1. Strategic Choice Aids SWOT ANALYSIS
At the very least, after the analysis of both the external and internal environments, we should have four lists:
Strengths
Weaknesses
Opportunities
Threats
The most important of these (especially those that clash with the current strategy) should identify the issues that the company must resolve
We have to come up with some alternative ideas of how to resolve these issues
Pros and cons of each alternative must be developed
Selection criteria should be considered and a choice made, based on those criteria
From the internal analysis
From the external analysis

2. Strategic Choice Aids TOWS ANALYSIS
A brainstorming technique that forces top executives to think outside of the box
Start with your SWOT lists
Then come up with any possible strategies that:
- make use of the firm’s strengths to take advantage of external opportunities
- take advantage of opportunities and reduce the impact of firm’s weaknesses
- use a firm’s strengths to eliminate threats in the environment
- attempt to reduce weaknesses and avoid threats
The industry standard is to identify the rational next to each strategy i.e. Strategy 1 was considered as a result of O1, O3 and S4

3. Strategic Choice Aids TOWS ANALYSIS STRENGTHS (S) List strengths
WEAKNESSES (W)
List weaknesses
OPPORTUNITIES
(O)
List opportunities
SO STRATEGIES
Use strengths
to take
advantage of
opportunities
WO STRATEGIES
Overcome
weaknesses
by taking
advantage of
opportunities
THREATS (T)
List threats
ST STRATEGIES
Use strengths
to avoid
threats
WT STRATEGIES
Minimize
weaknesses
and avoid
threats

4. Strategic Choice Aids GRAND STRATEGY MATRIX
Strategists believe there is a logical order to consider strategic choices
Does not mean there is only one order of choice, there is a best order to consider and eliminate until you arrive at your desired strategy
Strategic choices are based on two dimensions
- relative competitive position
- the rate at which the industry
is growing
(big players more aggressive,
Smaller players more copy strategy)
WEAK
STRONG
RELATIVE COMPETITIVE POSITION
RAPID
Market Development
Market Penetration
Product Development
Horizontal Integration
Divestiture
Liquidation
Market Development
Market Penetration
Product Development
Forward Integration
Backward Integration
Horizontal Integration
Concentric
Diversification
MARKET GROWTH
Retrenchment
Concentric
Diversification
Horizontal Diversif.
Conglomerate Diversif.
Divestiture
Liquidation
Concentric
Diversification
Horizontal Diversif.
Conglomerate Diversif.
Joint Ventures
SLOW

5. Horizontal Integration
Strategic Choice Aids
WEAK
STRONG
GRAND STRATEGY MATRIX
RELATIVE COMPETITIVE POSITION
All other things being equal...
Firm should not shift from present course, just fine tune
Develop the market
Penetrate the market
Come up with new products
RAPID
Market Development
Market Penetration
Product Development
Forward Integration
Backward Integration
Horizontal Integration
Concentric
Diversification
MARKET GROWTH
If the firm has excess resources...
- Buy distributors
Buy suppliers
Buy competitors
If the firm depends too much on a single product...
- Add similar and complementary products
SLOW
If you find yourself in this position (a market leader in a rapidly growing industry...
Be aggressive
Take risks
Take advantage of opportunities

6. Conglomerate Diversif.
Strategic Choice Aids
WEAK
STRONG
GRAND STRATEGY MATRIX
RELATIVE COMPETITIVE POSITION
Aggressively look for opportunities in growth industries...
- Diversify
RAPID
If the firm feels it does not have the needed expertise...
- Consider a joint venture
MARKET GROWTH
Concentric
Diversification
Horizontal Diversif.
Conglomerate Diversif.
Joint Ventures
SLOW
If you find yourself in this position (a market leader in an industry that is slowing down...
Use excess cash (from milking core products) to find new businesses
Find ways to reduce market risk

7. Horizontal Integration
Strategic Choice Aids
WEAK
STRONG
GRAND STRATEGY MATRIX
RELATIVE COMPETITIVE POSITION
If the firm can figure out what it is doing wrong...
Develop the market
Penetrate the market
Come up with a new product
RAPID
Market Development
Market Penetration
Product Development
Horizontal Integration
Divestiture
Liquidation
If the firm feels it does not have a distinct competitive advantage...
- Buy a competitor that has what is missing
MARKET GROWTH
If an opportunity arises to get out of this industry and try something else...
Divest of underperforming assets
Get out of the business all together
SLOW
Seriously evaluate your position.... The market is taking off and leaving you behind... WHY ??????

8. Conglomerate Diversif.
Strategic Choice Aids
WEAK
STRONG
GRAND STRATEGY MATRIX
RELATIVE COMPETITIVE POSITION
If there is room to cut costs or sell some assets...
Retrench
RAPID
If an opportunity arises to shift resources out of this industry into something else...
Diversify
MARKET GROWTH
Retrenchment
Concentric
Diversification
Horizontal Diversif.
Conglomerate Diversif.
Divestiture
Liquidation
If the firm feels it is backed into a corner...
Divest
Liquidate
SLOW
Acquire drastic quick medicine to avoid further demise and forced liquidation

