DIZON, AIRA C.

SUM-A

Chapter SIX

STRATEGY FORMULATION OF EVER BILENA COSMETICS, INC.

Ever Bilena Cosmetics, Inc. (EBCI) is a cosmetic company engaged in the

manufacturing and distribution of cosmetic products like makeup, fragrances, and many
more. Since its founding, Ever Bilena has established its name as a brand that provides
high quality products with affordable prices, making it one of the leading cosmetics
brands in the Philippines today. Despite the numerous cosmetics brands- foreign and
local- entering in and out of the market, Ever Bilena still remains as one of the strongest
and most preferred brand by Filipino women.

Introduction

In this chapter the strategist will show the process by which an organization
chooses the most appropriate course of action to achieve its defined goals. This
process is essential to and organization’s success, because it provides framework for
the actions that will lead to the anticipated results. Strategic formulation forces an
organization to carefully look at the changing environment and to be prepared for the
possible changes that may occur.

6.1) Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix

SWOT analysis is a planning methodology that helps organizations build a

strategic plan to meet goals, improve operations and keep the business relevant. During
SWOT analysis, organizations identify strengths, weaknesses, opportunities and threats
(the four factors SWOT stands for) pertaining to organizational growth, products and
services, business objectives and market competition. Final results of the analysis will
 help the organization determine whether objectives, products, services, projects or
goals are a strategic fit.

SWOT Matrix

Figure 6. : SWOT Matrix of Ever Bilena Cosmetics, Inc.

Strengths
S1. All Products Are Cruelty-Free, Paraben-Free, and Lead-
INTERNAL Free.
S2. New Storage Warehouse.
FACTORS S3. Dominates All Distribution Channels in the Philippines.
S4. Develop New Market Segment and Increase Market
Share by Marketing to Niche Audience.
S5. Activity Ratios are increasing.
S6. Profitability Ratios are increasing.
S7. Experts in the Industry.
S8. Organize Monthly Training for Sales Team
S9. Influencers
EXTERNAL FACTORS S10. Collaboration with influencers.
S11. Loyal and Satisfied Employees .
S12. Outstanding CSR Policy.
Weaknesses
W1. Weak Sponsorship Management – Sponsorships are not
Strictly Observed
W2. Slow Product Development Process.
W3. Weak Brand Design – Unappealing Packaging.
W4. Shift into Eco-friendly Packaging System with an
Appealing Brand Design.
W5. Liquidity is decreasing.
W6. Leverage Ratios are increasing.
W7. Limited Shade Range for Base Makeup Products.
W8. Timeline of Project and Activities are not Strictly Followed.
W9. Uniquely new cosmetics.
W10. Lack of ideas for uniquely new cosmetics.
W11. Improvable IT Hardware.
W12. Improvable IT Systems.

Opportunities S-O Strategies (Type) W-O Strategies (Type)

