1. STRATEGIC MANAGEMENT
UNIT 3

2. STRATEGIC MANAGEMENT PROCESS
Corporate Performance Evaluation S
O
External Internal
Environment Environmental Scanning Environment
T Vision W
Mission
Goals
Objectives
STRATEGIE
Corporate
S
Business
Functional
Policies
Programs
Budgets
Procedures
Evaluation

3. Strategic Management
Process
Environmental Strategy Strategy Evaluation
Scanning Formulation Implementation &Control

4. Strategic Management
Process
Strategy Formulation
Strengths
Weaknesses
Environmental
Scanning Opportunities S-O strategies W-O
strategies
Threats S-T strategies W-T
strategies

5. UNIT 3
ENVIRONMENTAL SCANNING AND INDUSTRY ANALYSIS
The environmental scan includes the following components:
• Analysis of the (external) Macro-environment (Societal Environment)
• Analysis of the firm's (external) Task Environment ( Industry Environment)
• Analysis of the firm’s Internal Environment (Organizational Environment)
The societal environment is composed of political-legal, economic, socio-
cultural and technological forces ( known as PEST factors)
The task environment (industry) contains stakeholder groups that have an
impact or are heavily impacted by the organization. These are
governments, local communities, suppliers, creditors, employees/labor
unions, special interest groups, and trade associations.
Within the industry environment, Strategic Groups are important because a
firm does not compete against everyone in an industry but only against those
with similar strategies using similar resources. .

6. Environmental Analysis
Analyse EXTERNAL Environment Conditions
SOCIETAL ENVIRONMENT
o
TASK ENVIRONMENT
T Identify Select the
Strategic Best
Options Strategy
Analyse INTERNAL Company Situation for the for the
Company Company
S
Competencies,
Capabilities,
Resource strengths and weaknesses,
Competitiveness
W

7. Environmental Variables

8. The Components of a Company’s Macro-Environment
MACROENVIRONMENT
Legislation and
Regulation
Suppliers Substitutes
COMPANY
Rival
Buyers
Firms
New
Entrants

IMMEDIATE INDUSTRY
AND COMPETITIVE
ENVIRONMENT

9. The Components of a Company’s Macro-Environment
MACROENVIRONMENT
Legislation and
Regulation
Suppliers Substitutes
COMPANY
Rival
Buyers
Firms
New
Entrants

IMMEDIATE INDUSTRY
AND COMPETITIVE
ENVIRONMENT

10. The Components of a Company’s Macro-Environment
MACROENVIRONMENT
Legislation and
Regulation
Suppliers Substitutes
Strat.
Group Strat.
Strat. 2 Group
Group 3 Buyers
1
New
Entrants

IMMEDIATE INDUSTRY
AND COMPETITIVE
ENVIRONMENT

11. Strategic Groups
 Firms in same strategic group have two or more competitive
characteristics in common
 (eg. Nokia, Motorola, Ericsson)
 Sell in same price/quality range
 Cover same geographic areas
 Be vertically integrated to same degree
 Have comparable product line breadth
 Emphasize same types of distribution channels
 Offer buyers similar services
 Use identical technological approaches

12. PEST Analysis
A scan of the external macro (societal) environment in which the
firm operates reveals the business opportunities lying ahead and the
threats the organization will have to face in future.
Developments or trends in a corporation's societal environment
typically do not affect the corporation directly but indirectly through
their impact on one or more stakeholder groups in the corporation's
task environment. This can be expressed in terms of the following
factors:
Political/Legal
Economic
Social
Technological
The acronym PEST (sometimes also labeled as “SLEPT") is used to
describe a framework for the analysis of these macro-environmental
factors.

