All - Strategy Formulation As of September 19 2019

.
The Strategic Management Process
External
Analysis
Strategy Strategy Strategy

Mission Objectives
Formulation Implementation Evaluation
Internal
Analysis
External
Analysis

Mission Objectives
Internal 1.Inputs Stage

Analysis EFE, CPM, IFE
2.The Matching Stage

SWOT, SPACE, IE, BCG, GS
3. Decision Stage
Quantitative Strategic Profile (QSP)
External
Analysis

Mission Objectives


SWOT, SPACE, IE, BCG, GS
3. Decision Stage
Quantitative Strategic Profile Matrix

1.Inputs - summarizes the basic input information needed to formulate

strategies.
Evaluation Tool Matrix: EFE, CPM, IFE
2.The Matching Stage - focuses on generating feasible alternative strategies

by aligning key external and internal factors.
Evaluation Tool Matrix: SWOT, SPACE, IE, BCG, GS
3. Decision Stage - to reveal the relative attractiveness of alternative

strategies.
Evaluation Tool Matrix: QSPM

strategies.

3. Decision StageEach
- to reveal the
of this relative
matrix attractiveness
has feasible or of alternative
recommends
strategies.
appropriate strategy


strategies.


strategies.
strategies.


strategies.
strategies.
These
2.The are Stage
Matching the TOP ALTERNATIVE
- focuses STRATEGIES
on generating feasible alternative strategies
Because they all have high frequency of appearance in
3. evaluation
Decision Stagematrices
- to reveal the relative attractiveness of alternative
strategies.
EFE IFE
External Analysis Internal Analysis
(Opportunities and Threats) (Strength and Weaknesses)
BCG Analysis
SPACE Analysis
SWOT Analysis
I.E. Analysis
Grand Analysis
EFE IFE
Accuracy of
generated feasible
strategies
Top Alternative Strategies for Starbucks depends on
Market Penetration
accuracy of
Market Development
Product Development
External and
Internal Analysis
EFE IFE
External and Internal Analysis

are very crucial
IFE EFE
CPM
The author of the
strama paper
must be
objective in
assigning weight
and rating in
EFE, IFE and
CPM
The Matching Stage
 The Strengths-Weaknesses-Opportunities-Threats
(SWOT) Matrix helps managers develop four types of
strategies:
 SO (strengths-opportunities) Strategies
 WO (weaknesses-opportunities) Strategies
 ST (strengths-threats) Strategies
 WT (weaknesses-threats) Strategies
SWOT – can be used to generate a number of possible

alternative strategies. This is a good way to use brainstorming to
create alternative strategies that might not otherwise be
considered.
SWOT Matrix
1. List the firm’s key external opportunities
2. List the firm’s key external threats
3. List the firm’s key internal strengths
4. List the firm’s key internal weaknesses
6-20
SWOT Matrix
1. List the firm’s key external OPPORTUNITIES
2. List the firm’s key external THREATS
3. List the firm’s key internal STRENGTHS
4. List the firm’s key internal WEAKNESSES
Strengths Weaknesses
Opportunities
Threats
6-21
SWOT Matrix (cont.)
5. Match internal strengths with external
opportunities, and record the resultant SO
6. Match internal weaknesses with external
opportunities, and record the resultant WO
Strategies
7. Match internal strengths with external threats,
and record the resultant ST Strategies
8. Match internal weaknesses with external
threats, and record the resultant WT Strategies
6-22
SWOT Matrix (cont.)
5. Match internal strengths with external opportunities, and record
the resultant SO
6. Match internal weaknesses with external opportunities, and record the resultant WO Strategies
7. Match internal strengths with external threats, and record the resultant ST Strategies
8. Match internal weaknesses with external threats, and record the resultant WT Strategies
Strengths
S5.Research & Development
S11. Good Financial Ratios
O1.Philippine coffee shops up domestic consumption by 2.25%