O1. (Tax Reform Attracting Better and High-Quality
Opportunities (The company would benefit from it as SO1: Develop New Market Segment and
their burden to pay the corporate income tax of 30% will WO1: Shift into Eco-friendly Packaging System
gradually reduce to 20%.) Increase Market Share by Marketing to Niche with an Appealing Brand Design ( W2, O7, O8,
O2. Proposed Vanity Tax (Amending and raise the Audience (S4, S5, O3, O5, O6) – Market
current tax from 20% to 30% on non-essential goods will O9) – Product Development
thereby increase prices for beauty and cosmetics
Development
products and services.)
O3. Growth of Cosmetic Industry (The growth in the SO2: Conduct Social Media Campaigns with WO2: Shift into a Refillable Packaging System
cosmetic industry is linked to the increasing disposable
income in the Asia-pacific region, and such growth is
Famous Personalities ( S4, S7, O9, O10) – with an Appealing Brand Design (W1, W2, O7,
expected to come from two countries, one of it being the Market Penetration O8, O10 )– Product Development
Philippines.)
O4. Local beauty brands (Local beauty brands offer SO3: Develop Makeup Brand and Products
products at very competitive prices to cater to lower- WO3: Develop New Makeup Foundations that
income consumers, while more premium local brands for Men (S2, S3, S5, O3, O6) – Product
has wide Range Shade suitable for Filipina
are attempting to woo brand-conscious consumers with Development
the premise of not having to pay more for imported Skin Tones with Appealing Eco-friendly
brands.)
O5. Increase and Shift in Cosmetic Market Demographic SO4: Develop Halal-Certified Makeup Package Design ( W7, O3, O7, O8) – Product
(After replacing Generation X whose age ranges from 39 Products ( S3, S5, S7, O3, O5) – Product Development
– 54 years old, the Millennial who are now between the Development
ages of 23 – 38 years old is now the major consumer
group for the beauty market.) WO4. Collaborationg with beauty influencers
O6. Online Influencers (Many new local makeup brands
are entering the Philippine market, and most of these
into developing new and unique products.
new make-up brands are backed up by the country’s (W7,W3,O4, O8) – Market Penetration
highly influential celebrities and top beauty vloggers)
O7. Influence of beauty vlogging (Knowing that the
younger generations are more influence by social-media
information, their purchasing decisions, can therefore be
derived from the resulting look of a make-up product
through make-up tutorials and feedbacks from its
application)
O8. Strong impact of reviews through social media
(Today’s consumers are more driven to trust and
ultimately purchase products recommended by their
peers in social media because beauty demands and
trends are typically found in such platforms.)
O9. . Sustainable switch to Refillable Cosmetic
Packaging (A solution due to the appalling amount of
wastes produced by cosmetics and its adverse effects to
the environment.)
O10. Appeal to Eco-Friendly Packaging (Suppliers are
observed to be moving toward adopting recyclable and
eco-friendly packaging products due to growing.
O11. ASEAN Harmonized Cosmetic Regulatory Scheme
(The objective to remove technical barriers to trade of
cosmetic products through harmonization of technical
requirements,)
O12. ASEAN Cosmetic Directive (The ACD requires
companies to notify the cosmetic regulatory authority of
each ASEAN Member State where the cosmetic product
will be marketed, manufactured, or imported before it is
placed in the ASEAN market.)
O13. Developing eco-friendly products.
O14. Creating a line of cosmetics where it’s profits would
go straight to charity.
O15. Largest Beauty company in the world
O16. Continuous research and development for the
products.
Threat S-T Strategies (Type) W-T Strategies (Type)
T1. Government Regulations (Government can withhold
or regulate the production of cosmetics which can affect ST1: Create and Develop an Application for WT1: Trio-Collaboration with an Influential V-
the industry)
T2. Proposed Vanity Tax (The demographic affecting the Brand (S3, T11) – Market Penetration logger and Famous Local Celebrity for a
particularly both middle and lower class may lessen or Makeup Collection (W1, W3, T3) – Market
weaken the purchasing power of these people because ST2: Make available exclusive products in
of the possible increase of the prices of cosmetics) Penetration
T3. Increase of cosmetic brands (Competition increases other Distribution Channels in Online Beauty
and prices vary, and the preference of people changes Shops in a limited number of stocks ( S2, S3,
as well) T3) – Market Development WT2: Collaborate with international companies
T4. Economic Recession (Products of vanity are not in developing dissolvable or reusable cosmetic
prioritized)
T5. Cosmetics that may affect the skin especially fake ST3: Developing organic based products packages. (W4, T9) –Product Development
ones (Brands of well known brands are often imitated (S1,T5) – Product Development
and its usage may damage ones skin)
T6. Makeup over natural beauty(Some artists who
encourage to be who they and to lessen the usage of ST4: Create deals or promotions at least four
cosmetics) times a year. (S8, S11, T4) – Market
T7. Independency to machinery (Machineries can
caused productions to a halt) Penetration
T8. Quality of cosmetics (There is a great disparity
between machine made and traditionally made
cosmetics)
T9. Toxic waste of pollution produced by cosmetics
(Adverse effects of cosmetic waste)
T10. Animal cruelty (Testing cosmetics on animals)
T11. Regulation of Cosmetics (The regulation of the FDA
on cosmetics in the Philippines is mandatory and
important for cosmetic companies to strictly complied
with but may impose some limits or restrictions.)
T12. Lawsuits against cosmetic brands (Some cosmetic
brands has some lawsuits which results to boycotting
them)
T13. Imitations of some well-known products which can
be bad for the skin.
T14. Usage of chemicals and toxics as a base ingredient
for cosmetics may cause consumers to avoid that
product.
T15. Too many subdivisions.
T16. Not engaging in retailing.