13. PEST Factors ( Detailed)

14. A PEST analysis fits into an overall
environmental scan as shown in the following
Political factors diagram: Economic factors
include government regulations and legal issues and affect the purchasing power of potential customers and
define both formal and informal rules under which the the firm's cost of capital. The following are examples of
firm must operate. Some examples include factors in the macro-economy
tax policy economic growth
employment laws interest rates
environmental regulations exchange rates
trade restrictions and tariffs inflation rate
political stability PEST :
Social factors FACTORS Technological
include the demographic and cultural aspects of the
external macro-environment. These factors affect
factors
needs and the size of potential markets. Some social can lower barriers to entry, reduce minimum efficient
factors include: production levels, and influence outsourcing decisions.
population growth rate Some technological factors include:
age distribution R&D activity
career attitudes automation
health consciousness technology incentives
rate of technological change

15. How to identify the strategic factors
in the External Environment?
List the major trends or developments emerging in each of the four
forces of a firm's societal environment.
Then estimate the likely impact of these general trends upon the primary
stakeholders, e.g., communities, creditors, competitors, etc. These data
form a series of strategic inputs - those trends and developments that are
very likely to determine the future environment.
Plot these strategic issues on an issues priority matrix .
Those issues judged to have a high probability of occurring and a high
probable impact on the corporation are strategic factors.
Categorize these factors as opportunities or threats. (Keep in mind that
some strategic factors may be both opportunities and threats depending
upon how one views them.)
Example: The trend toward dual-career couples is a development in the societal
environment of any company operating in the U.S or Canada. Socio-cultural forces
linked to the changing role of women plus the trend toward single family households
combined with the economic forces of high interest rates and inflation in the 1970s to
send both men and women searching for full-time jobs in addition to their being parents.
This development in the societal environment affected companies through its impact on
employee/union groups (who asked for parental leave and/or company-sponsored day
care centers), customers (employed parents who increasingly shop for convenience
goods because of time constraints), and special interest groups and even governments
(who asked business firms to help support local schools and deal with community social

16. Issues Priority Matrix
(External Strategic Factors of a firm are those that fall under High or Medium priority)
Prentice Hall, Inc. © 2008 4-16

17. Forecasting Techniques
- Trend Extrapolation Vs Scenario Writing
Extrapolation is simply the extension of present trends into the future. It
relies on the assumption that the environment is reasonably consistent and
changes slowly in the short run. As a result, extrapolation is fairly easy to
do - as witnessed by its being the most widely used form of forecasting.
Nevertheless, extrapolation is like driving a car without using a mirror or
twisting one's head to look around and backward. Everything will be fine
until a sudden new formation occurs! Like driving a car in this
way, extrapolation is fine if the time frame to be predicted is short and one is
lucky.
Scenario-writing, in contrast, is based upon a series of historical data plus
informed hunches from key people in the company who have access to
environmental information or from a Delphi panel of outside experts. Like
extrapolation, scenario-writing is a very popular forecasting technique, but
unlike extrapolation, it can get very complicated and time consuming. It has
at least one clear-cut advantage over extrapolation: It encourages
forecasters to make their assumptions explicit. One is thus more likely to
recognize the dangerousness of moving forward without information.
Scenario writing, if done conscientiously, could thus be seen as an attempt
to construct a mirror to use in hazardous driving!

18. Why is environmental uncertainty an
important concept in strategic management?
It can be argued that without environmental
uncertainty, there would be no need for strategic
management. The Arab oil embargo of 1973 is said to be
the single most influential event causing the formation of
planning departments in most U.S. corporations. The
embargo showed managers just how vulnerable their
companies were to environmental change.
A key part of strategic management, environmental
scanning is a tool used to help avoid strategic surprise and
cope with an uncertain environment. If the environment
was certain and predictable, environmental scanning would
be a rather easy chore. Simple extrapolation would be the
only type of forecasting needed. In a complex and
changing world, however, those corporations which engage
in environmental scanning and strategic planning tend to
deal better with environmental uncertainty and to be more

19. What can a corporation do to ensure that information about
strategic environmental factors gets to the attention of
strategy makers?
This is a very real problem in most large corporations given the usual
obstacles to good communication. The very people who are in the best
positions to gather this data are often the ones who either fail to pass it on
because it's too much of a chore or they fail to notice it because no one
told them how important certain developments are to top management.
Since proper information dissemination is an important part of
environmental scanning, corporations attempt to schedule a series of
analytical reports for top management's information. The purchasing
department, for example, might be tasked with the job of compiling a
quarterly analysis of the availability and reliability of present and future
suppliers. The market research department might prepare analyses of
present and future customers for certain products and services with
special attention to demographic shifts.
Each report would need to conclude with a list of strategic factors to
monitor in the coming months or years. Other approaches are, of
course, possible to get needed information to the attention of strategy
makers.

