EXTERNAL FACTOR EVALUTION (EFE) MATRIX COMPETITIVE PROFILE MATRIX (CPM) INTERNAL FACTOR EVALUTION (IFE) MATRIX STRENGHT-WEAKNESS-OPPORTUINITIES-THREATS(SWOT) MATRIX STRATEGIC POSITION AND ACTION EVALUTION (SPACE) MATRIX BOSTON CONSULTING GROUP (BCG) MATRIX INTERNAL-EXTERNAL(IE)MATRIX GRANG STRATEGY MATRIX QUANTITATIVE STRATEGIC PLANNING MATRIX(QSPM)

1. November
HTC 21, 2011
THE STRATEGY-FORMULATION ANALYTICAL
FRAMEWORK
• EXTERNAL FACTOR
STAGE 1 EVALUTION (EFE) MATRIX
• COMPETITIVE PROFILE
MATRIX (CPM)
THE INPUT STAGE • INTERNAL FACTOR
EVALUTION (IFE) MATRIX
• STRENGHT-WEAKNESS-
STAGE 2 OPPORTUINITIES-THREATS(SWOT)
MATRIX
THE MATCHING STAGE • STRATEGIC POSITION AND
ACTION EVALUTION (SPACE)
MATRIX
• BOSTON CONSULTING GROUP
(BCG) MATRIX
• INTERNAL-EXTERNAL(IE)MATRIX
• GRANG STRATEGY MATRIX
• QUANTITATIVE
STAGE 3 STRATEGIC
PLANNING
THE DECISION STAGE MATRIX(QSPM)
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2. November
HTC 21, 2011
STAGE 1: THE INPUT STAGE
Stages 1 summarize the basic input information needed to formulate strategies. The
information derived from these three matrices provides basic input information for
the matching and decision stage matrices.
1. INDUSTRY ANALYSIS: THE EXTERNAL FACTOR
EVALUTION (EFE) MATRIX:
An EFE Matrix allows strategies to summarize and evaluate economic, social,
cultural, demographic, environmental, political, government, legal, technological,
and competitive information
2. THE COMPETITIVE PROFILE MATRIX (CPM):
The CPM identifies a firm’s major competitors and its particular strengths and
weakness in relation to a sample firm’s strategic position.
3. THE INTERNAL FACTOR EVALUTION (IFE)
MATRIX:
IFE Matrix provides strategy formulation tool summarizes and evaluates
the major strengths and weakness in the functional areas of a business, and it also
provides a basis for identifying and evaluating relationships among those areas.
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3. November
HTC 21, 2011
EFE MATRIX FOR HTC
KEY EXTERNAL WEIGHT RATING WEIGHTED
FACTORS SCORE
OPPORTUNITIES:
1. HTC collaborated with Google and 0.12 3 0.36
launched their cell phones with Google
Android OS install in it.
2. Strategic partnership with Beat 0.11 3 0.33
Electronics by acquiring 51% shares.
3. Patent agreements. 0.05 2 0.10
4. Industrial growth rate is high for HTC. 0.10 3 0.30
5. Increasing demand for Touch screen 0.07 4 0.28
phones with 3G technology.
6. Manufacturing units in Brazil. 0.02 2 0.04
7. As BlackBerry is an executive phone, 0.08 1 0.08
HTC should also try to reach the
executive level.
THREATS:
1. Rapid technological change. 0.13 3 0.39
2. Intense competition. 0.08 3 0.24
3. Stringent regulation. 0.02 1 0.02
4. Difficult to make HTC phones 0.11 3 0.03
customer first preference when Apple,
Nokia and BlackBerry phones are in the
market (customer loyalty).
5.Numbers of products are less as 0.11 3 0.33
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4. November
HTC 21, 2011
compared to the competitors
TOTAL 1.00 2.8
ANALYSIS OF EFE MATRIX:
The total weighted score of 2.8 is above the average of 2.5, so the
telecommunication business (HTC) is doing pretty well, taking advantage of the
external opportunities and avoiding the threats facing the corporation but still there
is a great room for improvement as HTC is competing with the great players of
mobile market they need to continue producing new mobile models to cope up
with the competition. The corporation should take advantage when their competitor
make some mistake like blackberry have to called their phone sets from the market
due to some defect, in this situation HTC should try to win the customers of
blackberry. Striking out the opportunities at the right time and eliminating threats
at the right time will definitely help HTC to become the giant of the market.
