Topics:

The Decision Stage

Cultural Aspects of Strategy Choice
The Politics of Strategy Choice
Governance Issues

Ronel N. Dadula
Reporter
The Decision Stage
The Decision Stage

Analysis and intuition provide a basis for

making strategy-formulation decisions. The
matching techniques just discussed reveal
feasible alternative strategies.

Many of these strategies will likely have

been proposed by managers and
employees participating in the strategy
analysis and choice activity.
 Quantitative Strategic
Stage 3: Decision Stage Planning Matrix
(QSPM)
The Quantitative Strategic Planning Matrix (QSPM)

QSPM is the only one analytical technique in the

literature designed to determine the relative attractiveness
of feasible alternative actions other than ranking strategies
to achieve the prioritized list.

The QSPM is a tool that allows the strategist to

evaluate alternative strategies objectively, based on
previously identified external and internal critical success
factors

Like other strategy-formulation analytical tools, the

QSPM requires good intuitive judgment.
The Quantitative Strategic Planning Matrix (QSPM)

The QSPM comes under the third stage of

strategy formulation which is called The Decision
Stage and also the final stage of this process.

The best thing about QSPM is that it never

insist the strategist to enter the information on
assumptions, it extract the information from Stage 1
The Input Stage and Stage 2 The Matching Stage.
Format of Quantitative Strategic Planning Matrix
Format of Quantitative Strategic Planning Matrix

Internal and
External key
factors
(EFE & IFE matrix)
Format of Quantitative Strategic Planning Matrix

Weight
(relative importance
of the factor)
Format of Quantitative Strategic Planning Matrix

Attractive Score
(AS)
Format of Quantitative Strategic Planning Matrix

Total Attractive
Score
(TAS)
Steps to develop QSPM

1. List the firms key external opportunities &

threats; list the firms key internal strengths
and weaknesses (EFE Matrix and IFE Matrix).
A minimum of 10 external & internal critical
success factors should be taken.
2. Assign weights to each external and internal
critical success factor .
3. Examine the Stage 2 (matching) matrices and
identify alternative strategies that the
organization should consider implementing.
Steps to develop QSPM

4. Determine the Attractiveness Scores (AS),

defined as numerical values that indicate the
relative attractiveness of each strategy in a
given set of alternatives. The range for
Attractiveness Scores is 1 = not attractive, 2 =
somewhat attractive, 3 = reasonably
attractive, and 4 = highly attractive.
5. Compute the Total Attractiveness Scores. Total
Attractiveness Scores are defined as the
product of multiplying the weights (Step 2) by
the Attractiveness Scores (Step 4) in each
row.
Steps to develop QSPM

6. Compute the Sum Total Attractiveness Score.

Add Total Attractiveness Scores in each
strategy column of the QSPM.

The Sum Total Attractiveness Scores reveal

which strategy is most attractive in each set
of alternatives. Higher scores indicate more
attractive strategies, considering all the
relevant external and internal factors that
could affect the strategic decisions.
Limitations of QSPM

A limitation of the QSPM is that it can be only as

good as the prerequisite information and matching
analyses upon which it is based. Another limitation
is that it requires good judgment in assigning
attractiveness scores.

Also, the sum total attractiveness scores can be

really close such that a final decision is not clear.
Like all analytical tools however, the QSPM should
not dictate decisions but rather should be
developed as input into the owners final
decision.
Advantages of QSPM

A QSPM provides a framework to prioritize the

strategies, it can be used for comparing strategies
at any level such as corporate, business and
functional.

The other positive feature of QSPM that it integrate

external and internal factors into decision
making process. A QSPM can be developed for
small and large scale profit and non-profit
organizations.
Cultural Aspects
of
Strategy Choice
Cultural Aspects of Strategy Choice

All organizations have a culture. Culture includes

the set of shared values, beliefs, attitudes, customs,
norms, personalities, heroes, and heroines that describe
a firm.

Culture is the unique way an organization does

business. It is the human dimension that creates solidarity
and meaning, and it inspires commitment and
productivity in an organization when strategy changes
are made.
Cultural Aspects of Strategy Choice

It is beneficial to view strategic management from a

cultural perspective because success often rest upon
the degree of support that strategies receive from a
firms culture.

If firms strategies are supported by cultural

products such as values, beliefs, rites etc., then managers
often can implement changes swiftly and easily.
However, if a supportive culture does not exist and is not
cultivated, then strategy changes may be ineffective or
even counterproductive.
Cultural Aspects of Strategy Choice

A firms culture can become antagonistic to new

strategies, and the result of that antagonism may be
confusion and disarray.