O2.The specialty coffee shop industry isOpportunities
projected to sustain
growth of 20 percent over the next five years.
O5.increase health and wellness awareness trend
1. Increase coffee variety and
SO Strategies S.O.
create more healthy product
use a firm’s options or redevelop their
internal strengths product to a healthy drink
to take (s5, s11, o1, o2, o5, )
advantage of
external
opportunities
6-23
SWOT Matrix (cont.)
5. Match internal strengths with external opportunities, and record
the resultant SO
S5.R&D
S11. Good Financial Ratios
O1.Philippine coffee shops up domestic consumption by 2.25%

O2.The specialty coffee shop industry is projected to sustain
O5.increase health and wellness awareness trend
1. Increase coffee variety and
SO Strategies S.O.
create more healthy product
use atofirm’s
It is important include this notation to reveal the options or redevelop their
rationaleinternal
for eachstrengths
strategy generated (s5, s11, o1, o2, o5) product to a healthy drink
to take (s5, s11, o1, o2, o5, )
It means this S.O. Strategy
advantage of comes
from S#5,11 and taking advantage
of O#1,2,5external
opportunities
6-24
SWOT Matrix (cont.)
5. Match internal strengths with external opportunities, and record the resultant SO
6. Match internal weaknesses with external opportunities, and record the

resultant WO Strategies
 WO Strategies
 aim at improving
internal
weaknesses by
taking advantage
of external
opportunities W.O.
6-25
SWOT Matrix (cont.)
7. Match internal strengths with external threats, and record the resultant
ST Strategies
ST Strategies
use a firm’s
strengths
to avoid or
reduce the
impact of
external
threats S.T.
6-26
SWOT Matrix (cont.)
8. Match internal weaknesses with external threats, and record the

resultant WT Strategies
 WT Strategies
 defensive
tactics
directed at
reducing
internal
weakness and
avoiding
external
threats
W.T.
6-27
STRENGHTS WEAKNESSES
1. High brand equity 1. Product pricing
2. Largest and fast growing coffee shop chain in the 2. Highly dependent on the outsource
world suppliers
3. Excellent employee relationship 3. Less marketing efforts Limited product
4. Starbucks experience mix
5. R&D
SWOT 6. Rustan Coffee Corp, the operator of Starbucks
specialist coffee shops in the Philippines,
MATRIX continues to be the biggest chained player.
7. Fixed prices and price-to-be-fixed in their supply
8. Highly penetrated and has a large market share
in the Philippines coffee shop industry
9. Increase sales growth of 9.91% during 2012
10.Increase Net Income Growth rate up to 26.76%
during 2012
11.Financial Ratios
OPPORTUNITIES SO STRATEGIES WO STRATEGIES
1. Philippine coffee shops up domestic consumption by
2.25%
1. Increase coffee variety) and create 1.Increase marketing and
2. The specialty coffee shop industry is projected to sustain more healthy product options or promotion efforts (w1, w3, o1,
growth of 20 percent over the next five years. redevelop their product to a healthy o2, o3, o6)
3. Cafés/bars will be registering a constant value CAGR of drink (s5, s11, o1, o2, o5, ) 2.Collaborate w/ Suppliers: (w2, o1,
1% over the 2012-2017 forecast period.(euromonitor,
2013)
2. Increase coffee chain stores in the o4)
4. expanding coffee production industry in the Philippines Philippines (s6, s8, s11, o1, o2, 03
5. increase health and wellness awareness trend
6. Filipino love socializing
7. Coffee has a large market in the Philippines
THREATS ST STRATEGIES WT STRATEGIES
1. Increased competition from local cafes and 1.Joint venture or partnering (s1, s2, s11, 1.Increase market activity efforts
specialization of other coffee chains
2. Large value and increase of instant coffee competitor t2, t4) (w1, w3, t2, t4, t6)
3. Emerging coffee vending machines and coffee maker 2.Maintain price fixation on their product 2.Build and maintain a better
machines supply (s10, t5) supplier and manufacturer
4. Filipino high tendency to substitute 3.Work with suppliers to create a better relationship (w2, t1, t5)
5. Natural calamities, climate change, and crop diseases
that affects supply and demand of coffee
product using those raw materials: (s5,
6. Free wi-fi usage from other competitors s6, t1, t2)
world suppliers
5. R&D
SWOT 6. Rustan Coffee Corp, the operator of Starbucks
MATRIX continues to be the biggest chained player.
during 2012
11.Financial Ratios
2.25%
2. The specialty coffee shop industry is projected to sustain
3. Cafés/bars will be registering a constant value CAGR of
2013)
4. expanding coffee production industry in the Philippines
1. Increased competition from local cafes and
2. Large value and increase of instant coffee competitor
3. Emerging coffee vending machines and coffee maker
machines
4. Filipino high tendency to substitute
6. Free wi-fi usage from other competitors
SWOT
world suppliers
Strategist must classify this generated strategies based on the 3. Excellent employee relationship
4. Starbucks experience
3. Less marketing efforts Limited product
mix
5. R&D
11 Alternative Strategies 6. Rustan Coffee Corp, the operator of Starbucks
continues to be the biggest chained player.
MATRIX
during 2012
11.Financial Ratios
2.25%
2. The specialty coffee shop industry is projected to sustain
3. Cafés/bars will be registering a constant value CAGR of
2013)
4. expanding coffee production industry in the Philippines
1. Increased competition from local cafes and
2. Large value and increase of instant coffee competitor
3. Emerging coffee vending machines and coffee maker
machines
4. Filipino high tendency to substitute
6. Free wi-fi usage from other competitors
If there is no classification, then leave it as is.

