Strategic Management Skills, Research Paper Example
Words: 1527Research Paper
The SWOT matrix
This is a tool used by strategic planners in evaluating the strengths, weaknesses, opportunities and threats involved in a business venture. This involves specifying the business objective as well as identifying the external and internal that are favorable or unfavorable in achieving the objective. Hence, the setting of the objectives should be done after the SWOT analysis has been performed so as to allow the achievable objectives or goals to be set by the organization (Menon, 1999). Below is an example of a SWOT analysis of a small consultancy with the specialization of human resource management.
|Reputation in the marketplace||An established position with a market niche that is well defined||Operating level that has a shortage of consultants compared to the partner level||Large consultancies are operating at a minor level|
|Expertise at the partner level in the consultancy of HRM||There are identified markets in the field of consultancy in other areas rather than HRM, which enable to deal with the multidisciplinary assignments.||Due to the size of or lack of ability||Other small consultancies invading the market place.|
There are identified markets in the field of consultancy in other areas rather than HRM, which enable to deal with the multidisciplinary assignments due to the size of or lack of ability.
The Space Matrix
The strategic action and position evaluation or the SPACE matrix is a framework with four quadrants, which indicates if, conservatives, aggressive defensive and the competitive strategies are appropriate in a given company or business (Menon, 1999). The SPACE matrix is commonly applied during the professional market analysis of a firm or company. An example of a financial institution Space matrix: Financial strength ratings:
The institutions primary capital ratio is 7.23% .this is 1.23% points over the required ratio of 6%. The institutions return on assets is -0.77, compared to the industry’s average ratio of positive 0.70. The institutions net income was $182, which is 7% from the previous year. The institution increased by 7% to $3.46 billion.
Deregulation provides geographic as well as product freedom. This increases competition in the industry. Some of the interstate industrial law allows the institution to acquire other institutions in new areas.
The less developed countries experience high political instability and high inflation. Headquartered in Pittsburgh, the institution historically has been heavily dependent on the oil, steel and gas industries. These institutions are depressed institutions as the institution has created a lot of instability thought the industry.
The institution provides data processing services that are for more than 450 institutions in about 38 states. International institutions are becoming increasing competitive. The institution has a large customer base.
ES Average is -13.0 ÷ 3 = -4.33
IS Average is + 10.0 ÷ 3 = 3.33
CA Average is -9.0 ÷ 3 = -3.00
FS Average is + 9.0 ÷ 4 = 2.25
X-axis: -3.00 + (13.33) = +0.33
Y-axis: -4.33 + (12.25) = -2.08
The institution should pursue Competitive Strategies. Advantages and disadvantage of two alternative strategies
The BCG matrix:
There are many advantages of using the BCG matrix. First, if a company utilizes the experience curve, it should be able to manufacture as well as sell new products at such a price that is low enough so as to get the market share leadership (Menon, 1999). Once the firm becomes a star it is highly destined to profits. In addition, the BCG model is helpful in the evaluation of balance the firm’s current portfolio of stars by managers. The BCG model is also applicable to large companies that seek experience and value effects. The model is also unpretentious and easy to understand whilst ensuring that the management has a basis to make decisions and prepare for the future actions.
The BCG matrix model also has some disadvantages. First, it neglects the synergy effects between the business units. The other one is that the high market share is not the only factor of success. Market growth is also not the only indicator for the markets attractiveness as it is in the model. There is also a problem of getting data on the market growth and the market share. The model also makes use of only two dimensions including the market share and the growth rate. This may tempt the management to emphasize on a certain product or divest prematurely.
The IE Matrix
This is a strategic management contrivance used to analyze the strategic position of a business.
The matrix is supported by the total weighted scores of IFE matrix and the EFE matrix. The other advantage is that the matrix spots an organization into nine cells, and it can as well be divided into three sections that have different allusion.
The matrix works on two dimensions, which make the model estimation. The matrix is also constructed using the factors that area only related to the current conditions hence it is not forward looking, or it does not mainly focus on the future.
The recommended strategies for the firm to follow over the next three years:
The recommended strategies for the firm to use are the SWOT matrix and the SPACE matrix.
How the recommended strategies can be implemented
The strengths of a business or a project are the characteristics that give the project or the business an advantage over the others. These are the characteristics that help the business or project to be suitable for competition. The weaknesses or the limitations are the factors that place a project or a business at the disadvantages compared to the other projects or the other businesses in the same field (Larson, 2011). Opportunities are the external chases that give a business or a project a chance to improve its performances as to make greater profits in the environment it is operating. Threats are the external in the business environment that could cause trouble or problems to the project or the business (Hofer, 1978).
The identification of SWOT is extremely valuable as the subsequent steps in the process of planning for business-selected objectives may easily be derived from the SWOT analysis. First, the decision makers have to determining the attainability of the objective given the SWOT. When the management realizes that the objective is not attainable, a different objective is selected, and the same process is repeated. Therefore, the SWOT users have to ask and answer questions that end up generating meaningful information for each category in the SWOT analysis. This is done in order to maximize the returns related with the appraisal as well as finding their main competitive advantage (Larson, 2011).
One of the ways of using the SWOT analysis is matching and converting. Matching is used in finding the competitive advantages. This is through the matching of the strengths of a business to the opportunities that the business has. Converting is the application of all the conversion strategies s as to convert the weakness or the threats into opportunities or strengths. The other way is the use of internal and the external factors that contribute highly to achieving of the objectives, which is the main aim of the SWOT analysis (Larson, 2011).
These factors come from the company’s unique value chain. The internal factors of a firm may also be viewed as weakness or strengths of a firm depending on the impacts of the objectives of the organization. These factors may include all the four 4Ps as well as finance, personnel and manufacturing capabilities (Porter, 1980). The external factors may include technological change, macro economic matters, legislation and social cultural changes as well as changes in a firm’s competitive position. The results that are obtained are normally represented in a matrix form (Hofer, 1978).
The usefulness of SWOT analysis is never limited to the profit seeking firms or organizations. It can also be used in many decision-making processes or situations where by a desired objective has been defined. It may also be used in the creation of a recommendation during the study of viability or survey. In competitor analysis, many marketers build detailed profiles comprising of each competitor in the market especial focusing on their relative weakness and strengths as well as using the SWOT analysis. Therefore, the marketing managers examine each of the compotators sources of profits, cost structure, competencies and product differentiation. This helps in determining the competition that a firm is undergoing.
The SPACE matrix axes represent the internal dimensions of a competitive firm, which are considered as the financial strengths, as well as its competitive advantage. There are also two external dimensions, which are industry strengths and environmental stability. These factors are the most influential determinants of the overall strategic position of a venture in the market (Porter, 1980).
Depending on the industry and firm, some variables could make each of the dimensions that are represented on the axes of the SPACE matrix. The factors that are often included are the ones that are found in the firm’s analysis of the external factors and the domestic factors examination. Other factors that can be included in developing the SPACE matrix examination include the financial performance of a firm such as the returns on investments, liquidity and the working capital as they are considered as the determining factors of a firm’s financial strength. The SPACE matrix is thought to be entirely customized to a given firm being studied because it is based on the facts obtained from the market and the industry data.
Hofer, C. W., & Schendel, D. (1978). Strategy formulation: analytical concepts. St. Paul: West Pub. Co
Larson, E. W., & Gray, C. F. (2011). Project management: the managerial process (5th ed.). New York: McGraw-Hill Irwin
Menon, A. (1999). “Antecedents and Consequences of Marketing Strategy Making”. Journal of Marketing (American Marketing Association)
Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press.
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