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Reporter Reporter
RonelRonel N.N. DadulaDadula
The Decision StageTopics:
CulturalAspects of Strategy Choice
The Politics of Strategy Choice
Governance Issues
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The Decision Stage
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The Decision Stage
Analysis and intuition provide a basis for
making strategy-formulation decisions. The
matching tec
hniq
ues j
ust disc
ussed revea
l feasible alternative strategies.
Many of these strategies will likely have
been proposed by managers and
employees participating in the strategyanalysis and choice activity.
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Quantitative Strategic
Planning Matrix
(QSPM)
Stage 3: Decision Stage
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The Quantitative Strategic Planning Matrix (QSPM)
QSPM is the only one analytical technique in theliterature 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 toevaluate alternative strategies objectively , based on
previously identified external and internal critical success
factors
Like other strategy-formulation analytical tools, theQSPM requires good intuitive judgment.
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The Quantitative Strategic Planning Matrix (QSPM)
The QSPM comes under the third stage of strategy formulation which is called ³The 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.
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Format of Quantitative Strategic Planning Matrix
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Format of Quantitative Strategic Planning Matrix
Weight
(r elative impor tance
of the factor)
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Format of Quantitative Strategic Planning Matrix
Attractive Score
(AS)
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Format of Quantitative Strategic Planning Matrix
TotalAttractive
Score
(TAS)
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Steps to develop QSPM
1. List the firm¶s key external opportunities &threats; list the firm¶s key internal strengthsand weaknesses (EFE Matrix and IFE Matrix). A minimum of 10 exter nal & inter nal c r itical success factor s should be taken.
2. Assign weights to each external and internal critical success factor .
3. Examine the Stage 2 (matching) matrices andidentify alternative strategies that the
organization should consider implementing.
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Steps to develop QSPM
4. Determine the Attractiveness Scores (AS),defined as numerical values that indicate therelative attractiveness of each strategy in agiven set of alternatives. The range for
Attractiveness Scores is 1 = not attractive, 2 =somewhat attractive, 3 = reasonablyattractive, and 4 = highly attractive.
5. Compute the Total Attractiveness Scores. Total Attractiveness Scores are defined as theproduct of multiplying the weights (Step 2) bythe Attractiveness Scores (Step 4) in each row.
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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 Att r activeness Scor es r eveal which st r ategy is most attractive in each set of alter natives. Higher scores indicate moreattractive strategies, consider ing all ther elevant exter nal and inter nal factor s that could affect the st r ategic decisions.
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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 shouldnot dictate decisions but rather should be
developed as input into the owner¶s final
decision.
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Advantages of QSPM
AQSPM provides a framework to prioritize the
strategies, it can be used for comparing strategies
at any level such as corporate, business and
f unctional.
The other positive feature of QSPM that it integrate
external and internal factors into decision
making process. AQSPM can be developed for
small and large scale profit and non-profitorganizations.
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Cultural AspectsCultural Aspectsofof
Strategy ChoiceStrategy Choice
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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.
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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
firm¶s culture.
If firm¶s 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.
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Cultural Aspects of Strategy Choice
A firm¶s culture can become antagonistic to new
strategies, and the result of that antagonism may be
confusion and disarray.
Strategies that require fewer cultural changes maybe 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.
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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:
N ot only has the ³ r ight´ cor por ate cultur e becomethe essence and foundation of cor por ate excellence, but
success or failur e of needed cor por ate r efor ms hinges on
man-agement¶s sagacity and ability to change the fi r m
d r iving cultur e in time and in tune with r equi r ed changes in
st r ategies.
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The PoliticsThe Politicsofof
Strategy ChoiceStrategy Choice
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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 choiceof strategies in all organizations.
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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 keystrategy issues that face an enterprise.
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The Politics of Strategy Choice
Major R esponsibilities of st r ategists.
to guide the development of coalitions
to nurture an overall team concept
to gain the support of key individuals and
groups of individuals
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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 isan integral part of building enthusiasm and esprit
de corps in an organization.
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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
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Governance IssuesGovernance Issues
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Governance Issues
Director ± one of a g r oup of per sons ent r usted with
the overall di r ection of cor por ate
enter pr ise.
Board of Directors ± a g r oup of individuals who ar eelected by the owner ship of a cor por ation
to have oversight and guidance over
management and who look out for
shar eholder s¶ inter est.
The act of over sight and di r ection isr eferr ed to as Governance.
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Governance ± the char acter istics of ensur ing that long-ter m st r ategic objectives and plans ar e established
and that the pr oper management st r uctur e is in
place to achieve those objectives, while at the same
time making sur e that the st r uctur e functions tomaintain the cor por ation¶s integ r ity, r eputation, and
r esponsibility to its var ious constituencies.
sour ce: The N ational Association of Cor por ate Di r ector s
Governance Issues
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Board of Directors Duties and Responsibilities
Control and oversight over management
Ad
herence to legal prescriptions
Consideration of stakeholders¶ interest
Advancement of stockholders¶ rights
Governance Issues
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Board of Directors Duties and Responsibilities
- C ontrol and oversight over management.
Select the Chief Executive Officer (CEO).
Provide t
heC
EO with
a for u
m. Ensure managerial competency.
Evaluate management¶s performance.
Set management¶s salary levels, including fringe benefits.
Guarantee managerial integrity through continues auditing.
Devise and revise policies to be implemented by mgmt.
Governance Issues
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Board of Directors Duties and Responsibilities
- Adherence to legal prescriptions.
Keep abreast of new laws.
Ens
ure t
he entire organization f
ulfillslega
lprescriptions. Pass bylaws and related resolutions.
Select new directors.
Approve capital budgets.
Authorize borrowing, new stock issues, bonds, and so on.
Governance Issues
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Board of Directors Duties and Responsibilities
- C onsideration of stakeholders¶ interest.
Monitor product quality.
Faci
litate
upward progression in emp
loyee q
uality of worklife.
Review labor policies and practices.
Improve the customer climate.
Keep community relations at the highest level.
maintain good public image.
Governance Issues
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Board of Directors Duties and Responsibilities
- Advancement of stockholders¶ rights.
Preserve stockholders¶ equity.
Gu
ard against equ
ity dilu
tion. Inform stockholders through letters, reports and meetings.
Declare proper dividends.
Guarantee corporate survival.
Governance Issues
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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
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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
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Principles of Good Governance
³ 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
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Being a member of a board of directors todayrequires 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 organization¶s
health and operations, they are also taking a more active
role in ensuring that publicly issued documents are
accurate representations of a firm¶s status.
Governance Issues
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Thank You forThank You forlistening.listening.
EndEnd
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