world suppliers
SWOT
5. R&D
6. Rustan Coffee Corp, the operator of Starbucks
MATRIX 7. Fixed prices and price-to-be-fixed in their supply

during 2012
11.Financial Ratios
2.25% 1. Product development: increase 1.Market penetration: increase
2. The specialty coffee shop industry is projected to sustain coffee variety) and create more marketing and promotion efforts
growth of 20 percent over the next five years. healthy product options or redevelop (w1, w3, o1, o2, o3, o6)
3. Cafés/bars will be registering a constant value CAGR of their product to a healthy drink (s5, 2.Backward integration:
2013)
s11, o1, o2, o5, ) Collaborate w/ Suppliers: (w2, o1,
4. expanding coffee production industry in the Philippines 2. Market development: increase o4)
5. increase health and wellness awareness trend coffee chain stores in the Philippines
6. Filipino love socializing (s6, s8, s11, o1, o2, 03
1. Increased competition from local cafes and 1.Forward Integrations: Joint venture or 1.Increase market activity efforts
2. Large value and increase of instant coffee competitor partnering (s1, s2, s11, t2, t4) (w1, w3, t2, t4, t6)
4. Filipino high tendency to substitute 3.Horizontal Integration: Work with relationship (w2, t1, t5)
that affects supply and demand of coffee suppliers to create a better product
6. Free wi-fi usage from other competitors using those raw materials: (s5, s6, t1,
t2)
world suppliers
SWOT
5. R&D

during 2012
11.Financial Ratios
2.25% 1. Product development: increase 1.Market penetration: increase
2. The specialty coffee shop industry is projected to sustain coffee variety) and create more marketing and promotion efforts
2013)
4. expanding coffee production industry in the Philippines 2. Market development: increase o4)
5. increase health and wellness awareness trend coffee chain stores in the Philippines
6. Filipino love socializing (s6, s8, s11, o1, o2, 03
The purpose of SWOT is to
generate strategies, not
select or determine best
strategy that affects supply and demand of coffee suppliers to create a better product
t2)
SWOT is a static assessment