Example of Significant Strategies from Each Quadrant

Quadrant Example of Significant Strategies from the Quadrant
S.O. SO1: Develop New Market Segment and Increase Market Share by
Marketing to Niche Audience (S4, S5, O3, O5, O6) – Marketing
W.O. WO2: Shift into a Refillable Packaging System with an Appealing
Brand Design (W1, W2, O7, O8, O10 )– Productions Operations
S.T. ST2: Make available exclusive products in other Distribution
Channels in Online Beauty Shops in a limited number of stocks (
S2, S3, T3) – Marketing
W.T. WT1: Trio-Collaboration with an Influential V-logger and Famous
Local Celebrity for a Makeup Collection (W1, W3, T3) – Marketing

Frequency of Identified Alternative Strategies

Table 6._ : Frequency of Identified Alternative Strategies from the SWOT Matrix
 Frequency in
Alternative Strategies
SWOT Matrix
1. Forward Integration
2. Backward Integration
3. Horizontal Integration
4. Market Penetration 5
5. Market Development 2
6. Product Development 7
7. Related Diversification
8. Unrelated Diversification
9. Retrenchment
10. Divestiture
11. Liquidation

Relevance of SWOT
The initial phase in the business administration SWOT analysis is recognizing
key strengths of an organization. These strengths can incorporate a strong brand
picture, a lot of working capital, a great status among consumers and even strong
dissemination systems. Strength is fundamentally any benefit that an organization has
over its real rivals.

6.2) Strategic Position and Action Evaluation (SPACE) Matrix

It refers to the strategic position and action evaluation matrix. Also, an important
strategic management tool used for the purpose of determining the type of a strategy of
a company should undertake. The top management of an organization could easily
identify the most appropriate strategy for a given enterprise.

Table 6. _ : SPACE Matrix for (Ever Bilena Cosmetic Inc.)

Financial Position (FP) Rate

Efficiency Ratios 4
Liquidity Ratios 3
Leverage Ratios 4
Profitability Ratios 5
Total 16

Competitive Advantage Rate

Market Share -2
Product Quality -2
 Product Life Cycle -3
Customer Loyalty -5
Customer Utilization -2
Total -14

Industry Position (IP) Rate

Growth Potential 6
Profit Potential 5
Financial Stability 5
Extent Leveraged 4
Resource Utilization 5
Total 25
Stability Position (SP) Rate
Technological Changes -4
Demand Variability -3
Price Range of Competing Products -2
Barriers to Entry to Market -3
Competitive Pressure -1
Total -13

Computation in SPACE

FS average = 16 / 4 = (+4.00)
IP average = 25 / 5 = (+5.00)
SP average = -13/ 5 = (-2.60)
CP average = -14 / 5 = (-2.80)

X axis: IP average + CP average = (+5.00) + (-2.80) = + (2.20)

Y axis: FS average + SP average = (+4.00) + (-2.60) = + (1.40)
 Competition is at the core of the success or failure of any organization, and
determines the appropriateness of its activities. In developing a strategy, managers
must examine the marketing opportunities in each business and product-market, as well
as the organization's distinctive competencies or strengths relative to its competitors.
The SPACE matrix is a valuable method for analyzing the competitive position of an
organization. It makes use of two internal dimensions (financial strength and competitive
advantage) and two external dimensions (industry strength and environmental stability),
to determine the organization's strategic posture in the industry. The firm's strategic
posture is then classified broadly as: aggressive, competitive, conservative or
defensive.
6.3) Boston Consulting Group (BCG) Matrix
The BCG Matrix method is the most well-known Portfolio management tool. It is based
on cycle theory. The BCG Matrix can be used to determine what priorities should be
given in the product portfolio of a business unit.

Figure 6. __: BCG Matrix of (Ever Bilena Cosmetic Inc.)

Relative Market Share Position

Low
High Medium
1.0 0.50 0.0
High +20
Industry Sales Growth Rate (Percentage)

II STARS I QUESTION MARKS

Medium 0

III CASH COWS IV DOGS

Low -20

In the BGC Matrix, Ever Bilena Cosmetics, Inc. falls under the second quadrant,
that is QUESTION MARKS which leans on market penetration, market development,
product development, and divestiture. Computing the relative market share position of
Ever Bilena by dividing its market share of 14.4% over the remaining uncontrolled
market shares, it resulted to a value of 0.17. This placed Ever Bilena at a low to medium
relative market share position.
In regard to the industry growth rate, according Statisa, a statistics portal, the
cosmetic industry in the Philippines recorded a revenue of US$3.079 billion in 2016;
US$3.192 billion in 2017; US$3.297 billion in 2018. The growth rate between these
periods computed by getting the difference of the change in revenue over current
revenue, resulted to a value of 3.5 % (2016 – 2017) and 3.2% (2017 – 2018). From the
value determined, the industry growth rate in the BCG Matrix is thus positioned in
Medium to High.