Strategies that require fewer cultural changes may

be more attractive because extensive changes can take
considerable time and effort. Whenever two firms merge, it
becomes especially important to evaluate and consider
culture-strategy linkages.
Cultural Aspects of Strategy Choice

Culture provides an explanation for the difficulties a firm

encounters when it attempts to shift its strategic direction,
as the following statement explains:

Not only has the right corporate culture become

the essence and foundation of corporate excellence, but
success or failure of needed corporate reforms hinges on
man-agements sagacity and ability to change the firm
driving culture in time and in tune with required changes in
strategies.
 The Politics
of
Strategy Choice
The Politics of Strategy Choice

All organizations are political. Unless managed,

political maneuvering consumes valuable time,
subverts organizational objectives, diverts human
energy, and results in the loss of some valuable
employees.

Sometimes political biases and personal

preferences get unduly embedded in strategy
choice decisions. Internal politics affect the choice
of strategies in all organizations.
The Politics of Strategy Choice

The hierarchy of command in an organization,

combined with the career aspirations of different
people and the need to allocate scarce
resources, guaranties the formation of coalitions
of individuals who strive to take care of
themselves first and the organization second,
third or fourth.

Coalitions of individuals often form around key

strategy issues that face an enterprise.
The Politics of Strategy Choice

Major Responsibilities of strategists.

to guide the development of coalitions

to nurture an overall team concept

to gain the support of key individuals and

groups of individuals
The Politics of Strategy Choice

In the absence of objectives analyses, strategy

decisions too often are based on the politics of
the moment. With development of improved
strategy-formation tools, political factors become
less important in making strategic decisions.

In the absence of objectivity, political factors

sometimes dictate strategies, and this is
unfortunate. Managing political relationships is
an integral part of building enthusiasm and esprit
de corps in an organization.
The Politics of Strategy Choice

Tactics used by politicians for centuries that can

aid strategists:

Equifinality
Satisfying
Generalization
Focus on Higher-Order Issues
Provide Political Access on Important
Issues
Governance Issues
Governance Issues

Director one of a group of persons entrusted with

the overall direction of corporate
enterprise.

Board of Directors a group of individuals who are

elected by the ownership of a corporation
to have oversight and guidance over
management and who look out for
shareholders interest.
The act of oversight and direction is
referred to as Governance.
Governance Issues

Governance the characteristics of ensuring that long-

term strategic objectives and plans are established
and that the proper management structure is in
place to achieve those objectives, while at the same
time making sure that the structure functions to
maintain the corporations integrity, reputation, and
responsibility to its various constituencies.

source: The National Association of Corporate Directors

Governance Issues

Board of Directors Duties and Responsibilities

Control and oversight over management

Adherence to legal prescriptions
Consideration of stakeholders interest
Advancement of stockholders rights
Governance Issues
Board of Directors Duties and Responsibilities

- Control and oversight over management.

Select the Chief Executive Officer (CEO).

Provide the CEO with a forum.
Ensure managerial competency.
Evaluate managements performance.
Set managements salary levels, including fringe benefits.
Guarantee managerial integrity through continues auditing.
Devise and revise policies to be implemented by mgmt.
Governance Issues
Board of Directors Duties and Responsibilities

- Adherence to legal prescriptions.

Keep abreast of new laws.

Ensure the entire organization fulfills legal prescriptions.
Pass bylaws and related resolutions.
Select new directors.
Approve capital budgets.
Authorize borrowing, new stock issues, bonds, and so on.
Governance Issues
Board of Directors Duties and Responsibilities

- Consideration of stakeholders interest.

Monitor product quality.

Facilitate upward progression in employee quality of work
life.
Review labor policies and practices.
Improve the customer climate.
Keep community relations at the highest level.
maintain good public image.
Governance Issues
Board of Directors Duties and Responsibilities

- Advancement of stockholders rights.

Preserve stockholders equity.

Guard against equity dilution.
Inform stockholders through letters, reports and meetings.
Declare proper dividends.
Guarantee corporate survival.
Governance Issues

Good governance is acknowledged to be essential

for the success of any organization and is now more
important than ever.

Members of boards play a vital role in serving their

causes and communities and bring passion and
commitment as well as skills and experience to the
organizations they lead. They provide long term vision and
protect the reputation and values of their organizations.
Governance Issues

Today, boards of directors are composed mostly of

outsiders who are becoming more involved in
organizations strategic management.

The trend in the U.S. for example, is toward much

greater board member accountability with smaller boards,
now averaging 12 members rather than 18 as they did few
years ago
Governance Issues

Principles of Good Governance

An effective board will provide good governance and leadership

by:

Understanding their role

Ensuring delivery of organizational purpose
Being effective as individuals and a team
Exercising control
Behaving with integrity and
Being open and accountable.
Governance Issues

Being a member of a board of directors today

requires much more time , is much more difficult, and
requires much more technical knowledge and financial
commitment than in the past.

Just as directors are beginning to place more

emphasis on staying informed about an organizations
health and operations, they are also taking a more active
role in ensuring that publicly issued documents are
accurate representations of a firms status.
Thank You for
listening.

End