Uploaded, designed and prepared by; Muhammad Ameen Ujjan BBA (Hons) #Finance Shah Abdul Latif Univeristy Khairpur, Sindh, Pakistan

1. Topic:
Chapter 5; Chosen Competitive Strategies
Submitted to
Dr. Syed Muneer Ahmed Shah
In Partial Fulfillment of the
Requirement of Subject; Strategic Management
For the Award of the Degree of
Bachelor of Business Administration
Submitted By;
Abdul Razaque Shaikh (Roll No# 04)
Muhammad Ameen Ujjan (Roll NO# 57)
Faiza Kanwal Pathan (Roll No# 24)
Humra Riaz (Roll No# 31)
Zoha Khan (Roll No# 102)
BBA-4 Final Year (A)

2. StrategyAnalysis and Choice
The first step in evaluating and choosing a strategy is to review the results of the strategic situation
assessment consisting of an analysis of the general, industry, and internal environments, in terms of
factors critical to the success of the business. The implementation phase of strategic management
consists of two parts which are analysis and choice, which are vital links in the process. When
conducting analysis and making choices, you set long-term objectives and select generic and grand
strategies that best fit your company mission and changing circumstances.
In this course you will learn the basic ideas of long-term objectives, generic strategies and grand
strategies. Then you will learn how to analyze and choose strategies by using various techniques. By
choosing the right strategy, your company will be more effective at building sustainable competitive
advantages as well as maximizing shareholder value.
Three types of data are required to perform a situation audit: identifying threats, strengths, and
weaknesses.
1. Past performance of the firm.
2. Data about the current situation, including:
1. Analysis of customers and markets.
2. Resources of the company.
3. Competition.
4. Environmental setting.
5. Other performance measures or areas of interest.

3. 3. Forecasts of the future.
In general, at least five criteria tend to determine which factors are critical to the business and their
relative importance:
 Impact on performance measures, such as market share, profits, cash flow, and the like.
 Relationship to strategic thrusts, such as differentiation, costs, segmentation, preemptive,
turnaround, renewal, and the like.
 Relationship to life-cycle stage, that is, introduction, growth, maturity, and aging and decline.
 Relates to a major activity of the business, such as marketing.
 Involves large amounts of money relative to other activities of the firm.
The form of strategic analysis and choice varies considerably according to the stage of development of
the firm, and the focus differs at the different firm levels.
The evaluation should take place at the corporate, business, and functional levels, with close scrutiny of
policies and plans at each of these levels.
Alternative business-level strategies must be examined within the context of each business unit in multi-
industry firms.
The Process of Generating and Selecting Strategies.
Strategists never consider all feasible alternatives that could benefit the firm because there are an infinite
number of possible actions and an infinite number of ways to implement those actions. Therefore, a
manageable set of the most attractive alternative strategies must be developed. The advantages,
disadvantages, trade-offs, costs, and benefits of these strategies should be determined. This section
discusses the process that many firms use to determine an appropriate set.

4. Proposed strategies should be listed in writing. When all feasible strategies identified by participants are
given and understood, the strategies should be ranked.
Growth Means That:
• New employees will be hired who will be looking to top management for leadership.
• The company’s management will become increasingly decentralized, which may create greater
levels of internal politics, protectionism and dissension over the goals and projects the company
should pursue.
• Market share will expand, calling for new strategies for dealing with larger competitors.
• Additional capital will be required, creating new responsibilities for shareholders, investors and
institutional lenders.
Three stages considerduring choosing strategy:
Stage 1(input stage)
 EFE (External factor evaluationmatrix).
EFE Matrix is an analytical technique for evaluation of external position of the organization or its
strategic intents. EFE Matrix is an analytical technique related to the SWOT analysis. EFE is an
acronym of the External Factor Evaluation.
The EFE matrix is very similar to the IFE matrix. The major difference between the EFE matrix and the
IFE matrix is the type of factors that are included in the model. While the IFE matrix deals with internal
factors, the EFE matrix is concerned solely with external factors.
What should I include in the EFE matrix?
Now that we know how to construct or create the EFE matrix, let's focus on factors. External factors can
be grouped into the following groups:

5. • Social, cultural, demographic, and environmental variables:
• Economic variables
• Political, government, business trends, and legal variables
Social, cultural, demographic, and environmental factors
 Percentage or one race to other races
 Per-capita income
 Number and type of special interest groups
 Widening gap between rich & poor
 Number of marriages and/or divorces
 Ethnic or racial minorities
 Education
 Trends in housing, shopping, careers, business
 Number of births and/or deaths
 Immigration & emigration rates
Economic factors
 Growth of the economy
 Level of savings, investments, and capital spending
 Inflation
 Foreign exchange rates
 Stock market trends
 Level of disposable income
 Import and export factors and barriers
 Product life cycle (see the Product life cycle page)
 Government spending

6.  Industry properties
 Economies of scale
 Barriers to market entry
Political, government, business trends & legal factors.
 Globalization trends
 Government regulations and policies
 Worldwide trend toward similar consumption patterns
 Internet and communication technologies (e-commerce)
 Protection of rights (patents, trade marks, antitrust legislation)
 Level of government subsidies
 International trade regulations
 Taxation
 Terrorism
 Elections and political situation home and abroad
 IFE matrix(Internal factors evaluation matrix)
IFE matrix means Internal Factor Evaluation Matrix; is a popular strategic management tool for auditing
or evaluating major internal strengths and internal weaknesses in functional areas of an organization or a
business. IFE matrix also provides a basis for identifying or evaluating relationships among those areas.
The IFE Matrix together with the EFE matrix is a strategy-formulation tool that can be utilized to
evaluate how a company is performing in regards to identified internal strengths and weaknesses of a
company. The IFE matrix method conceptually relates to the Balanced Scorecard method in some
aspects.

7.  Competitive Profile Matrix (CPM)
The Competitive Profile Matrix (CPM) is a strategic analysis that allows you to compare your company
to your competitors, in such a way as to reveal your relative strengths and weaknesses. In order to better
understand the external environment and the competition in a particular industry, firms often use CPM.
The matrix identifies a firm’s key competitors and compares them using industry’s critical success
factors. The analysis also reveals company’s relative strengths and weaknesses against its competitors,
so a company would know, which areas it should improve and, which areas to protect.
Stage 2 The Matching stage:
 SWOT matrix
The concept of determining strengths, weaknesses, threats, and opportunities is the fundamental idea
behind the SWOT model. To present the model in a more understandable way, scholars came up with
so-called SWOT matrix. SWOT matrix is only a graphical representation of the SWOT framework

8.  SPACE Matrix
The Strategic Position & ACtion Evaluation matrix or short a SPACE matrix is a strategic management
tool that focuses on strategy formulation especially as related to the competitive position of an
organization.
The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a
nature of a strategy:
• Aggressive
• Conservative
• Defensive
• Competitive
Aggressive
A portfolio management strategy that attempts to maximize returns by taking a relatively higher degree
of risk. An aggressive investment strategy emphasizes capital appreciation as a primary investment
objective, rather than income or safety of principal.
Conservative
Conservative investing is an investing strategy that seeks to preserve an investment portfolio's value by
investing in lower risk securities such as fixed-income and money market securities, and often blue-chip
or large-cap equities
Competitive
Competitive Strategy is defined as the long term plan of a particular company in order to gain
competitive advantage over its competitors in the industry. It is aimed at creating defensive position in
an industry and generating a superior ROI (Return on Investment).

9. Defensive
Defensive strategies are management
tools that can be used to fend off an
attack from a potential competitor.
Think of it as a battleground: You have
to protect your share of the market in
order to keep your customers happy
and your profits stable.
 BCG Matrix
BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic position of the
business brand portfolio and its potential. It classifies business portfolio into four categories based on
industry attractiveness (growth rate of that industry) and competitive position (relative market share).