Relevance of Space Matrix

To ensure long-term value creation, accompany should have a portfolio of
products that contains both high-growth products in need of cash inputs and low-growth
products that generate a lot of cash. The Boston Consulting Group Matrix has 2
dimensions: market share and market growth. The basic idea behind it is: if a product
has a bigger market share, or if the product's market grows faster, it is better for the
company.

6.4) Internal-External (IE) Matrix

The Internal-External (IE) matrix is strategic management tool used to analyze working
conditions and strategic position of a business. The Internal External Matrix or short IE
matrix is based on an analysis of internal and external business factors which are
combined into one suggestive model. The IE matrix is a continuation of the EFE
matrix and IFE matrix models.
Figure 6. _ : IE Matrix of Ever Bilena Cosmetic Inc.

IFE Total Weighted Score

Strong Average Weak

4.0 3.0 2.0 1.0

High III
I II
EFE Total Weighted Score

3.0

Medium
IV V VI
2.0

Low
VII VIII IX
1.0

The IE matrix result positions Ever Bilena Cosmetics, Inc. in the Grow and Build
Region, specifically under cell II of the matrix, which leans on the following strategies:
market penetration; market development, product development and backward, forward,
or horizontal integration. It suggests an intensive and tactical strategies. The result is
from plotting the Internal Factor Evaluation (IFE) total weighted score of 2.65 (located in
the average region) and External Factor Evaluation (EFE) scored a total weighted mean
of 3.09 (located in the high region).

Relevance of IE Matrix
The Internal-External (IE) Matrix can be divided into three major regions that
have different strategy implications. First, the prescription for divisions that fall into cells
I, II, or IV can be described as grow and build. Intensive (market penetration, market
development, and product development) or integrative (backward integration, forward
integration, and horizontal integration) strategies can be most appropriate for these
divisions. Second, divisions that fall into cells III, V, or VII can be managed best withhold
and maintain strategies; market penetration and product development are two
commonly employed strategies for these types of divisions. Third, a common
prescription for divisions that fall into cells VI, VIII, or IX is harvest or divest. Successful
organizations are able to achieve a portfolio of businesses positioned in or around cell I
in the IE Matrix.

6.5) Grand Strategy (GS) Matrix

The Grand Strategy Matrix has become a popular tool for formulating feasible
strategies, along with the SWOT Analysis, SPACE Matrix, BCG Matrix, and IE Matrix.
Grand strategy matrix is the instrument for creating alternative and different strategies
for the organization. All companies and divisions can be positioned in one of the Grand
Strategy Matrix’s four strategy quadrants. The Grand Strategy Matrix is based on two
dimensions: competitive position and market growth.

GS Matrix

Rapid Market Growth

Quadrant II Quadrant I
Strong Competitive Position
Weak Competitive Position

Quadrant III Quadrant IV

Slow Market Growth

 The Grand Strategy Matrix positioned Ever Bilena Cosmetics, Inc. under
Quadrant I, which suggests the following strategies: market development, market
penetration, product development, forward integration, backward integration, horizontal
integration, and related diversification. Companies located in Quadrant I of this Matrix
are in an excellent strategic position. This means the company has strong competitive
base and is operating in the fast growing market of the cosmetic industry.

Relevance of GS
Data needed for positioning SBUs in the matrix is derived from the portfolio
analysis. This matrix offers feasible strategies for a company to consider which are
listed in sequential order of attractiveness in each quadrant of the matrix. The efficiency
of the management greatly depends upon adoption of and pursuing the strategies
consistent with the market and competitive position of the firm.

6.6) Tally of Alternative Strategies from Matching Stage Matrices

Strategic decision making tools can be methodologically grouped into three
stages, with the portfolio analysis representing its core. Portfolio methodology with all its
limitations offers a solid ground in the strategy formulation process especially for
companies in transition economies inexperienced in the strategic planning process. The
basic idea is to enable companies build grounds for sustainable or long-term
competitive advantage.

