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MGT603 - Strategic Management - Lecture Handout 30

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GRAND STRATEGY MATRIX

Learning objective

Grand strategy matrix is a last matrix of matching strategy formulation framework. It same as important as BCG, IE and other matrices. This chapter enables you to understand the preparation of GS matrix.

The Quantitative Strategic Planning Matrix (QSPM)

The last stage of strategy formulation is decision stage. In this stage it is decided that which way is most appropriate or which alternative strategy should be select. This stage contains QSPM that is only tool for objective evaluation of alternative strategies. A quantitative method used to collect data and prepare a matrix for strategic planning. It is based on identified internal and external crucial success factors. That is only technique designed to determine the relative attractiveness of feasible alternative action.

This technique objectively indicates which alternative strategies are best. The QSPM uses input from Stage 1 analyses and matching results from Stage 2 analyses to decide objectively among alternative strategies. That is, the EFE Matrix, IFE Matrix, and Competitive Profile Matrix that make up Stage 1, coupled with the TOWS Matrix, SPACE Analysis, BCG Matrix, IE Matrix, and Grand Strategy Matrix that make up Stage 2, provide the needed information for setting up the QSPM (Stage 3).

Preparation of matrix

Now the question is that how to prepare QSPM matrix. First it contains key internal and external factors. An internal factor contains (strength and weakness) and external factor include (opportunities and threats). It relates to previously IFE and EFE in which weight to all factors. Weight means importance to internal and external factor. The sum of weight must be equal to one. After assigning the weights examine stage-2 matrices and identify alternatives strategies that the organization should consider implementing. The top row of a QSPM consists of alternative strategies derived from the TOWS Matrix, SPACE Matrix, BCG Matrix, IE Matrix, and Grand Strategy Matrix. These matching tools usually generate similar feasible alternatives. However, not every strategy suggested by the matching techniques has to be evaluated in a QSPM. Strategists should use good intuitive judgment in selecting strategies to include in a QSPM. After assigning the weight to strategy, determine the attractiveness score of each and afterwards total attractiveness score. The highest total attractiveness score strategy is most feasible.

Steps in preparation of QSPM

  1. List of the firm's key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM.
  2. Assign weights to each key external and internal factor
  3. Examine the Stage 2 (matching) matrices and identify alternative strategies that the organization should consider implementing
  4. Determine the Attractiveness Scores (AS)
  5. Compute the Total Attractiveness Scores
  6. Compute the Sum Total Attractiveness Score

Strategy 1
AS TAS
Strategy 2
AS TAS
Strategy 3
Weight AS TAS

Key External Factors

Economy conditions
Social/Cultural/Demographic
/Environmental
Political/Legal/Governmental
Competitive
Technological
Consumer attitude

Key Internal Factors

Research and Development
Computer Information
Finance/Accounting
Production/Operations
Management
Marketing
Systems

Limitations

  1. Requires intuitive judgments and educated assumptions
  2. Only as good as the prerequisite inputs
  3. Only strategies within a given set are evaluated relative to each other

Advantages

  1. Sets of strategies considered simultaneously or sequentially
  2. Integration of pertinent external and internal factors in the decision making process

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