Fazaia College of Education for Women Lahore
Subject: Strategic Management BBA (Hons) Class Instructor Maimoona Sadaf
Strategic Management Lecture 11
STRATEGIC MANAGEMENT CONCEPT AND CASES FRED R. DAVID 13 TH EDITION
Topic Week 7 Lecture 11
Q.1 Explain some common models to generate strategy.
SWOT
SPACE
Experience Curve
Break-even Point
STRATEGY
FORMULATION: Product Life Cycle
ORGANIZATIONAL Porter’s five factor
6 PROCESS STRATEGY Blue Ocean Strategy
ANALYSIS Big Think Strategy
Portfolio Models (BCG, General Electric, Shell, The
Quiz 2nd internal -external (IE) matrix)
Q.1 Explain some common models to generate strategy ?
Several Models are used today based on applicability as well as academic values.
Most commonly used models are:
SWOT Model
SPACE Model
Experience Curve
Break-even Point
Product Life Cycle
Porter’s five factor
Blue Ocean Strategy
Big Think Strategy
Portfolio Models (BGG, General Electric, Shell, The internal -external (IE) matrix)
Factors effect Strategy Models
There are so many factors which influence whether a particular model can be suitable for business or
not but the moment a factor changes, then another model might be better. These factors are
1. Working culture of Organization
2. Leadership styles (autocratic, participative and consultative)
3. The data base system of the organization
4. The dynamism of the industry (internal and external environment of industry)
5. Size and age of organization and competitive nature of industry
Fazaia College of Education for Women Lahore
Subject: Strategic Management BBA (Hons) Class Instructor Maimoona Sadaf
6. Many or few competitors
7. Experienced or young managers.
SWOT MODEL
This SWOT model was introduced by Albert Humphrey assumes that by matching two sets of
factors external and internal a rational strategic decision can be [Link] analysis organizes
your business top strengths, weaknesses, opportunities, and threats into an organized list and is
usually presented in a simple two-by-two grid.
SWOT matrix is a strategic planning technique used to help a person or organization identify
strengths, weaknesses, opportunities, and threats related to business competition or project planning.
SWOT matrix is only a graphical representation of the SWOT framework.
There is a number of simple rules that you can go by when creating a SWOT matrix.
Be realistic: Make sure you assess your situation objectively. It is better to be more
pessimistic about weaknesses and threats and lighter about strengths and opportunities.
Today versus future: When doing the SWOT analysis, distinguish between today's state of
your business and your expectation for the future. Mixing your expectation with the current
state will result in skewed outcome.
Simple: Keep your SWOT matrix short and simple. Avoid complexity and over analysis. If you
want to include many points to each quadrant of the SWOT matrix, it is a good idea to weight
them.
Give a weight to every item in the SWOT matrix and then add them together. Each quadrant in the
SWOT matrix will result in some number which as a whole will give you a better picture where your
business is relative to other quadrants
Fazaia College of Education for Women Lahore
Subject: Strategic Management BBA (Hons) Class Instructor Maimoona Sadaf
The Space Model
The SPACE Model was introduced by Roweet al in 1982.
The SPACE matrix is a management tool focuses on strategy formulation especially as related to the
competitive position of an organization.
SPACE matrix tells us that our company should pursue an aggressive strategy. Our company has a
strong competitive position it the market with rapid growth. It needs to use its internal strengths to
develop a market penetration and market development strategy. This can include product
development, integration with other companies, acquisition of competitors, and so on.
The SPACE matrix is based on four areas of analysis.
Internal strategic dimensions: External strategic dimensions:
Financial strength (FS) Environmental stability (ES)
Competitive advantage (CA) Industry strength (IS)
This is what a completed SPACE matrix looks like:
Fazaia College of Education for Women Lahore
Subject: Strategic Management BBA (Hons) Class Instructor Maimoona Sadaf
The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA)
and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental
stability (ES) and financial strength (FS) dimensions. The SPACE matrix can be created using the
following seven steps:
Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA), industry
strength (IS), environmental stability (ES), and financial strength (FS).
Step 2: Rate individual factors using rating system specific to each dimension. Rate competitive
advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate
industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best).
Step 3: Find the average scores for competitive advantage (CA), industry strength (IS),
environmental stability (ES), and financial strength (FS).
Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis.
Step 5: Add the average score for the competitive advantage (CA) and industry strength (IS)
dimensions. This will be your final point on axis X on the SPACE matrix.
Step 6: Add the average score for the SPACE matrix environmental stability (ES) and financial
strength (FS) dimensions to find your final point on the axis Y.
Step 7: Find intersection of your X and Y points. Draw a line from the center of the SPACE matrix to
your point. This line reveals the type of strategy the company should pursue.
The Experience Curve Model
Experience curve refers to a diagrammatic
representation of the inverse relationship
between the total value-added costs of a
product and the company experience in
manufacturing and marketing it.
Fazaia College of Education for Women Lahore
Subject: Strategic Management BBA (Hons) Class Instructor Maimoona Sadaf
The Breakeven Point Model
The break-even point can be defined as a point
where total costs (expenses) and total sales
(revenue) are equal. Break-even point can be
described as a point where there is no net profit or
loss. The firm just “breaks even.” Any company which
wants to make abnormal profit, desires to have a
break-even point. Graphically, it is the point where the
total cost and the total revenue curves meet
The Product Life Cycle Model
The life cycle of a product is broken into four stages—
introduction, growth, maturity, and decline. This concept
is used by management and by marketing professionals
as a factor in deciding when it is appropriate to increase
advertising, reduce prices, expand to new markets, or
redesign packaging.
Porter’s Five Factor Model
Porter's Five Forces is a framework for analyzing a
company's competitive environment. The number and
power of a company's competitive rivals, potential new
market entrants, suppliers, customers, and substitute
products influence a company's profitability.
The Blue Ocean Strategy Model
Blue ocean strategy is the simultaneous
pursuit of differentiation and low cost to open
up a new market space and create new
demand. It is about creating and capturing
uncontested market space, thereby making the
competition irrelevant.
Fazaia College of Education for Women Lahore
Subject: Strategic Management BBA (Hons) Class Instructor Maimoona Sadaf
Big Tink Strategy Model
Big Think Strategy, Schmitt shows how to bring bold thinking into your business by
sourcing big ideas and executing them creatively. With the tools in this book, any leader can
overcome institutionalized small think the inertia, the narrow-mindedness, and the aversion to risk
that block true innovation.
Portfolio Models
"Portfolio models are a tool used to compare all SBUs within a company, on specific criteria, to give
an indication of the most logical strategic direction to take each SBU, and to what extent."
Strategic Portfolio Management is about deciding where best to focus the organization’s finite
resources in order to meet strategic objectives, considering the business as a portfolio of activities
and making trade- offs across the portfolio. ... Once the portfolio is focused, attention needs to turn
to execution.
BCG matrixis designed to help with long-term strategic planning, to help a business consider
growth opportunities by reviewing its portfolio of products to decide where to invest, to
discontinue or develop products. It's also known as the Growth/Share Matrix.
GE matrix was developed by Mckinsey and Company consultancy group in the 1970s. The
nine cell grid measures business unit strength against industry attractiveness and this is the
key difference. Whereas BCG is limited to products, business units can be products, whole
product lines, a service or even a brand.
The IE Matrix is a strategic management tool which is used to analyze the current position of
the divisions and suggest the strategies for the future. The Internal-External (IE) Matrix is
based on an analysis of internal and external business factors which are combined into one
suggestive model.