Tally of Alternative Strategies from Matching Stage Matrices

SWOT SPACE BCG IE GS Total

1. Forward Integration - X X X X 4
2. Backward Integration - X X X X 4
3. Horizontal Integration - X X X X 4
4. Market Penetration X X X X X 5
5. Market Development X X X X X 5
 6. Product Development X X X X X X
7. Related Diversification X X - - X 3
8. Unrelated Diversification - - - - - -
9. Retrenchment - - - - - -
10. Divestiture - - - - - -
11. Liquidation - - - - - -

Relevance of Tallying
Strategy involves the action plan of a company for building competitive
advantage and increasing its triple bottom line over the long-term. The action plan
relates to achieving the economic, social, and environmental performance objectives; in
essence, it helps bridge the gap between the long-term vision and short-term decisions.
A balanced scorecard is a tool sometimes used to evaluate a business’s overall
performance.

6.7) Quantitative Strategic Planning Matrix (QSPM)

Quantitative Strategic Planning Matrix (QSPM) is a high-level strategic
management approach for evaluating possible strategies. Quantitative Strategic
Planning Matrix or a QSPM provides an analytical method for comparing feasible
alternative actions. The QSPM method falls within so-called stage 3 of the strategy
formulation analytical framework.

Table of Quantitative Strategic Planning Matrix

Top Alternative
Top Alternative
Strategy 3
Strategy 1
Top Alternative Product
Market
Strategy 2 Development
Penetration
Market Develop New
Trio-
Development Makeup
Collaboration
Develop New Foundations that
with an
Market Segment has wide Range
Influential V-
to Increase Market Shade suitable
logger and
Share by for Filipina Skin
Famous Local
Marketing to Niche Tones with
Celebrity for a
Audience Appealing Eco-
Makeup
friendly Package
Collection
Design
Key Factors Weight AS TAS AS TAS AS TAS
Opportunities
O1. TRAIN 2 – Tax Reform for Attracting Better
0.02 - - -
and High-Quality Opportunities Bill
O2. Rise in GDP: Philippine Gross Domestic
0.04 3 0.12 2 0.08 3 0.12
Product (GDP) Forecast in 2019
O3. Over 6% Growth of Cosmetic Industry due
to Increase in Disposable Income in the Asia- 0.08 3 0.24 4 0.32 4 0.32
Pacific Region by 2022
O4. Increase and Shift in Cosmetic Market
0.05 4 0.20 4 0.20 4 0.20
Demographic
O5. Growing Market for Halal-Certified
0.07 1 0.07 4 0.28 1 0.07
Cosmetic Products
O6. Signs of Demand for Men’s Cosmetics
0.07 2 0.14 4 0.28 3 0.21
Especially in Asia
O7. Strong Impact of Peer Recommendation on
0.10 4 0.40 4 0.40 4 0.40
Makeup Products through Social Media
O8. Huge Influence of Beauty Vlogging through
0.11 4 0.40 4 0.40 4 0.40
Youtube
O9. Appeal of Eco-Friendly Packaging 0.09 3 0.27 1 0.09 4 0.32
O10. Sustainable Switch to Refillable Cosmetic
0.09 2 0.18 1 0.09 1 0.09
Packaging
Threats
T1. Filipino Celebrities and Beauty V-loggers
0.11 4 0.44 2 0.22 4 0.44
Launching Their Own Make-up Line
T2. E-Commerce – Emergence of Online
0.08 4 0.32 4 0.32 4 0.32
Beauty Shops and Applications
T3. Regulation of Cosmetics in the Philippines 0.02 - - -
T4. ASEAN Harmonized Cosmetic Regulatory
0.02 - - -
Scheme
T5. ASEAN Cosmetic Directive 0.04 - - -
Total Weight for Opportunities and Threats 1.00
Strengths
S1. Dominates All Distribution Channels in the
0.09 3 0.27 2 0.18 3 0.27
Philippines
S2. Expertise in the Industry 0.05 3 0.15 4 0.20 3 0.15
S3. Good Quality Makeup Products at
0.13 4 0.52 3 0.39 3 0.39
Affordable Price Point
S4. All Products Are Cruelty-Free, Paraben-
0.07 4 0.28 4 0.28 4 0.28
Free, and Lead-Free
S5. New Storage Warehouse 0.05 3 0.15 1 0.05 3 0.15
S6. Organize Monthly Training for Sales Team 0.04 - - -
S7. Socially Responsible Corporation 0.07 - - -
Weaknesses
W1. Weak Brand Design – Unappealing
0.12 4 0.48 1 0.12 4 0.48
Packaging
W2. Weak Brand Image – Prejudice against
0.12 4 0.48 4 0.48 3 0.26
EBCI Products
W3. Limited Shade Range for Base Makeup
0.08 3 0.24 1 0.08 4 0.32
Products
W4. Timeline of Project and Activities are not
0.05 - - -
Strictly Followed
W5. Weak Sponsorship Management –
0.05 - - -
Sponsorships are not Strictly Observed
W6. Slow Product Development Process 0.08 3 0.24 1 0.08 3 0.24
Total Weight for Opportunities and Threats 1.00
Sum Total Attractiveness Score Sum Sum Sum
of TAS of TAS of TAS
5.59 4.54 5.43

