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Strategic Choice
Strategist collects and evaluates information to assess strengths and
weaknesses of the internal environment and opportunities and
threats of the external environment. Among the alternatives, choices
are made.
It involves 4 steps;
3. Evaluating alternatives.
Environment Analysis
Davis - Aggregate of conditions, events and influences that surround
and affect it. It has to work within the framework provided by the
society and its innumerable constituents.
1) Internal environment
2) External environment.
Features of environment:
Complex
Dynamic
Challenging.
It is nothing but the summarised picture of the environmental factors and their likely impact on the
organisation. The importance of each environmental factor is assessed closely and expressed in
qualitative and quantitative factors. It is a technique whereby managers try to predict the future
characteristics of the organisational environment and hence make decisions today that will help the
firm deal in future.
It helps to identify the segments in a chosen field of activity, presenting excellent growth
opportunities.
SWOT Analysis:
Strength – is an in-built capability which an organisation can use to
gain strategic advantage over its competitors.
Critical success factors are those few things that must go well to ensure success
for a manager or an organization and, therefore, they represent those
managerial or enterprise areas that must be given special and continual
attention to bring about high performance. CSFs include issues vital to an
organization's current operating activities and to its future success."
Every firm has strategic advantages and disadvantages. For example, large firms have
financial strength but they tend to move slowly, compared to smaller firms, and often cannot
react to changes quickly. No firm is equally strong in all its functions.
In other words, every firm has strengths as well as weaknesses Strategists must be aware of
the strategic advantages or strengths of the firm to be able to choose the best opportunity for
the firm. On the other hand they must regularly analyse their strategic disadvantages or
weaknesses in order to face environmental threats effectively. we shall examine the strategic
advantage factors that management analyses and
diagnoses to determine the internal strengths and weaknesses with which it must face the
opportunities and threats from the environment.
Strategic portfolio analysis involves identification and evaluation of all products or service
groups offered by company on the market (so called product mix) and preparing specific
strategies for every group according to its relative market share and actual or projected sales
growth rate. It can be also used to make strategic decision about strategic business units.
Portfolio analysis in strategic management allows to answer key questions how to shape the
present and future business portfolio (of product or services) in order to reduce the risk of
functioning in a changing environment, and increase the effects of the implemented strategy.
GAP Analysis:
In management literature, gap analysis involves the comparison of actual performance with
potential or desired performance. If an organization does not make the best use of current
resources, or forgoes investment in capital or technology, it may produce or perform below
its potential.
Distinctive Competitiveness:
Distinctive competence refers to some characteristic of a business that it does better than
its competitors. Because the business is able to do something better than other businesses,
that business has a competitive advantage over other businesses.
Matrix:
Input stage
1) Internal Factor Evaluation Matrix (IFE)
2) External Factor Evaluation Matrix (EFE)
3) Competitive Profile Matrix (CPM)
Matching stage
1) SWOT Matrix
2) SPACE Matrix Stage
3) BCG Matrix
4) IE Matrix
5) Grand Strategy Matrix
Decision stage
1) QSPM Quantitative Strategic Planning Matrix