(snapshot) in time.
Analysis 1. High brand equity
2. Largest and fast growing coffee shop chain in the
1. Product pricing
2. Highly dependent on the outsource
world suppliers
After discussion and construction of SWOT Matrix, Analysis will proceed. In the Analysis,
SWOT
the student must identify the top 3 Alternative Strategies with highest frequencies in
5. R&D
the table. specialist coffee shops in the Philippines,

during 2012
11.Financial Ratios
2.25% 1. Product development:
increase 1.Market penetration: increase
coffee variety) and create more
2. The specialty coffee shop industry is projected to sustain marketing and promotion efforts
2013)
In this case, SWOT Analysis must suggest 2. Market In development:
4. expanding coffee production industry in the Philippines this case, SWOT Analysis
increase o4) must suggest
Horizontal Integ, Market Dev, Product
6. Filipino love socializing Dev coffee chain stores in the Philippines
Horizontal Integ, Market Dev, Related Diver
(s6, s8, s11, o1, o2, 03
that affects supply and demand of coffee suppliers to create a better product
t2)
In this case, SWOT Analysis must suggest

Forward Integ, Backward Integ, Horiz Integ, Market Dev
SWOT Analysis
The Strategic Position and Action
Evaluation (SPACE) Matrix
 Strategic Position and Action Evaluation
(SPACE) Matrix
 four-quadrant framework evaluates whether the
organization is aggressive, conservative, defensive, or
competitive strategies are most appropriate
6-35
The SPACE Matrix
These factors
are perhaps
the most Is your company Is your company
important Conservative? Aggressive?
determinants
of an
organization’s
overall
Is your company Is your company
strategic Defensive? Competitive?
position.
6-36
The SPACE Matrix
These factors
are perhaps
the most Is your company Is your company
important Conservative? Aggressive?
determinants
of an
organization’s
overall
Is your company Is your company
strategic Defensive? Competitive?
position.
SPACE shows the direction of
the company.
6-37
The SPACE Matrix
Each strategic
position has
quadrant
location that has
corresponding
alternative
strategies
6-38
SPACE Matrix
The strategic position depends on the two internal
dimension and two external dimensions
 Two internal dimensions (financial position [FP] and

competitive position [CP])
 Two external dimensions (stability position [SP] and
industry position [IP])
6-39
Two internal dimensions (financial position [FP] and competitive position [CP]) are placed here
Two external dimensions (stability position [SP] and industry position [IP]) are placed here
Financial
Position
Conservative Aggressive
Competitive Industrial
Position Position
Defensive Competitive
Stability
The SPACE Matrix Position
6-40
Important
Financial
determinants of the
Position organization’s overall
strategic position
Position Position
Stability
Position
6-41
FP
CP IP
SP
Factors That Make Up the SPACE Matrix Axes
6-43
Factors That Make Up the SPACE Matrix Axes
These
factors will
enables the
strategist to
analyze the
position of
the
organization
6-44
Steps to Develop a SPACE
Matrix
1. Select a set of variables to define financial position
(FP), competitive position (CP), stability position
(SP), and industry position (IP)
6-45
Matrix Variables to be selected are the factors from the
identified Strength, Weaknesses, Opportunities and
Threats
1. Select a set of
variables to
define financial
position (FP),
competitive
position (CP),
stability position
(SP), and
industry position
(IP)
6-46
Need to reclassify these
variables based on
Financial Position,
Industrial Position,
Stability Position and
Competitive Position
Financial
Position
Position Position
Stability
Position
Need to reclassify these
variables based on
Financial Position,
Industrial Position,
Stability Position and
Competitive Position
Financial
Position
Position Position
Stability
Position
Steps to Develop a SPACE Matrix
FINANCIAL POSITION
 Increase sales growth of 9.91% during 2012
 Increase Net Income Growth rate up to 26.76% during 2012
 Increase operating income rate of 27.26% during 2012
INDUSTRY POSITION
 Domestic demand for coffee has been on a steady rise per year with instant coffee growing by 20 to 25
percent, while "roast and ground" requirements rising by five to six percent.
 The specialty coffee shop industry is projected to sustain growth of 20 percent over the next five years.
 Cafés/bars will be registering a constant value CAGR of 1% over the 2012-2017 forecast period.(Euromonitor,
2013)
 Philippine coffee shops up domestic consumption by 2.25% After reclassification of
STABILITY POSITION the factor, here are the
 Natural calamities, climate change, and crop diseases that affects supply and demand of coffee variables for the 4
 Local production in the Philippines still did not meet coffee demand in the country.
 increase health and wellness awareness trend dimensions
 Increased competition from local cafes and specialization of other coffee chains (This reclassification is
COMPETITIVE POSITION done already at the end
 High brand equity
 Largest and fast growing coffee shop chain in the world
of external and internal
 Excellent employee relationship analysis, chapter 4 and 5
 High quality product and Starbucks experience
 R&D
respectively)
 Rustan Coffee Corp, the operator of Starbucks specialist coffee shops in the Philippines, continues to be the
biggest chained player.
 Starbucks Philippines with a network of more than 200 coffee chain stores
6-49
2. Assign a numerical
value ranging from +1
(worst) to +7 (best) to
each of the variables
that make up the FP
and IP dimensions.
Assign a numerical
value ranging from –1
(best) to –7 (worst) to
each of the variables
that make up the SP
and CP dimensions
6-50
Ratings
FINANCIAL STRENGTH
 Increase sales growth of 9.91% during 2012 6.0