Relevance of QSPM
QSPM approach attempts to objectively select the best strategy using input from
other management techniques and some easy computations• The QSPM method uses
inputs from stage 1 analyses, matches them with results from stage 2 analyses, and
then decides objectively among alternative strategies. Conceptually, the QSPM in stage
3 determines the relative attractiveness of various strategies based on the extent to
which key external and internal critical success factors are capitalized upon or
improved. The relative attractiveness of each strategy is computed by determining the
cumulative impact of each external and internal critical success factor.
Detailed Instructions
FONT TYPE: ARIAL
FONT SIZE: 12
SPACING: 1.5
Chapter SIX
(Delete this)
STRATEGY FORMULATION OF (WRITE HERE THE NAME OF COMPANY)
(WRITE HERE NATURE OF BUSINESS AND PRODUCT OR SERVICES BEING OFFERED BY THE COMPANY;
short sentence)

(Introductory Paragraph for Chapter 6. This chapter is all about generation of

alternative strategy, evaluate those alternatives and choose a specific course of action
to achieve its mission and objectives. Strategy-Formulation Framework and its stages
must be also written in this introductory Paragraph.) [– 3 sentences min]

By this time, the student or strategist should realize that strategy formulation consist of 3
stages.

Stage 1 Input Stage

Summarizes the basic input information (from Chapter 4 and 5) needed to formulate
strategies
Consists of the EFE Matrix, the IFE Matrix, and the Competitive Profile Matrix (CPM)

Stage 2 Matching Stage

Focuses on generating feasible alternative strategies by aligning key external and
internal factors
Techniques include the Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix,
the Strategic Position and Action Evaluation (SPACE) Matrix, the Boston Consulting
Group (BCG) Matrix, the Internal-External (IE) Matrix, and the Grand Strategy Matrix