20. Industry Analysis: Porter’s Five-Forces Model
The task (industry) environment contains stakeholder groups that have an
impact on or are heavily impacted by the organization. These are
governments, local communities, suppliers, creditors, employees/labor
unions, special interest groups, and trade associations.
 However, the level of competitive intensity present in an industry is more
closely felt and determined by the industry structure in which the firm
operates.
The model of pure competition implies that risk-adjusted rates of return
should be
constant across firms and industries. However, numerous economic studies
have
affirmed that different industries can sustain different levels of profitability;
part of
this difference is explained by industry structure.
Michael Porter provided a framework that models an industry as being
influenced by five forces. The strategic business manager seeking to
develop a competitive edge over rival firms can use this model to better
understand the industry context in which the firm

21. Diagram of Porter's 5 Forces – Determinants of Industry
Attractiveness
SUPPLIER POWER
Supplier concentration
Importance of volume to supplier
Differentiation of inputs
Impact of inputs on cost or differentiation
THREAT OF Switching costs of firms in the industry
Presence of substitute inputs
NEW ENTRANTS
Threat of forward integration
THREAT OF
(BARRIERS Cost relative to total purchases in industry SUBSTITUTES
TO ENTRY)
Absolute cost
-Switching
advantages
Proprietary learning DEGREE OF RIVALRY costs
curve -Exit barriers -Buyer
Access to inputs -Industry concentration inclination
Government policy -Fixed costs/Value added
Economies of scale to substitute
-Industry growth
Capital requirements -Intermittent overcapacity -Price-
Brand identity performance
Switching costs
Access to
trade-off of
distribution BUYER POWER substitutes
Expected retaliation Bargaining leverage
Proprietary products Buyer volume
Buyer information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation

22. Describe the importance of entry barriers
in an industry.
Entry barriers are a key variable determining the threat of new
entrants into an industry. To the extent that entry barriers are
low, it will be relatively easy for a new company to enter the
industry and raise the level of competitive intensity.
Some of these barriers are: Economies of scale, product
differentiation, capital requirements, switching
costs, access to distribution channels, cost
disadvantages independent of size, and government
policy.
These six forces are not just constraints, but are, in
effect, variables that can be partially controlled by industry
participants

23. Porter’s Model : Example
According to Porter's discussion of industry analysis, is Pepsi Cola a
substitute for Coca Cola?
According to Porter, substitute products are those products that
appear to be different but can satisfy the same need as another
product. The identification of possible substitute products or services
means searching for products or services that can perform the same
function, even though they may not appear to be easily substitutable.
Pepsi and Coke are, therefore, not substitutes for each other. They are
merely different brands of the same cola product. The real question
here is: what is the product? If the product is colas, then a lemon-lime
drink like Seven Up could be a substitute product. If the product is
carbonated soft drinks, then other beverages which might perform the
same function could be identified, such as coffee, tea, beer, or wine.

24. According to Miles and Snow, competing firms within a
single industry can be classified as four basic strategic
types.
Within each strategic group in which a company operates are key
competitors. Many of these can be characterized as a strategic
type: defender, prospector, analyzer, or reactor. Each of these
types has its own combination of structure, culture, and processes
to complement its dominant strategic orientation. If one can
categorize a firm into one of these four types, then it will be easier
to predict their likely reaction to future environmental changes.
Defenders are companies with a limited product line that focus
on improving the efficiency of existing operations.
(Toyota, Microsoft)
Prospectors are companies with fairly broad product lines that
focus on product innovation and market opportunities (HP, SONY).
Analyzers are companies that operate in at least two different
product-markets, one stable and one variable, and are able to
adjust their orientation based on the industry they are in
(Panasonic).
Reactors are companies that lack a consistent strategy-
structure-culture relationship and seem to switch strategies on a

