
 Support/Coalitions
Core Competencies
Core Competencies of the
Corporation
 Real sources of advantage - not based on
  businesses.
 Core competencies are collective learning in
  the organization, especially:
        how to coordinate diverse production skills by
        integrating multiple streams of technologies.
 Tests to identify core
competencies
 Provide potential access to a wide variety of
  markets/products/services.
 Are difficult to imitate.
 Are driven by knowledge and learning.
 examples
Core Competencies         Products/businesses
    Engines             Cars; motorcycles; lawn
    Powertrains          mowers; generators


    Optics              Copiers; laser printers;
    Imaging              cameras; image scanners;
                          medical imaging
    Microprocessor
     controls
More kinds of core
competencies:
 Systems Integration
 Virtual reality
 Bioengineering
 Delighting the customer
Strategic Analysis and Choice
          Summary
  Making subjective decisions based
   on objective information, and
      subjective interpretation