Stage 3 Decision Stage

Involves the Quantitative Strategic Planning Matrix (QSPM)
Reveals the relative attractiveness of alternative strategies and thus provides objective
basis for selecting specific strategies
 6.1) Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix
(Definition and principles of SWOT Analysis must be explained here. How SWOT
Analysis is being constructed should be also mentioned here. For review of creating
SWOT Matrix check pages 205 to 208 of textbook.) [– 3 quality sentences]
Figure 6._ : SWOT Matrix of (Company)
(Make it sure this Matrix will fit in one page only by adjusting font size from 8 to 6, if necessary)
Strengths
S1. (Copy paste the exact sentence from IFE)
INTERNAL S2.
FACTORS S3.
S4.
S5.
(# of strengths must be the same inside IFE)
EXTERNAL FACTORS
Opportunities S-O Strategies (Type)
O1. (Copy paste the exact sentence from EFE)
O2. (Minimum of 4 Strategic Options, check page
O3. 206 for suggested SO strategies; Be specific
O4. in thinking of strategies; Use of strengths to
O5. take advantage of opportunities)
(# of opportunity must be the same inside EFE)
Strategy 1 Generated [factor source] –
Alternative Strategy Classification
Strategy 2 Generated [factor source] –
Alternative Strategy Classification
Strategy 3 Generated [factor source] –
Alternative Strategy Classification
Strategy 4 Generated [factor source] –
Alternative Strategy Classification
Threat S-T Strategies (Type)
T1. (Copy paste the exact sentence from EFE)
T2. (Minimum of 4 Strategic Options, , check page
T3. 206 for suggested ST strategies; Be specific
T4. in thinking of strategies; Use of strengths as
T5. ways to solve or avoid/mimize impact of
(# of threat must be the same inside EFE) threat)
Strategy 1 Generated [factor source] –
Alternative Strategy Classification
Strategy 2 Generated [factor source] –
Alternative Strategy Classification
Strategy 3 Generated [factor source] –
Alternative Strategy Classification
Strategy 4 Generated [factor source] –
Alternative Strategy Classification
Weaknesses
W1. (Copy paste the exact sentence from IFE)
W2.
W3.
W4.
W5.
(# of weaknesses must be the same inside IFE)
ALL FONTS INSIDE THIS TABLE:
FONT TYPE: ARIAL
W-O Strategies (Type) FONT SIZE: 8 to 6 (put in one page)
SPACING: 1.0
BOARDER, SHADING, HEIGHT AND WIDTH OF
THIS TABLE SHOULD BE SMALL AND CANNOT
(Minimum of 4 Strategic Options, check page
BE ADJUSTED
206 for suggested WO strategies;
(Delete this) Be specific in
thinking of strategies; Take advantage of
opportunities by overcoming weaknesses)
Strategy 1 Generated [factor source] –
Alternative Strategy Classification
Strategy 2 Generated [factor source] –
Alternative Strategy Classification
Strategy 3 Generated [factor source] –
Alternative Strategy Classification
Strategy 4 Generated [factor source] –
Alternative Strategy Classification
W-T Strategies (Type)
(Minimum of 2 Strategic Options, , check page
206 for suggested WT strategies; Be specific in
thinking of strategies; Act to minimize
weaknesses and avoid threats.)
Strategy 1 Generated [factor source] –
Alternative Strategy Classification
Strategy 2 Generated [factor source] –
Alternative Strategy Classification
(Note: Be specific in thinking and generating strategies inside this matrix. By undergoing
this process of matching, the strama student would be able to explore all possible
solutions. These generated strategies inside the SWOT matrix will be useful in Chapter
7: Strategy Implementation)

Write one example of important strategy derived from each quadrant

Quadrant Example of Significant Strategies from the Quadrant

S.O. (Copy paste one example of strategy from this quadrant)
W.O. (Copy paste one example of strategy from this quadrant)
S.T. (Copy paste one example of strategy from this quadrant)
W.T. (Copy paste one example of strategy from this quadrant)

Table 6._ : Frequency of Identified Alternative Strategies from the SWOT Matrix
(This is based on appearance of alternative strategies in all quadrant of SWOT)

Frequency in
Alternative Strategies
SWOT Matrix
1. Forward Integration
2. Backward Integration
3. Horizontal Integration ALL FONTS INSIDE THIS TABLE:
4. Market Penetration FONT TYPE: ARIAL
FONT SIZE: 10
5. Market Development SPACING: 1.0
BOARDER, SHADING, HEIGHT AND WIDTH OF
THIS TABLE SHOULD BE SMALL AND CANNOT
6. Product Development BE ADJUSTED
7. Related Diversification (Delete this)

8. Unrelated Diversification
9. Retrenchment
10. Divestiture
11. Liquidation

Relevance of SWOT
After discussion and construction of SWOT Matrix, relevance will proceed. In this
relevance analysis, the student must identify the top 3 (or 4) Alternative Strategies with
highest frequencies in the table above. The alternative strategies are tallied at the end
of this chapter. The student may mention examples of specific strategies from those top
3 alternative strategies. All the generated strategies can serve as starting point for deep
discussion. The student or strategist must relate or check the alignment of the result of
SWOT Matrix to the current situation of the company. Also, the student can also
comment if the company is already doing or not yet doing this strategies or dwelling in
this strategies already. [– 3 sentences min]

Example. HI, MD and PD are identified

here.

Example. HI, MD and RD are identified

here.
 Example. In this case, the identified
strategies are FI, BI, HI and MD

6.2) Strategic Position and Action Evaluation (SPACE) Matrix

(Definition and principles of Strategic Position and Action Evaluation must be explained
here. How SPACE is being constructed should be also mentioned here. For review of
creating SPACE Matrix check pages 208 to 212 of textbook.) [– 3 quality sentences]

Next, the strama student must compute the average score for FP, CP, IP and SP based
on the variables (opportunities, threats, strengths and weaknesses) and their numerical
value rates.