9. Strategic Choice Aids INTERNAL/EXTERNAL MATRIX
IFE MATRIX TOTAL WEIGHTED SCORE
Typically used to view a portfolio of businesses (THUS a corporate strategy tool)
STRONG
3.0 to 4.0
AVERAGE
2.0 to 2.99
WEAK
1.0 to 1.99
HIGH
3.0 to 4.0
GROW & BUILD
Market penetration
Market development
Product development
Backward integration
Forward integration
Horizontal integration
EFE MATRIX TOTAL WEIGHTED SCORE
MEDIUM
2.0 to 2.99
LOW
1.0 to 1.99
HOLD & MAINTAIN
Market penetration
Product development
HARVEST & DIVEST
Retrenchment
Divestiture
Liquidation

10. Strategic Choice Aids INTERNAL/EXTERNAL MATRIX
IFE MATRIX TOTAL WEIGHTED SCORE
To make this matrix more useful, strategists represent each business by a circle, the size of which represents the relative size of the business (in revenues) within the corporate family
STRONG
3.0 to 4.0
AVERAGE
2.0 to 2.99
WEAK
1.0 to 1.99
HIGH
3.0 to 4.0
EFE MATRIX TOTAL WEIGHTED SCORE
MEDIUM
2.0 to 2.99
Relative profits are also indicated in the matrix as pie shapes within the circles
LOW
1.0 to 1.99

11. Strategic Choice Aids LIFE CYCLE PORTFOLIO MATRIX
BUSINESS UNIT’S COMPETITIVE POSITION
Starts with IFE/EFE Matrix
STRONG
AVERAGE
WEAK
Combines the two dimensions into one based on the business’s relative competitive position
EARLY
Adds the dimension of the stage in the life cycle
TAKE OFF
Let’s you better identify developing business winners
GROWTH
LIFE CYCLE STAGES
Allows you to see the distribution of a diversified firm’s businesses across various stages of an industry’s evolution
SHAKE OUT
MATURITY
SATURATION
STAGNATION

12. Strategic Choice Aids
Once you have identified the family of strategies that make sense given the firm’s relative competitive position and the dynamics of the industry....
You have to develop a number of more specific (less generic) strategies that allow the firm to use its strengths to take advantage of opportunities or combat threats
No strategy is perfect, each has pros and cons. You must understand these and feel comfortable that you understand the implications of choosing one over the others
The next step is to decide what criteria you will use to make the final choice
Typical criteria include but are not limited to...
adding value to shareholders
adding value to customers
solves the problem/issue
fits with the philosophy/mission of the company
company has the resources to make it work
ease of implementation
gives the firm an extended competitive advantage

13. Strategic Choice Aids Gives firm long-term advantage
Value to shareholders
Value to customers
Fits company mission
Gives firm long-term advantage
TOTAL
STRATEGIC OPTIONS
Open resorts in exotic locales
Start a portfolio of senior residences
Expand into non-boutique hotels
Slow down growth and solve the weaknesses
Build a stronger brand and loyalty program
3.5
3.0
3.0
2.5
8.0

14. Strategic Choice Aids
You might also want to test the compatibility of the new strategies with the opportunities, threats, strengths and weaknesses identified earlier and ranked in the IFE/EFE tests performed against the current strategy
The new strategy should result in a higher score
Copy the IFE and EFE matrices.
The relative weights should be as they were previously
Come up with new scores for each strategy being considered

15. EFE Matrix Example – Exotic Locales
EXTERNAL ANALYSIS RESULTS
WEIGHT
GRADE
SCORE
TOTAL
OPPORTUNITIES
Population group that travels the most is the 30 – 45 slice
.20
3.8
.76
2.64
30 – 45 year olds prefer smaller hotels to larger ones
.10
3.8
.38
Above
Average
Not WOW
High immigrant population prefers to travel out of country
.08
.16
2.0
Aging population want luxury hotel-like retirement homes
.05
0.0
.00
Democrats, in power, tend to support small business
.03
2.5
.08
THREATS
2008 financial melt-down dried up sources of capital
.25
1.5
.38
Increased competition for older buildings from condo developers
.17
3.0
.51
Industry consolidation due to being in later stages of growth
.09
3.5
.32
Increased use of communication technology is reducing travel
.03
1.5
.05

16. IFE Matrix Example – Exotic Locales
INTERNAL ANALYSIS RESULTS
WEIGHT
GRADE
SCORE
TOTAL
STRENGTHS
We have an excellent brand & customers are always satisfied
3.8
.95
2.75
.25
Room rates are 15% higher than comparable rooms
.13
2.0
.26
Above Average
Has not solved most of the issues
Loyalty programs result in 70% repeat customers
.10
.35
3.5
Salaries & fringe benefits are 10% more than industry average
.05
2.7
.14
Hotel managers meet every 6 months to share ideas
.05
2.0
.10
WEAKNESSES
Revenues growing 14% p.a. (4 years) but profits only 3% p.a.
.18
2.5
.45
Debt/Equity is 2.5 versus industry average of 0.75
.12
1.5
.18
CEO has just quit and has joined our closest rival
.07
2.5
.18
Computer system straining & no internet for customers
.05
2.8
.14

17. Strategic Choice Aids
If you redid the EFE/IFE matrices for each of the new strategies, you would find that none of them alone results with an outstanding score card
Some combination of strategies is necessary that addresses both the environment and the internal situation
Something that moves the business in a new market or industry and that addresses both management and financial issues