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5. November
HTC 21, 2011
CPM MATRIX FOR HTC
APPLE HTC NOKIA
CRITICAL WEI RATI WEIG RATI WEIG RAT WEIG
SUCCESS GHT NG HTED NG HTED ING HTED
FACTORS SCOR SCOR SCOR
E E E
Market share 0.1 3 0.3 2 0.2 3 0.3
Price 0.1 2 0.2 2 0.2 3 0.3
Financial position 0.15 3 0.45 3 0.45 2 0.3
Product quality 0.15 3 0.45 3 0.45 2 0.3
Consumer loyalty 0.15 4 0.6 2 0.30 3 0.45
Advertising 0.05 2 0.1 1 0.05 3 0.15
Management 0.07 4 0.28 4 0.28 2 0.14
Global expansion 0.08 3 0.24 3 0.24 3 0.24
Innovation 0.15 4 0.6 4 0.6 3 0.45
TOTAL 2.77
1.00 3.22 2.63
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6. November
HTC 21, 2011
ANALYSIS OF CPM MATRIX:
Apple is on the top position as compared to HTC and Nokia. Apple is using an
effective technique that has been able to create a brand image, which helps in
achieving high market share as compared to other brands. Apple is much popular
and highly in demand brand which is the major threat to HTC. It is a big hindrance
in the demand of HTC cell phones. Apart from that, the financial crush could also
be the threat for the company. That’s because HTC smart phones are expensive
and are not affordable for many of the smart phones users. On the other side
NOKIA’s smart phones are way cheaper. So lots of people prefer Nokia on HTC.
However, through effective advertising HTC can differentiate its smart phones and
can get maximum advantage of its new ANDROID phones.
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7. November
HTC 21, 2011
IFE MATRIX FOR HTC
KEY EXTERNAL WEIGHT RATING WEIGHTED
FACTORS SCORE
STRENGHTS:
1. It is the leading maker of PDA’s smart 0.04 4 0.16
phones in the world.
2. There is the strong setup of R&D in 0.14 4 0.56
HTC.
3. HTC caters the customer national and 0.13 4 0.52
internationally and the numbers of
customers.
4. HTC smart phones equipped with 0.06 3 0.18
windows vista, Android OS, HD video
recording, multiple touch system.
5. Industry recognition and awards. 0.11 4 0.44
6. Financial performance. 0.03 3 0.09
7. Expending market share in sectors. 0.10 3 0.3
WEAKNESS:
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8. November
HTC 21, 2011
1. HTC is not very much recognized 0.10 2 0.2
brand in the market as compare to the
Apple, Nokia and Blackberry.
2. High manufacturing cost of HTC. 0.07 1 0.07
3. Declining liquidity ratio. 0.04 2 0.08
4. Patent infringement litigation. 0.01 2 0.02
5. Small range of cell phones model as 0.08 1 0.08
compared to Nokia.
6.huge market share capture by Nokia, 0.09 1 0.09
Apple and BlackBerry etc.
TOTAL 1.00 2.79
ANALYSIS OF IFE MATRIX:
The IFE of HTC shows weight age average of 2.79 is above average which means
corporation is able to use is toped resources and focus on strength like updated
machinery, new technology used that is increased cost can be control through
revenue earned by HTC. However, it has small range of cell phones compared to
NOKIA and has very high manufacturing cost as well but still there is a great room
for improvement as HTC is competing with the great players of mobile market
they need to continue producing new mobile models to cope up with the
competition. As entering into new markets like CHINA and INDIA can bring
heavy cash inflow to the company but the need is to have heavy spending on
advertisement to that will not only give HTC brand recognition but will bring huge
profits that can strengthen its financial position and can improve its financial ratios
as well.
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9. November
HTC 21, 2011
STAGE 2: THE MATCHING STAGE
Stage 2 focuses upon generating feasible alternative strategies by aligning key
external and internal factors. Strategy is sometimes defined as the match an
organization makes between its internal resources and skills and the opportunities
and risks created by its external factors.
1. THE STRENGHT-WEAKNESS-OPPRTUNITIES-
THREATS (TOWS) MATRIX:
The SWOT Matrix is an important matching tool that helps managers develops
four types of strategies: SO Strategies use a firm’s internal strengths to tae
advantage of external opportunities, WO Strategies aim at improving internal
weakness by taking advantage of external opportunities, ST Strategies use a firm’s
strengths to avoid or reduce the impact of external threats, WT Strategies are
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10. November
HTC 21, 2011
defensive strategies tactics directed at reducing internal weakness and avoiding
external threats.
2. THE STRATEGIC POSITION AND ACTION
EVALUTION (SPACE) MATRIX:
The SPACE Matrix indicates whether aggressive, conservative, defensive, or
competitive strategies are most appropriate for a given organization. The axe of the
SPACE Matrix represents two internal dimensions (Financial strength [FS] and
competitive advantage [CA]) and two external dimensions (environmental stability
[ES] and industry strength [IS]).