 Increase Net Income Growth rate up to 26.76% during 2012 7.0
 Increase operating income rate of 27.26% during 2012 7.0
INDUSTRY STRENGTH
 Domestic demand for coffee has been on a steady rise per year with instant coffee growing by 20 to 25 6.0
percent, while "roast and ground" requirements rising by five to six percent. 6.0
 The specialty coffee shop industry is projected to sustain growth of 20 percent over the next five years. 5.0
 Cafés/bars will be registering a constant value CAGR of 1% over the 2012-2017 forecast period.(Euromonitor, 6.0
2013)
 Philippine coffee shops up domestic consumption by 2.25%
STABILITY POSITION
 Natural calamities, climate change, and crop diseases that affects supply and demand of coffee -4.0
 Local production in the Philippines still did not meet coffee demand in the country. -3.0
 increase health and wellness awareness trend -3.0
 Increased competition from local cafes and specialization of other coffee chains -2.0
COMPETITIVE POSITION
 High brand equity -1.0
 Largest and fast growing coffee shop chain in the world -1.0
 Excellent employee relationship -1.0
 High quality product and Starbucks experience -2.0
 R&D -2.0
 Rustan Coffee Corp, the operator of Starbucks specialist coffee shops in the Philippines, continues to be the -2.0
biggest chained player. -2.0
6-51
•Compute an average score for FP, CP, IP, and SP by summing the values given to the
variables and dividing by the number of variables included in each dimension.
3. Compute an average score for FP, CP, IP, and SP

FINANCIAL STRENGTH Ratings
 Increase sales growth of 9.91% during 2012 6.0 FS

 Increase Net Income Growth rate up to 26.76% during 2012 7.0 average is
 Increase operating income rate of 27.26% during 2012 7.0 6.67
INDUSTRY STRENGTH
 Domestic demand for coffee has been on a steady rise per year with instant coffee growing by 20 to 25 6.0 IP
percent, while "roast and ground" requirements rising by five to six percent. 6.0 average is
 The specialty coffee shop industry is projected to sustain growth of 20 percent over the next five years. 5.0 5.75
 Cafés/bars will be registering a constant value CAGR of 1% over the 2012-2017 forecast period.(Euromonitor, 6.0
2013)
 Philippine coffee shops up domestic consumption by 2.25%
STABILITY POSITION
 Natural calamities, climate change, and crop diseases that affects supply and demand of coffee -4.0
 Local production in the Philippines still did not meet coffee demand in the country. -3.0 SP
 increase health and wellness awareness trend -3.0 average is
 Increased competition from local cafes and specialization of other coffee chains -2.0 -3
COMPETITIVE POSITION
 High brand equity -1.0 CP
 Largest and fast growing coffee shop chain in the world -1.0
average is
 Excellent employee relationship -1.0
 High quality product and Starbucks experience -2.0 -1.57
 R&D -2.0
 Rustan Coffee Corp, the operator of Starbucks specialist coffee shops in the Philippines, continues to be the -2.0
biggest chained player. -2.0
Matrix
4. Plot the average scores for FP, IP, SP, and CP on
the appropriate axis in the SPACE Matrix
5. Add the two scores on the x-axis and plot the
resultant point on X. Add the two scores on the
y-axis and plot the resultant point on Y. Plot the
intersection of the new xy point
6-53
4. Plot the average scores for FP, IP, SP, and CP on the
appropriate axis in the SPACE Matrix
5. Add the two scores on the x-axis and plot the resultant
point on X. Add the two scores on the y-axis and plot the
resultant point on Y. Plot the intersection of the new xy
point
Conclusion:
IP average is 5.75
CP average is -1.57 3.67
SP average is -3
FP average is 6.67
4.18
Directional vector coordinates:
x-axis: -1.57 + 5.75 = 4.18