25. EFAS –Table: External Factors Analysis Summary
External Weight Rating Weighted Comments
Factors (Impact) (Response) Score
(Societal/ Industry) 0.0 -1.00 1–5 (Strategic
Efficiency
Level)
Opportunities
O1
O2
O3
O4
O5
Threats
T1
T2
T3
T4

26. Maytag: EFAS –Table: External Factors Analysis Summary
External Weig Rating Weigh Comments
Factors ht (Mgmt. ted
Response)
Score
Opportunities
Economic integration of European .20 4 .80 Acquisition of Hoover
Community (O1)
Demographics favor quality .10 5 .50 Maytag quality
appliances(O2)
Economic Development of Asia(O3) .05 1 .05 Low Maytag presence
Emergence of Eastern Europe(O4) .05 2 .10 New markets (Will take time)
Trend to “Super Stores” (O5) .10 2 .20 Maytag weak in this channel
Threats
Increasing Govt. regulations (T1) .10 4 .40 Well positioned
Strong US competition(T2) .10 4 .40 Well positioned
Whirlpool and Electrolux strong 15 3 .45 Hoover weak globally
globally(T3)
New product advances(T4) .05 1 .05 Questionable

27. STRATEGIC MANAGEMENT PROCESS
Corporate Performance Evaluation S
O
External Internal
Environment Environmental Scanning Environment
T Vision W
Mission
Goals
Objectives
STRATEGIE
Corporate
S
Business
Functional
Policies
Programs
Budgets
Procedures
Evaluation

28. UNIT 4
INTERNAL SCANNING: ORGANIZATIONAL
ANALYSIS
•The analysis of a corporation's internal environment reveals the strengths
and weaknesses of the firm. It includes an assessment of a firm's
structure and culture, and its functional areas (such as marketing, finance,
research & development, operations, human resources, and information
systems )
Quite a number of techniques and concepts are available to analyze the
internal environment of the organization.
According to the resource-based view of the firm, a company's sustained
competitive advantage is primarily determined by its resource endowments
that are often revealed through the competencies the firm possesses.( Dell,
Toyota, Sony, Apple)
The internal competencies of a firm is best explained by Prahlad and
Hammel’s concept of Core Competencies. Core competencies are the
collective learning and coordination skills behind the firm's product lines.
Core competencies are the source of competitive advantage and enable
the firm to introduce an array of new products and services.

29. Resource-Based Approach to Organizational Analysis
Internal Strategic Factors
(Resources, Capabilities & Competencies)
•Resources
-Assets that are the building blocks of an organization. These include:
-Physical assets (plant, equipment, location, etc.)
-Human assets (employees and their skills)
-Organizational assets (structure, culture and reputation)
•Capabilities
- A corporation’s ability to exploit the above resources: These comprise business processes
and routines that manage the interaction among resources to turn inputs into outputs. E.g..
Marketing capability, R&D capability, production capability.
•Competency
-It is the cross-functional integration and coordination of capabilities. Each division may
have its own competencies. E.g.. One division may have competency in “New product
development” while another division may have competency in recruiting human resources
•Core competency
- Collection of competencies that crosses divisional boundaries, is widespread within the
corporation, and something that the corporation can do exceedingly well. E.g. Fedex
competency in its application of information technology to all its operations.
•Distinctive competency
- When a core competency is superior to that of the competition it is called distinctive
competency. E.g. General Electric’s distinctive competency in management development 5-
Prentice Hall, Inc. © 2008 29

30. Core competencies lead to the development of core
products. Core products are not directly sold to end users;
rather, they are used to build a larger number of end-user
products by the various business units of the firm. For
example, motors are a core product that can be used in wide array
of end products. The business units of the corporation each tap
into the relatively few core products to develop a larger number of
end user products based on the core product technology. Some
classic examples include Philip's expertise in optical media and
Sony's ability to miniaturize electronics
The intersection of market opportunities with core competencies
forms the basis for launching new businesses. By combining a set
of core competencies in different ways and matching them to
market opportunities, a corporation can launch a vast array of
businesses.

