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Comprehensive Strategy Formulation Framework: IE166-E01 Gutierrez, Jhamela Mae Maghinay, Dhessamine

This document provides an overview of strategic planning frameworks, including the IE Matrix, GSM, and QSPM. The IE Matrix analyzes organizational divisions similarly to the BCG Matrix. The GSM evaluates strategies based on market growth and competitive position to place a company in one of four quadrants. The QSPM is a 6-step technique to determine the relative attractiveness of strategies by examining external/internal factors, assigning weights and attractiveness scores, and computing total attractiveness scores to identify the most attractive strategy.

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Mark Mutya
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83 views18 pages

Comprehensive Strategy Formulation Framework: IE166-E01 Gutierrez, Jhamela Mae Maghinay, Dhessamine

This document provides an overview of strategic planning frameworks, including the IE Matrix, GSM, and QSPM. The IE Matrix analyzes organizational divisions similarly to the BCG Matrix. The GSM evaluates strategies based on market growth and competitive position to place a company in one of four quadrants. The QSPM is a 6-step technique to determine the relative attractiveness of strategies by examining external/internal factors, assigning weights and attractiveness scores, and computing total attractiveness scores to identify the most attractive strategy.

Uploaded by

Mark Mutya
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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A COMPREHENSIVE

STRATEGY
FORMULATION
FRAMEWORK
IE166-E01
GUTIERREZ, JHAMELA MAE
MAGHINAY, DHESSAMINE
MUTYA, MARK
I STAGE 1: INPUT STAGE
• EFE MATRIX
• IFE MATRIX
• CPM

II STAGE 2: MATCHING STAGE


• SWOT
• SPACE MATRIX
• BCG MATRIX
• IE MATRIX
• GSM

III STAGE 1: DECISION STAGE


• QSPM
TA B L E O F
CONTENTS
THE INTERNAL-
EXTERNAL MATRIX
(IE Matrix)
The similarity between IE matrix
I & BCG Matrix
• The IE Matrix is like BCG Matrix in that both tools involve
plotting organization divisions in a schematic diagram; this is
way they are both called “portfolio matrices”.

• Also the size of each circle represents the percentage sales


contribution of each division, and pie slices reveal the
percentage profit contribution of each division in both the BCG
and IE Matrix.

The differences between IE matrix &


II BCG Matrix
• The axis are different
• IE Matrix requires more information about the divisions than the BCG Matrix
• The strategic implications of each matrix are different.
• For these reasons, strategists in multidivisional firms often develop both the BCG Matrix
and IE Matrix in formulating alternative strategies.
• A common practice is to develop a BCG Matrix and an IE Matrix for the present and then
develop projected matrices to reflect expectations of the future.
• This before-and-after analysis forecasts the expected effect of strategist decisions on an
organization’s portfolio of divisions.
The IFE Total Weighted Score

Strong Average Weak


3.0 to 4.0 2.0 to 2.99 1.0 to 1.99

High I II III
3 to 3.99
The EFE Total
Weighted Score Medium IV V VI
2. To 2.99

Low VII VIII IX


1.0 to 1.99

IE Matrix for the Turkish Airlines on Domestic Air Transportation


GRAND STRATEGY
MATRIX (GSM)
GRAND STRATEGY MATRIX (GSM)

Each quadrant provides the set of possible


strategies in which company falls such as GSM is famous tools for
quadrant 2 contains market development, alternative strategies in addition to
market penetration, product development, SPACE Matrix, BCG Matrix, IE
horizontal integration, divestiture and Matrix and SWOT Matrix
liquidation strategies.

GRAND
Quadrant 3 contains the set of
STRATEGY All the firms can fall in one of
retrenchment, related
MATRIX (GSM) the GSM’s four strategy
diversification, divestiture,
unrelated diversification and quadrants.
liquidation strategies.

GSM evaluation is based


Quadrant 4 contains the set of on 2 dimensions i.e.
diversification, joint venture market growth and
and unrelated diversification competitive position.
strategies.
Rapid Market Growth
Quadrant 2 Quadrant 1
1. Market Development
2. Market Penetration
3. Product Development
4. Forward Integration
5. Backward Integration
6. Horizontal Integration
7. Concentric Diversification

Weak Competitive Strong Competitive


Competition Competition

Quadrant 3 Quadrant 4
Slow Market Growth

The Grand Strategy Matrix for Turkish Airlines on Domestic Air Transportation
STAGE 3:
DECISION STAGE
THE QUANTITATIVE
STRATEGIC
PLANNING MATRIX
(QSPM)
THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
Technique designed to determine the relative attractiveness of
feasible alternative actions.
Six steps required to develop a QSPM:
Make list of the firm’s key external opportunities/ threats and internal
1 strengths/weaknesses in the left column of the QSPM.
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Assign weights to each key external and internal factor.


2 These weights are identical to those in the EFE Matrix and IFE Matrix.
The weights are presented in a straight column just to the right of the
external and internal critical success factors

Examine the stage 2 (matching) matrices and identify alternative


3 strategies that the organization should consider implementing.
Record these strategies in the top row of the QSPM. Group the strategies
into mutually exclusive sets if possible.
THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
4 Determine the Attractiveness Scores (AS)
• Defined as numerical values that indicate the relative attractiveness of
each strategy in a given set of alternative.
• Attractiveness Scores (AS) are determined by examining each key
external or internal factor, one at a time, and asking the question “Does
this factor affect the choice of strategies being made?”
• If the answer to this question is yes, then the strategies should be
compared relative to that key factor. Specifically, Attractiveness Scores
should be assigned to each strategy to indicate the relative attractiveness
of one strategy over others, considering the particular factor. The range for
Attractiveness Score is 1= not attractive, 2=somewhat attractive,
3=reasonably attractive and 4=highly attractive. By attractive, we mean
the extent that one strategy, compared to others, enables the firm to either
capitalize on the strength, improve on the weakness, exploit the
opportunity, or avoid the threat. Work row by row in developing a QSPM.
• If the answer to the previous question is no, indicating that the respective
key factor has no effect upon the specific choice be made, then do not
assign Attractiveness Scores to the strategies in that set. Use a dash to
indicate that they key factor does not affect the choice being made. Note:
if you assign an AS score to one strategy, then assign AS scores to the
other. In the other words, if one strategy receives a dash, then all others
must receive a dash in a given row.
THE QUANTITATIVE STRATEGIC PLANNING MATRIX (QSPM)
5 Compute the Total Attractiveness Scores
•Total Attractiveness Scores (TAS) are defined as the product of
multiplying the weights (step 2) by the Attractiveness Scores (step 4) in
each row.
• The Total Attractiveness Scores indicate the relative attractiveness of
each alternative strategy, considering only the impact of the adjacent
external or internal critical success factor.
• The higher the Total Attractiveness Score, the more attractive the
strategic alternative (considering only the adjacent critical success factor).

6 Compute the sum Total Attractiveness Score


• Add Total Attractiveness Scores in each strategy column of the QSPM.
• The sums Total Attractiveness Scores (STAS) reveal which strategy is
most attractive in each set of alternative.
• Higher scores indicate more attractive strategies, considering all the
relevant external and internal factors that could be affect the strategic
decisions.
• The magnitude of the difference between the sum Total Attractiveness
Scores in the given set of strategic alternative indicates the relative
desirability of one strategy over another.
Youtube Related Links
IE Matrix : https://youtu.be/oCNR2LHUMwU
GSM : https://youtu.be/fYWHaOjWnN8
QSPM : https://youtu.be/F9dfRY8nRmY
Thank You

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