Y-axis: -3 + 6.67 = 3.67
Matrix
6. Draw a directional vector
from the origin of the
SPACE Matrix through the Aggressive
new intersection point
This vector reveals the type of strategies
recommended for the organization:
aggressive, competitive, defensive, or
conservative
6-55
Starbucks Example
SPACE Analysis
Example Strategy Profiles
6-58
Example Strategy Profiles
6-59
Boston Consulting Group Matrix
Graphically portrays differences among divisions in terms
of relative market share position and industry growth rate
Allows a multidivisional organization to manage its

portfolio of businesses by examining the relative market
share position and the industry growth rate of each
division relative to all other divisions in the organization
Relative market share position is defined
as the ratio of a division’s own market
share (or revenues) in a particular industry
to the market share (or revenues) held by
the largest rival firm in that industry.
Industry growth rate in

sales, measured in
percentage terms. The
growth rate percentages
on the y-axis could range
from -20 to +20 percent,
with 0.0 being the
midpoint. The average
annual increase in
revenues for several
leading firms in the
industry would be a good
estimate of the value.
Question marks – Quadrant I
Organization must decide whether to
strengthen them by pursuing an intensive
strategy (market penetration, market
development, or product development) or
to sell them
Stars – Quadrant II
represent the organization’s best long-
run opportunities for growth and
profitability
Cash Cows – Quadrant III

generate cash in excess of their needs
should be managed to maintain their
strong position for as long as possible
Dogs – Quadrant IV
compete in a slow- or no-market-
growth industry
businesses are often liquidated,
divested, or trimmed down through
retrenchment
Strategies
•Forward, backward,
horizontal integration;
•Market penetration,
•Market development,
•Product development.
BCG Analysis
The Internal-External (IE) Matrix
 The IE Matrix is based on two key dimensions: the
IFE total weighted scores on the x-axis and the EFE
total weighted scores on the y-axis IFE
EFE 3.11
3.17
The Internal-External (IE) Matrix
 Three major regions
 Grow and build
 Hold and maintain
IFE
 Harvest or divest
EFE
The IE Matrix
6-72
The IE Matrix
Harvest or Divest
-Retrenchment
-Divestiture
The IE Matrix
Hold and Maintain

-Market Penetration
-Product Development 6-74
Grow and Build
The IE Matrix
-Backward, Forward, or Horizontal Integrations
-Market Penetration
-Market Development
-Product Development
6-75
IFE TOTAL
WEIGHTED Starbucks Example
SCORE: 3.11
EFE TOTAL
WEIGHTED
SCORE: 3.17
Starbucks Example
Grow and Build
Grow and Build Starbucks Example
-Backward, Forward, or Horizontal Integrations
-Market Penetration
-Market Development
-Product Development
I.E. Analysis
The Grand Strategy Matrix
 Grand Strategy Matrix
 based on two evaluative dimensions: competitive
position and market (industry) growth
RAPID MARKET
GROWTH
WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION
SLOW MARKET
GROWTH
6-81
*Note: Any industry whose annual growth in sales exceeds
5% could be considered to have rapid growth.
RAPID MARKET
GROWTH
SLOW MARKET
GROWTH
Quadrant II Quadrant I
Unable to compete effectively Continued concentration on current
need to determine why the firm’s current markets (market penetration and
approach is ineffective and how the market development) & products
company can best change to improve (product development) is an
its competitiveness appropriate strategy
Quadrant III Quadrant IV