31. There are three tests useful for identifying a core competence. A
core competence should:
1. provide access to a wide variety of markets, and
2. contribute significantly to the end-product benefits, and
3. be difficult for competitors to imitate
Without core competencies, a large corporation is just a collection
of discrete businesses. Core competencies serve as the glue that
bonds the business units together into a coherent portfolio.
Core competencies tend to be rooted in the ability to integrate and
coordinate various groups in the organization.
A firm’s distinctive competencies can also be identified using the
VRIO framework in terms of a company’s value, rareness, imitability,
and organization .The two basic characteristics of a company's
resources and capabilities that determine the sustainability of its
distinctive competencies are durability and imitability

32. What is the relevance of the resource-based view of the firm
to strategic management in a global environment?
The resource-based view of the firm is an attempt to bring attention to the importance of
a corporation's resources in strategic management. For much of the 1980s, Porter's
concepts of industry analysis and competitive strategy dominated the field of strategic
management to such an extent that many felt that industry structure alone seemed to
determine a firm's profit potential.
Unfortunately, this emphasis on the industry tended to ignore a firm's core skills and
competencies. What good is the knowledge that a niche in the market exists that can be
reached through a focused differentiation competitive strategy if a corporation doesn't
have the resources to implement such a strategy? Experts on the resource-based view
suggest that differences in performance among companies may be explained best, not
through differences in industry structure identified by industry analysis, but through
differences in corporate assets and resources and their application.
The resource-based view of the firm is compatible with the traditional concepts of
S.W.O.T. and distinctive competence popular in the field since the 1960s.
The only danger with the resource-based approach is that people may go overboard
again and tend to put too much emphasis on internal factors and not enough on external
factors.
Nevertheless, the idea that the durability and imitability of corporate resources
determine competitive advance is a very useful one.
The movement toward a more global environment simply accentuates the need to
assess and to build a firm’s competencies so that it can successfully compete world-
wide. A competency may be distinctive in one’s home country, but only be a core

33. The Experience Curve Advantage
(Bruce Henderson – BCG)
Based on the assumption underlying the BCG growth-share portfolio
matrix, Henderson argues that the key to profits lies in market share. Results
from PIMS research supports this notion. If a corporation is able to sell a very
large number of new products by offering them at a very low price (actually
below unit cost unless vast quantities are sold), it will gain a dominant market
share and pre-empt competition by keeping the price too low for potential
competitors to earn profits. This forms a formidable entry barrier.
The corporation successfully using the experience curve will earn large
profits either as a star or when it eventually becomes a cash cow. Model-T
Fords and Bic ball point pens are just two examples. The experience curve thus
is a basis for using financial and operating leverage to achieve a low cost
business-level strategy
The experience curve concept does have its limitations, however. For one
thing, it does not consider that a corporation can be very profitable with very
low leverage by occupying a dependable niche in the marketplace based upon
some differentiating strategy such as quality or snob appeal. Rolls Royce
automobiles and Maytag washers are just two examples of firms ignoring the
experience curve by pricing at a cost above the market price and still achieving
solid profits. Differentiation and focus strategies can be very successful

34. The Value Chain
To analyze the specific internal activities through which firms can create
a competitive advantage, it is useful to model the firm as a chain of value-
creating activities. Michael Porter labels this as the value-chain of the
firm.
A value chain is a linked set of value-creating activities beginning with
basic raw materials coming from suppliers, to a series of value-added
activities involved in producing and marketing a product or service, and
ending with distributors getting the final goods into the hands of the
ultimate consumer. Industry value-chain analysis can identify which firms
are strongest (and weakest) in each stage of the industry’s value chain.
Assuming the firm under consideration operates at various stages of the
industry value chain, a comparison with other firms at each stage can
help identify a firm’s strengths and weaknesses. The systematic
examination of an individual firm’s value activities in corporate value-
chain analysis can lead to a better understanding of a corporation’s
strengths and weaknesses - thus identifying any core or distinctive
competencies. According to Porter, “Differences among competitor value
chains are a key source of competitive advantage.”

