Strategy Management - Qualitative Strategic Planning Matrix QSPM & Other Frameworks (Video #78)

Summary

This video dives into strategy selection, focusing on three powerful frameworks: the Qualitative Strategic Planning Matrix (QSPM), the SAFE framework, and the Industry Life Cycle Matrix. It outlines how companies can evaluate strategic alternatives by assessing internal and external factors, the feasibility of execution, stakeholder acceptability, and alignment with industry maturity stages. The video highlights that strategy selection is a prioritized and iterative process, requiring careful judgment and flexibility. By using these frameworks, businesses can make informed, focused decisions, ensuring that chosen strategies align with their mission, goals, and the competitive landscape.

Takeaways

• 😀 Strategy selection is a continuous process that involves identifying and prioritizing courses of action aligned with a company's mission, vision, and strategic goals.
• 😀 The Qualitative Strategic Planning Matrix (QSPM) is a powerful tool for assessing the relative attractiveness of different strategies by evaluating internal and external factors.
• 😀 In QSPM, the process begins with identifying critical external (opportunities and threats) and internal (strengths and weaknesses) factors through External and Internal Factor Evaluations (EFE and IFE).
• 😀 Weights are assigned to each factor based on their relative importance, and the total should add up to 1.0 or 100%.
• 😀 Strategies are rated on a scale from 1 to 4 in terms of how attractive they are to address the internal and external factors identified, with higher scores indicating greater attractiveness.
• 😀 The total attractiveness score (TAS) for each strategy is calculated by multiplying the ratings by the factor weights and summing the results.
• 😀 The SAFE framework (Suitability, Acceptability, Feasibility) helps prioritize strategies by evaluating their alignment with the external environment, stakeholder approval, and practicality of implementation.
• 😀 Suitability in the SAFE framework assesses how well a strategy aligns with external opportunities and company goals.
• 😀 Acceptability in the SAFE framework evaluates stakeholder approval, considering factors like risk, expected returns, and reactions.
• 😀 Feasibility in the SAFE framework examines the practicality of implementing a strategy, taking into account financial, human, and technological resources.
• 😀 The Industry Life Cycle Matrix classifies industries into stages (Embryonic, Growth, ShakeOut, Mature, Decline) and helps businesses tailor their strategies according to the industry's stage and their position in the market.
• 😀 The strategy selection process is iterative, and planning teams should be flexible enough to revisit and reintegrate strategies if new insights arise.

Q & A

What is the main purpose of the strategy selection process discussed in the video?

The strategy selection process helps organizations identify and choose the most effective courses of action to achieve their strategic intent, mission, vision, and objectives while addressing business challenges and opportunities.

What is the Qualitative Strategic Planning Matrix (QSPM) and how does it aid in strategy selection?

The QSPM is a tool used to evaluate the relative attractiveness of different strategies. It helps prioritize strategies based on internal and external factors, providing a structured approach to assessing their potential effectiveness.

What are the steps involved in using the QSPM?

The steps in using the QSPM include listing key internal and external factors, assigning weights to those factors, listing strategic alternatives, evaluating the attractiveness of each strategy, calculating the total attractiveness score for each strategy, and using the results to make strategic decisions.

How do you evaluate the attractiveness of a strategy in the QSPM?

The attractiveness of a strategy is evaluated on a scale from 1 to 4, where 1 means 'not attractive', 2 means 'somewhat attractive', 3 means 'reasonably attractive', and 4 means 'highly attractive'. This evaluation is based on how well a strategy addresses the internal and external factors.

What does the SAFE framework assess in strategy selection?

The SAFE framework evaluates strategies based on three dimensions: Suitability (alignment with external opportunities and goals), Acceptability (stakeholder approval and risk-return balance), and Feasibility (practicality of implementation given resources).

What is the significance of stakeholder acceptance in the SAFE framework?

Stakeholder acceptance in the SAFE framework ensures that the chosen strategy is not only suitable and feasible but also acceptable to those affected by it. This involves assessing the risk, expected returns, and potential reactions from stakeholders.

What are the five stages of the Industry Life Cycle Matrix?

The five stages of the Industry Life Cycle Matrix are: Embryonic (high growth, high risk), Growth (market share expansion), ShakeOut (market consolidation, cost reduction), Mature (cost efficiency and differentiation), and Decline (cost-cutting and exits).

How does the Industry Life Cycle Matrix guide strategy selection?

The Industry Life Cycle Matrix helps businesses tailor their strategies based on the maturity of their industry. Each stage presents different challenges and opportunities, which require specific strategic actions, such as market establishment, consolidation, or cost reduction.

Why is strategy selection an iterative process?

Strategy selection is iterative because as new information becomes available or circumstances change, planning teams may need to revisit and refine their strategic choices to ensure alignment with the organization's goals and the external environment.

What is the primary focus of strategy selection, given the limitations of resources?

The primary focus of strategy selection is prioritization, as companies cannot pursue every potential strategy. The selection process aims to focus resources on the most feasible and impactful strategies that align with the company's vision and objectives.