Chapter 9

1. STRATEGIC MANAGEMENT
AND BUSINESS POLICY
THIRD EDITION
Chapter 9
Strategic analysis and
choice
AZHAR KAZMI

2. (c) Dr. Azhar Kazmi 2008 2
Learning objectives
 Describe the process of strategic choice
 Explore the tools and techniques for strategic analysis
 Examine the subjective factors in strategic choice
 Discuss the manner in which organisations handle
unforeseen environmental events through formulation
of contingency strategies
 Itemise the contents of a typical strategic plan for an
organisation
 Discuss the strategic plan preparation and content for
private and public sector organisations in India

3. (c) Dr. Azhar Kazmi 2008 3
Process of strategic choice
 Focussing on strategic alternatives
 Analysing the strategic alternatives
 Evaluating the strategic alternatives
 Choosing from among the strategic
alternatives

4. (c) Dr. Azhar Kazmi 2008 4
Gap analysis for focussing on
strategic alternatives
Time
T2
T1
Performance gap
Desired performance
Present
performance
Pe
rf
or
m
an
ce

5. (c) Dr. Azhar Kazmi 2008 5
Dynamic competitive positioning
Adapted from C.W.L. Hill & G.R. Jones: Strategic Management: An Integrated
Approach Boston: Houghton Mifflin, 2007, p. 164

6. (c) Dr. Azhar Kazmi 2008 6
Strategic analysis
 Tools and techniques for strategic analysis
 Corporate portfolio analysis
 GE nine-cell matrix
 Corporate parenting analysis
 SWOT analysis
 Experience curve analysis
 Life cycle analysis
 Industry analysis
 Strategic groups analysis
 Competitor analysis

7. (c) Dr. Azhar Kazmi 2008 7
General Electric nine-cell matrix
High
Medium
Low
Strong Average Weak
BUSINESS STRENGTH / COMPETITIVE POSITION
INDUSTRY
ATTRACTIVENESS
GREEN
YELLOW
RED
ZONE STRATEGIC
SIGNAL
INVEST /
EXPAND
SELECT /
EARN
HARVES
T /
DIVEST

8. (c) Dr. Azhar Kazmi 2008 8
Consolidated SWOT profile
--------------------------------------------------------------------------------------------------------
ETOP Sector impact SAP Impact factor
--------------------------------------------------------------------------------------------------------
Economic ↑
Market → Finance ↓
International ↓ Marketing →
Political → Operations ↑
Regulatory → Personnel →
Social ↑ Information management ↑
Supplier → General management ↑
Technology ↑
Up arrows indicate favourable impact; down arrows indicate unfavourable impact, while
horizontal arrows indicate a neutral impact.

9. (c) Dr. Azhar Kazmi 2008 9
Porter’s five forces model of
competition in an industry
Potential threats from
firms which make
substitute products or
services
Forces of competition
created by rivalry
Buyers’ bargaining power
Potential threat from entry
of new firms
Suppliers’ bargaining
power

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Components of competitor analysis
 Future goals of competitor
 Current strategy of competitor
 Key assumptions made by competitor
 Capabilities of competitor

11. (c) Dr. Azhar Kazmi 2008 11
Subjective factors in strategic
choice
 Considerations for governmental policies
 Perception of critical success factors and
distinctive competencies
 Commitment to past strategic actions
 Strategist's decision styles and attitude to
risk
 Internal political considerations
 Timing and competitor considerations.

12. (c) Dr. Azhar Kazmi 2008 12
Contingency strategies
 Contingency strategies are formulated in
advance to deal with uncertainties that are
a natural part of the business
 The prospects of emergencies or disasters
 The phenomenon of serendipity
 A model of contingency planning consists of
three steps:
 Identifying the contingent events
 Establishing the trigger points
 Developing and strategies and tactics

13. (c) Dr. Azhar Kazmi 2008 13
Strategic plan
 A strategic plan (also called
corporate, group, or perspective
plan), is a document which provides
information regarding the different
elements of strategic management
and the manner in which an
organisation and its strategists
propose to put the strategies into
action.

14. (c) Dr. Azhar Kazmi 2008 14
Contents of a comprehensive
strategic plan
 A clear statement of strategic intent covering the vision, mission,
business definition, goals and objectives.
 Results of environmental appraisal, major opportunities and
threats, and critical success factors.
 Results of organisational appraisal, major strengths and
weaknesses, and core competencies.
 Strategies chosen and the assumptions under which those
strategies would be relevant.
 Contingent strategies to be used under different conditions.
 Strategic budget for the purpose of resource allocation for
implementing strategies and the schedule for implementation.
 Proposed organisational structure and the major organisational
systems for strategy implementation including the top
functionaries and their role and responsibility
 Functional strategies and the mode of their implementation
 Measures to be used to evaluate performance and assess the
success of strategy implementation.