35. Corporation’s Value Chain

36. Porter classifies value-chain
into
Primary Value Chain Activities and Support Activities
Primary Value Chain Activities:
Inbound Logistics > Operations > Outbound Logistics > Marketing & Sales >
Service
The goal of these activities is to create value that exceeds the cost of
providing the product or service, thus generating a profit margin
Inbound logistics include the receiving, warehousing, and
inventory control of input materials.
Operations are the value-creating activities that transform the
inputs into the final product. (Contd.)

37. Outbound logistics are the activities required to get the
finished product to the customer, including
warehousing, order fulfillment, etc.
Marketing & Sales are those activities associated with
getting buyers to purchase the product, including channel
selection, advertising, pricing, etc.
Service activities are those that maintain and enhance the
product's value including customer support, repair
services, etc.

38. Support Activities
The primary value chain activities described above are facilitated by
support
activities. Porter identified four generic categories of support
activities, the details of which are industry-specific.
Procurement - the function of purchasing the raw materials and
other inputs
used in the value-creating activities.
Technology Development - includes research and
development, process
automation, and other technology development used to support the
value-chain activities.
Human Resource Management - the activities associated with
recruiting,
development, and compensation of employees.
Firm Infrastructure - includes activities such as
finance, legal, quality
management, etc.
Support activities often are viewed as "overhead", but some firms

39. Industry Vs Corporate Value Chain
The focus of value-chain analysis is to examine the corporation in the
context of the overall chain of value-creating activities, of which the firm
may only be a small part. In industry value-chain analysis, the value
chain is split into two segments, upstream and downstream parts with
the corporation under examination being the focal point. In analyzing
the complete value chain of a product, note that even if a firm operates
up and down the entire industry chain, it usually has a center of gravity
- an area of primary expertise where its primary activities (and core
competencies) lie. One goal of industry value-chain analysis is to
identify where on the chain is the activity providing the greatest return
on investment. This might be an activity which a corporation might
want to expand when doing strategic planning.
In corporate value-chain analysis, each corporation has its own
internal value chain of activities. Each of a company’s product lines has
its own distinctive value chain. Because most corporations make
several different products or services, an internal analysis of the firm
involves analyzing a series of different value chains. The systematic
examination of individual value activities can lead to a better

40. The Value System
The firm's value chain links to the value chains of
upstream suppliers and downstream buyers. The result is a
larger stream of activities known as the value system. The
development of a competitive advantage depends not only
on the firm-specific value chain, but also on the value
system of which the firm is a part
Value chain analysis can be used at both the industry level
and at the corporate level to assess a corporation's
strengths (competencies) and weaknesses

41. Organizational Structure
The specific ways in which the value-chain is organized and
managed result in a specific organizational structure. The
basic organizational structures are simple, functional,
divisional, SBU, and conglomerate
If a corporation's structure is compatible with present and
potential strategies, it can be viewed as an internal corporate
strength. If, however, the structure is not compatible with
either present or potential strategies, it is a definite weakness
and will act to constrain strategy formulation. For example, if
a corporation is structured on the basis of function, this may
be a weakness if the firm wishes to grow by acquiring other
profitable corporations. In order to implement such a strategy,
the strategy formulators may have to reorganize on a
divisional basis.
To the extent that top and middle managers have no
experience with such a structure, a lot of unforeseen problems

42. Organizational Structures
5-
Prentice Hall, Inc. © 2008 42

43. Organizational Culture
Corporate culture is the collection of beliefs, expectations, and
values learned and shared by a corporation's members and
transmitted from one generation of employees to another
Corporate culture, a collection of beliefs, expectations, and
values shared by a corporation's members, acts to shape the
behavior of people in a corporation. Since corporate culture has a
powerful influence on the behavior of managers as well as other
employees, it may strongly affect a corporation's ability to shift its
strategic direction.
Acting in a manner similar to structure, to the extent that a
corporation's culture is compatible with present and potential
strategies, it can be viewed as an internal corporate strength. To
the extent that it is not compatible, it may spell disaster for a
strategic change in the implementation stage. A strategy which
contradicts an entrenched culture may find itself being quietly (or
not so quietly) sabotaged by the corporation's most loyal and
competent employees.