10.  The Internal-External (IE) Matrix
The Internal-External (IE) matrix is another strategic management tool used to analyze working
conditions and strategic position of a business. The Internal External Matrix or short IE matrix is based
on an analysis of internal and external business factors which are combined into one suggestive model.
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
Three major regions in IE matrix
 Grow and build
 Hold and maintain
 Harvest or divest
 Grand Strategy Matrix
A grand strategy matrix consists of a four-quadrant graph, similar to a SWOT matrix, which lists
strategic options for companies in either strong or weak competitive positions in industries experiencing
either rapid or slow growth.
Based on two evaluative dimensions: competitive position and market (industry) growth.
A grand strategy matrix consists of a four-quadrant graph, similar to a SWOT matrix that lists strategic
options for companies in either strong or weak competitive positions in industries experiencing either
rapid or slow growth. Unlike a SWOT matrix, a grand strategy matrix reveals strategic options for
virtually any business in a given industry within any stage of the industry's life cycle. In the quadrant
corresponding to slow industry growth and a strong competitive position, for example, options such as
new-product development and merging with other companies can be listed, but these options will not
apply to companies with weaker competitive positions.

11. Accurately gauging a company's competitive strength and the growth rate of its industry is a key to
gaining the most relevant insights from this tool. At the same time, the quadrants that do not apply to a
specific company can still be useful, as they can reveal the strategic options available to stronger or
weaker competitors or the options available to a company if it enters a different industry.
 Quadrant I
Continued concentration on current markets (market penetration and market development) and products
(product development) is an appropriate strategy.
 Quadrant II
Unable to compete effectively and need to determine why the firm’s current approach is ineffective and
how the company can best change to improve its competitiveness.
 Quadrant III
Must make some drastic changes quickly to avoid further decline and possible liquidation.
Extensive cost and asset reduction (retrenchment) should be pursued first.
 Quadrant IV
Have characteristically high cash-flow levels and limited internal growth needs and often can pursue
related or unrelated diversification successfully.
Quantitative strategic planning matrix (QSPM)
It is a tool, an analytical technique, determination method or a priority-based strategy synchronizer that
short list the strategies that are feasible and applicable for the company. It shows the strategy as a result
that must be prioritized at once for the betterment of the future of the company. And it is set by
strategists or the corporate level.

12. It is said quantitative as it is all about numerical values as a results. Companies use this technique to get
help that either which strategy should be chosen first, which strategy is suitable for now, which strategy
can get one’s company’s operations up to mark.
The matrix squeeze out the strategies according to the alignment by putting in view the internal and
external factors or can be said swot analyses of a company.
And this method is a part of strategy formulation process.
The nutshell of the matrix or the parts that make the matrix complete are as follows:
 Key factors (internal & external factors or SWOT analyses)
 Strategic alternatives (different types of strategies like a cluster to be broken down according to
the numerical results.)
 Weights (numerical values that measure a company’s key swot factors)
 A.S (attractive scores- bench-marks, measuring ranges, range from 1 to 4% that show the
goodness or badness of the key internal and external factors)
 T.A.S (total attractive scores-resultant of multiplication of weights by attractive scores)
 S.T.A.S (sum of total attractive scores- additional resultant of all the total attractive scores)

13. Example of strategic planning matrix:

14. Steps for the development of QSPM
 Make a list of the firm’s key swot.
 Assign weights to each key factor.
 Identify alternative strategies and put them into the matrix
 Determine A.S.(attractive scores)
 Compute the T.A.S (total attractive scores)
 Compute the S.T.A.S (sum of total attractive scores)
Positive features of QSPM
 Simultaneous & sequential:
(As it reduces the time and provide a certain sequence, alignment of the strategies according to the
results.)
 Comparison:
(It make strategists to compare and contrast among the strategies alternatives)
 Roadmap:
(It provides a clearer sense and view that what has to be chosen and worked on it)
 Co-ordination of management levels:
(It allows all the level of managements like top, middle and lower to participate in such activity)

15. Negative features of QSPM
 High intuitive judgments:
(The matrix process requires high level of mental approach to work on it)
 Data to results:
(whatever the results would be found out those are dependent on the data or information one is
providing, if one has not provided the data of key internal and external factors accurately then definitely
the results would not do justification to one’s work)
 Management decision :
(The management has to take a final decision by his own self, it is not like a business decision making
software that It automatically drives any decision after the outcomes for the company)