3. THE BOSTON CONSULTING GROUP (BCG)
MATRIX:
BCG &IE Matrix are designed specifically to enhance a multi divisional firm’s
efforts to formulate strategies. The BCG Matrix graphically portrays differences
among divisions in terms of relative market share position and industry growth
rate.
4. The INTERNAL-EXTERNAL (IE) MARIX:
The Internal-External (IE) Matrix positions an organization’s various divisions in a
nine-cell display.
5. THE GRAND STRATYEGY MATRIX:
In addition to the SWOT Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the
Grand Strategy Matrix has become a popular tool for formulating alternative
strategies. All organizations can be positioned in one of the Grand Strategy
Matrix’s four strategy quadrants.
TOWS MATRIX OF HTC
SO STRATEGIES WO - STRATEGIES
1. Produced innovative products with high 1. Purchase all legal rights (W4, O3).
technology (S2, O1).
2. Served national and globally with 3G technology 2. Lower their cost by taking advantage of lower labor
(S3, O5, O4). cost and production unit (W2, O7).
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11. November
HTC 21, 2011
3. Increasing market share by providing innovative 3. Overcome short term debt by strategic alliances (W3,
products to customers as compared to rivals (S7, O2).
O7).
4.Bring out new products in collaboration with 4. Take advantage of sponsorship to make space in hearts
experience partnership(S8,O2) of customers (W1, W6, and O6).
5.Acheived many rewards and recognition by
Beating electronic rivals(S5,O2)
ST- STRATEGIES WT - STRATEGIES
1. Introduced new products to gain customer trust 1. Put attractive features to the product (W6, T5).
(S4, T4, and T5).
2. Compete with rival by focus on performance, 2. Keep cost low to attract customers (W5, T4).
Technological advancement and brand recognitions
and awards (S5, S6, S7, T2, T1).
3. Compete with rivals by providing services to 3. Compete with rivals with new techniques (T2, W6, and
customers nationally and internationally (S3, T2). W1).
4. Enlarge sales volume and market share with more 4. Supported by technology launches and threaten by
promotional activities as compared to rivals (S7, popular and highly in demand brand because of high cost
T5). (W2, T1, and T5).
5. Less brand awareness leads to lower marketing/sales
(W1, T5).
SPACE MATRIX OF HTC
FINANCIAL STRENGTH RATINGS
3
1. Purchase all legal rights.
2. Overcome short term debt by strategic alliances. 3
3. It is the leading maker of PDA’s smart phones in the world and there is strong setup of R&D in 5
HTC.
11
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12. November
HTC 21, 2011
INDUSTRY STRENGTH
4
1. Compete with rivals by providing services to customers nationally and internationally.
4
2. Defect in BlackBerry sales decline product brings out HTC product.
6
3. Producing 3G technology in response to rapid technological change.
14
ENVRIONMENTAL STABILITY
-2
1.Compete with rivals with new techniques
2. Supported by technology launches and threaten by popular and highly in demand because of -5
high cost.
3. Less brand awareness leads to lower marketing sales. -6
4.Compete with rivals by focus on performance, technology etc. -3
-16
COMPETITIVE ADVANTAGE
-3
1. HTC has long experience with network suppliers.
-2
2. Introduced new products to gain customer trust.
3. Enlarge sales volume by market share with more promotional activities as compared to rivals. -5
4. Put attractive features to the products. -2
5. Keep cost low to attract customers. -4
-16
CONCLUSION:
ES= -16/4= -4 IS = 14/3 = 4.67
CA= -16/5= -3.2 FS = 11/3 = 3.667
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13. November
HTC 21, 2011
Directional Vector coordinates’: x-axis: -3.2 + 4.67 = 1.47
Y-axis: -4 + 3.67 = -0.33
FS
CONSERVATIVE AGGRESSIVE
6
5
4
3
2
1
CA IS
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1
-2
-3
-4
-5
DEFENSIVE COMPETITIVE
ES
ANALYSIS OF SPACE MATRIX:
Forward Integration
Backward Integration
Horizontal Integration
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14. November
HTC 21, 2011
Market Penetration
Market Development
Product Development
Joint Venture
HTC is competing fairly in an unstable market. Organization lies in
“COMPETITIVE” quadrant. They should really go for market penetration, product
development.
The result of TOWS analysis is matching with space matrix .The decision
regarding market penetration, product development will be beneficial to move with
the overall performance is good, firms financial strength is a dominating factor in
the industry.