Must make some drastic changes Have characteristically high cash-flow
quickly to avoid further decline and levels and limited internal growth needs
possible liquidation and often can pursue related or unrelated
Extensive cost and asset reduction diversification successfully
(retrenchment) should be pursued first
The Grand Strategy Matrix
6-84
Starbucks Example
SUMMARY OF STRATEGIES
The recommended strategies from the different strategy formulation tools stated above
are summarized below:
STRATEGIES SWOT SPACE IE GRAND BCG TOTAL

Market penetration 1 1 1 1 1 5
Market development 1 1 1 1 1 5
Product development 1 1 1 1 1 5
Backward integration 1 1 1 1 4
Forward integration 1 1 1 1 4
Horizontal integration 1 1 1 1 4
Unrelated diversification 1 1
Related diversification 1 1
Retrenchment
Divestiture
Liquidation
SUMMARY OF STRATEGIES
The recommended strategies from the different strategy formulation tools stated above
are summarized below:
STRATEGIES SWOT SPACE IE GRAND BCG TOTAL

Market penetration 1 1 1 1 1 5
Market development 1 1 1 1 1 5
Product development 1 1 1 1 1 5
Backward integration 1 1 1 1 4
Forward integration 1 1 1 1 4
Horizontal integration 1 1 1 1 4
Unrelated diversification 1 1
Related diversification 1 1
Retrenchment
Divestiture
Liquidation
These are the TOP ALTERNATIVE STRATEGIES
External
Analysis
Strategy Strategy Competitive

Mission Objectives
Formulation Implementation Advantage


SWOT, SPACE, IE, GS
3. Decision Stage
Strategy Evaluation
The Quantitative Strategic
Planning Matrix (QSPM)
 Quantitative Strategic Planning Matrix (QSPM)
 objectively indicates which alternative strategies are
best
 uses input from Stage 1 analyses and matching
results from Stage 2 analyses to decide objectively
among alternative strategies
6-90
The Quantitative Strategic
Planning Matrix (QSPM)
6-91
QSPM of Starbucks
KEY FACTORS PRODUCT MARKET MARKET
DEVELOPMENT DEVELOPMENT PENETRATION
W’T RATE SCORE RATE SCORE RATE SCORE
STRENGTH:
WEAKNESSES
OPPORTUNITIES
THREATS
100%
TOTAL WEIGHT
SUM OF TOTAL ATTRACTIVENESS SCORE: 3.28 3.7 3.02

PD MD MP
QSPM of Starbucks
STRENGTH:
High brand equity 10% 4 .4 4 .4 3 .3
Largest and fast growing coffee shop chain in 8% 2 .16 4 .32 2 .16
the world
Excellent employee relationship 7% - - - - - -
Starbucks experience 9% - - - - - -
R&D 7% 4 .28 3 .21 3 .21
Rustan Coffee Corp, the operator of 8% 2 .16 4 .32 2 .16
Starbucks specialist coffee shops in the
Philippines, continues to be the biggest
chained player.
Fixed prices and price-to-be-fixed in their 5% - - - - - -
supply
Highly penetrated and has a large market 9% 2 .18 3 .27 2 .18
share in the Philippines coffee shop industry
Increase sales growth of 9.91% during 2012 6% - - - - - -
Increase Net Income Growth rate up to 6% - - - - - -
26.76% during 2012
Financial Ratios 7% - - - - - -
QSPM of Starbucks
STRENGTH:
WEAKNESSES
OPPORTUNITIES
THREATS
100%
TOTAL WEIGHT

