Strategic Management Tools

Business Strategy: The Three Generic Strategies

Three of the most widely read books on competitive analysis in the 1980s were Michael Porter’s Competitive Strategy, Competitive Advantage, and Competitive Advantage of Nations. In his various books, Porter developed three generic strategies that, he argues, can be used singly or in combination to create a defendable position and to outperform competitors, whether they are within an industry or across nations. The strategies are (1) overall cost leadership, (2) differentiation, and (3) focus on a particular market niche.

Cost Leadership, Differentiation, and Scope

These strategies are termed generic because they can be applied to any size or form of business.… Read the rest

Abey Francis

Market Activated Corporate Strategy (MACS) Framework

Market Activated Corporate Strategy (MACS) Framework was developed in the late 1980s. But it wasn’t developed at once. There were several predecessors to this framework.

Once of the first can be the BCG Growth-Share Matrix. This matrix represents the market growth rate and the relative market share, and according to the level, the business units were divided into 4 categories. It was used very often before, but over the time more comprehensive tools were designed, to eliminate the weaknesses of BCG Matrix, like the fact that is takes into consideration only two factors, avoiding many many others that have a huge impact on profitability.… Read the rest

Abey Francis

Porter’s Five Forces Analysis of Microsoft

Microsoft Corporation is the largest software company founded by Paul Allen and Bill Gate in 1975, the company controlled an overwhelming share of the personal computer operating system, cloud storage, office software suite, video game console Xbox, servers etc. Microsoft Company has intense pressure in the software competition over Google and Apple since they introduce operating system in both mobile device and PC. But still Microsoft conquer the market of operating system and software which resulting in more than 90% market share of operating system. Their vison is to create innovative technology that can be accessible to everyone. Therefore, to archive that vision, they decide to reduce the cost of software and service and make sure everyone can afford to use it.… Read the rest

Abey Francis

Top 3 Strategy Development Tools in Business

In the business world, strategy refers to the models using to make the right decisions that help organizations achieve set targets. It is, therefore, important that business people invest in understanding the various strategy development tools, their benefits, and their limitations. Having in-depth knowledge about strategy and how to select the right strategy tools, can businesses become more efficient and productive. There are several strategy development tools for use in the business world; what’s important is to know which strategy tool to use in a given circumstance. The main goal of using business strategy tools is to implement strategic plans in companies and help create economic moats.… Read the rest

Abey Francis

The Strategic Position and Action Evaluation Matrix (SPACE)

Strategic Position and Action Evaluation Matrix  (SPACE) is “an approach to  hammer out an appropriate strategic posture for a firm and its individual  business.”  SPACE is an analysis of the following four dimensions in as in a two-dimensional  portfolio analysis and involves a consideration of:

  1. Company’s competitive advantage
  2. Company’s financial strength
  3. Industry strength
  4. Environmental stability

Various factors are evaluated for determining each of the dimensions  and they are summarized below:

Dimensions Factors EvaluatedCompany’s competitive advantage
  1. Market Share
  2. Product Quality
  3. Product life cycle
  4. Product Replacement cycle
  5. Customer Loyalty
  6. Competitor’s Capacity Utilization
  7. Technological knowhow
  8. Vertical integration
Company’s Financial Strength
  1. Return on investment
  2. Leverage liquidity
  3. Capital Required/Available
  4. Cash Flow
  5. Ease of exit from market
  6. Risk involved in business
Industry Strength
  1. Growth potential
  2. Profit potential
  3. Financial Stability
  4. Technological know how
  5. Resource utilization
  6. Capital intensity
  7. Ease of entry into market
  8. Productivity
  9. Capacity Utilization
Environmental Stability
  1. Technological charges
  2. Rate if inflation
  3. Demand variability
  4. Prices of competing products
  5. Barriers to entry into market
  6. Competitive pressure
  7. Price elasticity of demand

Steps essential to construct a Strategic Position and Action Evaluation Matrix are described below:

  1. Choose a combination of factors that best characterize Competitive Advantage (CA), Environmental Stability (ES), Financial Strength (FS) and Industry Strength (IS).
… Read the rest
Abey Francis

Alcar Model of Value Based Management

The Alcar model, developed by the Alcar Group Inc., a company into management education and software development, uses the discounted cash flow analysis to identify value adding strategies.

According to Alcar Model  of Value Based Management, there are seven ‘value drivers’ that affect a firm’s value. These are

  1. The growth rate of sales
  2. Operating profit margin
  3. Income tax rate
  4. Incremental investment in working capital
  5. Incremental investment in fixed assets
  6. Value growth duration
  7. Cost of capital.

Value growth duration refers to the time period for which a strategy is expected to result in a higher than normal growth rate for the firm.… Read the rest

Abey Francis
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