BOSTON CONSULTING GROUP (BCG) MATRIX
RELATIVE MARKET SHARE
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15. November
HTC 21, 2011
High 1.0 Medium 0.5 Low 0.0
High +20
I
Stars Question Marks N
D
U
S
AMERICA T
R
EUROPE Y
G
R
O
Medium 0 ASIA W
T
Cash Cows Dogs H
R
A
T
E
Low -20
DIVISION REVENUE REVENUE PROFIT PROFIT MARKET GROWTH
Billion ($) % Billion ($) % SHARE RATE
ASIA 47.7 17.1 9.842 25 21.44 +6
EUROPE 90.1 32.2 14.15 36 39.89 +9
AMERICA 141 50.6 15.338 39 45.60 +10
TOTAL 278.8 100 39.33 100
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16. November
HTC 21, 2011
ANALYSIS OF BCG:
All three regions i.e. Asia, Europe and America lie in the first quadrant that is
QUESTION MARK, means HTC needs to penetrate its market to bring these
regions in STAR. HTC’s demand has been growing rapidly among upper-middle
and working class due to its introduction of ANDROID phones which are more
attractive and have more functions and features compared to NOKIA.
Although it has not been reached to the level of apple yet, but can easily target
executive class by reaching to the companies and having contract with them to give
their executive people HTC phones. According to the recent analysis it has been
observed that many people of top level management have started to prefer Android
phones due to their enhanced operating system. So, it’s a good time for HTC to
engage itself in good contracts with well renounced multinational companies and
to have a good advertising.
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17. November
HTC 21, 2011
The Internal-External (IE) Matrix
THE IFE TOTAL WEIGHTED
SCORES
E
F
E
W
E
I
G
H
T
E
D
S
C
O
R
E
DIVISION REVENUE REVENUE % PROFIT PROFIT % IFE EFE
Billion ($) Billion ($)
ASIA 47.7 17.1 9.842 25 1.98 2.10
EUROPE 90.1 32.2 14.15 36 2.39 2.53
AMERICA 141 50.6 15.338 39 2.56 2.67
TOTAL 278.8 100 39.33 100
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18. November
HTC 21, 2011
ANALYSIS OF IE:
Asia region lies in weak quadrant and HTC after entering into new market INDIA
need to put its huge money on advertising. They need to sow many HYV (high
yielding variety) seeds to harvest well, like showing effective ads that should
particularly focus executive class. They should not advertise their android phones
only, but their windows phones and tabs as well.
However, America and Europe lie in the medium quadrant means they are doing
little well, still they need to strength their position through the strategy of product
development to move to strong quadrant. As its rivals apple and Samsung have
already captured a huge market and Motorola is also coming up with new range of
android phones, so HTC needs to keep an eagle eye on its rival and must respond
to the public demand as both America and Europe are the high profit yielding areas
for HTC.
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19. November
HTC 21, 2011
Grand Strategy Matrix
RAPID MARKET GROWTH
Quadrant II Quadrant I
WEAK STRONG
COMPETITIVE COMPETITIVE
POSITION POSITION
Quadrant III Quadrant IV
Concentric HTC
Diversification
Conglomerate
Diversification
Horizontal
Diversification SLOW MARKET GROWTH
Retrenchment
Divestiture
Liquidation
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20. November
HTC 21, 2011
Matrix Analysis Summary
Alternative Strategies IE SPACE GRAND
Forward Integration * *
Backward Integration * *
Horizontal Integration * *
Market Penetration * *
Market Development * *
Product Development * *
Concentric Diversification *
Conglomerate Diversification *
Horizontal Diversification *
Joint Venture *
Retrenchment *
Divestiture *
Liquidation *
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21. November
HTC 21, 2011
STAGE 3: DECISION STAGE
Stage 3Analysis and intuition provide a basis for making strategy-formulation
decisions.
THE QUANTITATIVE STRATEGIC PLANNING
MATRIX (QSPM)
This technique is the QUANTITATIVE STRATEGIC PLANNING MATRIX
(QSPM), which comprises stage 3 of the strategy-formulation analytical
framework. This technique objectively indicates which alternatives strategies are
best. The QSPM uses input from stage 1 analyses and matching results from stage
2 analyses to decide objectively among alternative strategies.
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22. November
HTC 21, 2011
THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
DIVERTIFICATIO EXPAND
N IN PRODUCTS MARKET IN
ASIA &
CHINA
KEY EXTERNAL WEIGH AS TAS TAS
FACTORS T AS
OPPORTUNITIES:
1. HTC collaborated with Google and 0.12 4.00 0.48 2.00 0.24
launched their cell phones with
Google Android OS install in it.