PD MD MP
1.Market Development On Chapter 7, This

2. Product Development priority strategies will be
3. Market Penetration implemented
QSPM of Starbucks
STRENGTH:
WEAKNESSES
OPPORTUNITIES
THREATS
100%
TOTAL WEIGHT

PD MD MP
1.Market Development On Chapter 7, Strategies

It is advisable that the strama
2. Product Development will student
be implemented
must double check the
3. Market Penetration rates and other computations inside
the QSPM in order to validate the
resulting prioritization of strategies.
QSPM of Starbucks
Sometimes the student may need to further check if the Strategy Ranked #1
here in QSPM is really the best strategy.
Result of QSPM is a mathematical
W’T approach, intuition
RATE SCORE RATE and experience
SCORE RATE SCORE
STRENGTH:
maybe applied.
WEAKNESSES
OPPORTUNITIES
THREATS
100%
TOTAL WEIGHT

PD MD MP
1.Market Development On Chapter 7, Strategies

2. Product Development will be implemented
3. Market Penetration
For our Starbucks example,
Marketing Development Strategy
will serve as the compass or
direction.
1.Market Development
2. Product Development
3. Market Penetration
Thank you.

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The Strategic Management Process

Strategy Strategy Strategy

Strategy Strategy Strategy

Internal 1.Inputs Stage

2.The Matching Stage

Strategy Strategy Strategy

Internal 1.Inputs Stage

2.The Matching Stage

Strategy Strategy Strategy

1.Inputs - summarizes the basic input information needed to formulate

2.The Matching Stage - focuses on generating feasible alternative strategies

3. Decision Stage - to reveal the relative attractiveness of alternative

1.Inputs - summarizes the basic input information needed to formulate

2.The Matching Stage - focuses on generating feasible alternative strategies

Strategy Strategy Strategy

1.Inputs - summarizes the basic input information needed to formulate

2.The Matching Stage - focuses on generating feasible alternative strategies

3. Decision Stage - to reveal the relative attractiveness of alternative

2.The Matching Stage - focuses on generating feasible alternative strategies

3. Decision Stage - to reveal the relative attractiveness of alternative

External and Internal Analysis

SWOT – can be used to generate a number of possible

O1.Philippine coffee shops up domestic consumption by 2.25%

O1.Philippine coffee shops up domestic consumption by 2.25%

6. Match internal weaknesses with external opportunities, and record the

8. Match internal weaknesses with external threats, and record the

If there is no classification, then leave it as is.

MATRIX 7. Fixed prices and price-to-be-fixed in their supply

MATRIX 7. Fixed prices and price-to-be-fixed in their supply

SWOT is a static assessment

MATRIX 7. Fixed prices and price-to-be-fixed in their supply

In this case, SWOT Analysis must suggest

 Two internal dimensions (financial position [FP] and

 Increase sales growth of 9.91% during 2012 6.0

3. Compute an average score for FP, CP, IP, and SP

 Increase sales growth of 9.91% during 2012 6.0 FS

x-axis: -1.57 + 5.75 = 4.18

Allows a multidivisional organization to manage its

Industry growth rate in

Cash Cows – Quadrant III

Hold and Maintain

Quadrant III Quadrant IV

STRATEGIES SWOT SPACE IE GRAND BCG TOTAL

STRATEGIES SWOT SPACE IE GRAND BCG TOTAL

Strategy Strategy Competitive

Internal 1.Inputs Stage

2.The Matching Stage

SUM OF TOTAL ATTRACTIVENESS SCORE: 3.28 3.7 3.02

SUM OF TOTAL ATTRACTIVENESS SCORE: 3.28 3.7 3.02

1.Market Development On Chapter 7, This

SUM OF TOTAL ATTRACTIVENESS SCORE: 3.28 3.7 3.02

1.Market Development On Chapter 7, Strategies

SUM OF TOTAL ATTRACTIVENESS SCORE: 3.28 3.7 3.02

1.Market Development On Chapter 7, Strategies

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