44. Maytag IFAS –Table: Internal Factors Analysis Summary
Internal Weight Rating Weighted Comments
Factors Score
Strengths
Quality Maytag culture (S1) .15 5 .75 Quality key to success
Experienced top management(S2) .05 4 .20 Know appliances
Vertical integration(S3) .10 4 .40 Dedicated factories
Employee relations(S4) .05 3 .15 Good, but deteriorating
Hoover’s international .15 3 .45 Hoover name in cleaners
orientation(S5)
Weaknesses
Research & Development (W1) .05 2 .10 Slow on new products
Distribution channels(W2) .05 2 .10 Superstores replacing
small dealers
Financial position(W3) .15 2 .30 High debt load
Global positioning(W4) .20 2 .40 Hoover weak outside UK
and Australia
Manufacturing facilities(W5) .05 4 .20 Investing now

45. How to create the SFAS Matrix?
(Strategic Factors Analysis Summary Matrix)
IFAS TABLE
SFAS MATRIX
EFAS TABLE

46. Maytag IFAS –Table: Internal Factors Analysis Summary
Internal Weight Rating Weighted Comments
Factors Score
Strengths
Quality Maytag culture (S1) .15 5 .75 Quality key to success
Experienced top .05 4 .20 Know appliances
management(S2)
Vertical integration(S3) .10 4 .40 Dedicated factories
Employee relations(S4) .05 3 .15 Good, but deteriorating
Hoover’s international .15 3 .45 Hoover name in cleaners
orientation(S5)
Weaknesses
Research & Development (W1) .05 2 .10 Slow on new products
Distribution channels(W2) .05 2 .10 Superstores replacing
small dealers
Financial position(W3) .15 2 .30 High debt load
Global positioning(W4) .20 2 .40 Hoover weak outside UK
and Australia

47. Maytag EFAS –Table: External Factors Analysis Summary
External Weight Rating Weighted Comments
Factors Score
Opportunities
Economic integration of European .20 4 .80 Acquisition of Hoover
Community (O1)
Demographics favor quality .10 5 .50 Maytag quality
appliances(O2)
Economic Development of .05 1 .05 Low Maytag presence
Asia(O3)
Emergence of Eastern Europe(O4) .05 2 .10 New markets
Trend to “Super Stores” (O5) .10 2 .20 Maytag weak in this
channel
Threats
Increasing Govt. regulations (T1) .10 4 .40 Well positioned
Strong US competition(T2) .10 4 .40 Well positioned
Whirlpool and Electrolux strong 15 3 .45 Hoover weak globally
globally(T3)

48. Maytag SFAS –Matrix: Strategic Factors Analysis Summary
Key Strategic Wei Rati Weigh Short Interm Long Comments
Factors ght ng ted Durati ediate Durati
Score on Dration on
Quality Maytag culture .10 5 .50 Quality key to
(S1) X success
Hoover’s international .10 3 .30 X Hoover name in
orientation(S5) cleaners
Financial position(W3) .10 2 .20 X High debt load
Global positioning(W4) .15 2 .30 X Hoover weak
outside UK and
Australia
Economic integration .10 4 .40 X Acquisition of
of European Hoover
Community (O1)
Demographics favor .10 5 .50 X Maytag quality
quality appliances(O2)
Trend to “Super Stores” .10 2 .20 X Maytag weak in
(O5) this channel
Whirlpool and 15 3 .45 X Hoover weak
Electrolux strong globally