2. Strategic partnership with Beat 0.11 3.00 0.33 3.00 0.33
Electronics by acquiring 51% shares.
3. Patent agreements. 0.05 - - - -
4. Industrial growth rate is high for 0.10 2.00 0.2 3.00 0.3
HTC.
5. Increasing demand for Touch screen 0.07 3.00 0.21 4.00 0.28
phones with 3G technology.
6. Manufacturing units in Brazil. 0.02 - - - -
7. As BlackBerry is an executive 0.08 3.00 0.24 4.00 0.32
phone, HTC should also try to reach
the executive level.
THREATS:
1. Rapid technological change. 0.13 3.00 0.39 2.00 0.26
2. Intense competition. 0.08 4.00 0.32 3.00 0.24
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23. November
HTC 21, 2011
3. Stringent regulation. 0.02 - - - -
4. Difficult to make HTC phones 0.11 2.00 0.22 4.00 0.44
customer first preference when Apple,
Nokia and BlackBerry phones are in
the market (customer loyalty).
5.Numbers of products are less as 0.11 1.00 0.11 2.00 0.22
compared to the competitors
SUBTOTAL 1.00 2.5 2.33
DIVERSIFICATI EXPAND
ON IN MARKET IN
PRODUCTS ASIA &
CHINA
KEY INTERNA FACTORS WEIGH AS TAS TAS
T AS
STRENGTH:
0.04 1.00 0.04 4.00 0.16
1. It is the leading maker of PDA’s
smart phones in the world.
2. There is the strong setup of R&D in 0.14 2.00 0.28 3.00 0.42
HTC.
3. HTC caters the customer national 0.13 3.00 0.39 1.00 0.13
and internationally and the numbers of
customers.
4. HTC smart phones equipped with 0.06 2.00 0.12 1.00 0.06
windows vista, Android OS, HD video
recording, multiple touch system.
5. Industry recognition and awards. 0.11 - - - -
6. Financial performance. 0.03 - - - -
7. Expending market share in sectors. 0.10 1.00 0.1 4.00 0.4
WEAKNESSES:
1. HTC is not very much recognized 0.10 2.00 0.2 4.00 0.4
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24. November
HTC 21, 2011
brand in the market as compare to the
Apple, Nokia and Blackberry.
2. High manufacturing cost of HTC. 0.07 1.00 0.07 3.00 0.21
3. Declining liquidity ratio. 0.04 - - - -
4. Patent infringement litigation. 0.01 - - - -
5. Small range of cell phones model as 0.08 4.00 0.32 1.00 0.08
compared to Nokia.
6.huge market share capture by Nokia, 0.09 3.00 0.27 3.00 0.27
Apple and BlackBerry etc.
SUBTOTAL 1.00 1.79 2.13
SUM TOTAL 4.29 4.46
ATTRACTIVENESS
SCORE
ANALYSIS OF QSPM:
The two alternative strategies__ (1) DIVERSIFICATION IN PRODUCTS (2)
EXPAND MARKET IN ASIA & CHINA___ are being considered for HTC , by
sum total attractiveness scores of 4.29 and 4.46 that the analysis indicates that
HTC should go for market development in ASIA and CHINA. As both CHINA
and Asia’s largest territory holder INDIA fall under the category of coming up
super power country, so its will prove to be a good strategy for HTC to expand but
side by side they need to have a good marketing to have a brand recognition.
Furthermore, they should try to reach to target executive level as their android
phones can easily make their market in their segment due to their operating system.
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25. November
HTC 21, 2011
RECOMMENDATIONS:
STRATEGY 1:
LOWER ITS MARKET PRICES:
The fact that Apple's new phone isn't significantly cheaper than its previous
iPhone 4 offering should allow HTC to increase market share in key emerging
markets with its cheaper Smartphone models.
STRATEGY 2:
ADVERTISE EFFECTIVELY:
AS the Smartphone market has grown nearly ninety percent from last year and
more than six times the overall mobile phone market indicates strong demand
worldwide and vendors' collective ability to meet that demand.
STRATEGY 3:
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26. November
HTC 21, 2011
EXPAND MARKETS IN ASIA & CHINA:
As the Taiyuan-based company has increased market share in the U.S., Asia and
Europe in recent years with its early adoption of Google Inc.'s Android software,
becoming the fifth-largest producer of Smartphone globally by shipments in the
second quarter. Over the past year it has acquired a variety of companies, including
Beats, a headphone maker started by music producer Dr. Dre, to build out its
service offerings and compete with Apple Inc.'s iPhone and Samsung Electronics
Co.'s Smartphone’s
26