Table 6. _ : SPACE Matrix for (Company)

Financial Position (FP) Rate
(Copy and Paste here KEY Strength and Weakness Factors that falls under (Same Rate w/
the Internal Dimension of Financial Position) that in the last
table in Chap
5)
(allALL
rate here
FONTS INSIDE THIS TABLE:
mustFONTbe TYPE: ARIAL
FONT SIZE: 10
SPACING: 1.0
BOARDER, SHADING, HEIGHT AND WIDTH OF
THIS TABLE SHOULD BE SMALL AND CANNOT
BE ADJUSTED
(Delete this)
 positive)

Total

Competitive Position (CP) Rate

Industry Position (IP) Rate

(Copy and Paste here KEY Opportunity and Threat Factors that falls under (Same Rate w/
the External Dimension of Industry Position) that in the last
table in Chap
4)
(all rate here
must be
positive)

Total

Stability Position (SP) Rate

(Copy and Paste here KEY Opportunity and Threat Factors that falls under (Same Rate w/
the External Dimension of Stability Position) that in the last
table in Chap
4)
(all rate here
must be
negative)

Total
 (Copy and Paste here KEY Strength and Weakness Factors that falls under (Same Rate w/
the Internal Dimension of Financial Position) that in the last
table in Chap
5)
(all rate here
must be
negative)
Co
mp
uta
tio
n
Total
in
SPACE

FS average = Total Rate / Number of Factor = ( + __ )

IP average = Total Rate / Number of Factor = ( + __ )
SP average = Total Rate / Number of Factor = ( - __ )
CP average = Total Rate / Number of Factor = ( -__ )

X axis: IP average + CP average = (+__ ) + (- __ ) = + ()

Y axis: FS average + SP average = (+ __ ) + (- __ ) = - ()

Figure 6. _ : SPACE Matrix of Company

FS
6

Conservative 4 Aggressive
3

1
-6 -5 -4 -3 -2 -1 1 2 3 4 5 6
CA IS
-1

-2

-3

Defensive -4 Competitive

-5
 ES

(student can also use this graphic SPACE graph, just enlarge this, the graphic below)

(Note: Draw a directional vector to show the positioning of the company. Logo of the company must be
placed also near to that vector. The SPACE figure drawing object above can be expanded which can be
used, in case of error occur in editing the figure)

Relevance of SPACE

After discussion and construction of SPACE Matrix, relevance will proceed. In the
analysis, the student must write and explain which quadrant does the company fall.
Then, all the feasible alternative strategies being recommended by the directional vector
in a quadrant must be mentioned here (check page 208 for the feasible strategies in
each quadrant or powerpoint lecture slide). The alternative strategies are tallied at the
end of this chapter. The student or strategist must relate or check the alignment of the
result of SPACE Matrix to the current situation of the company. Also, the student can
also comment if the company is already doing or already in that position. Proof,
indicators, evidence must be mentioned here especially in oral defense to prove that the
company must really be in aggressive, competitive, defensive or conservative
positioning. [– 3 quality sentences]

6.3) Boston Consulting Group (BCG) Matrix

(Definition and principles of BCG must be explained here. How BCG is being
constructed should be also mentioned here. For review of creating BCG Matrix check
pages 212 to 216 of textbook.) [– 3 quality sentences]

Figure 6. __ : BCG Matrix of (Company)

Relative Market Share Position

Low
High Medium
1.0 0.50 0.0
High +20
Industry Sales Growth Rate (Percentage)

II STARS I QUESTION MARKS

Medium 0

III CASH COWS IV DOGS

Low -20

Note: Locate in the BCG Matrix if the company is in quadrant of stars, question marks,
cash cows or dogs. Logo of the company must be placed also.
Must also show and explain here the information and relevant computation on relative
market share and industry growth rate.

Information and Computations on Related Market Share

-(min of 2 sentence explanations with computations)

Information and Computations on Industry Sales Growth Rate

-(min of 2 sentence explanations with computations)

Relevance of BCG

After discussion and construction of BCG Matrix, analysis will proceed. The student or
strategist must explain what quadrant does the company fall. In this analysis, the
student must identify the feasible Alternative Strategies or Alternative Strategies being
recommended in the corresponding Quadrant. (check page 215 for the feasible
strategies in each quadrant or powerpoint lecture slide) The alternative strategies are
tallied at the end of this chapter. The student or strategist must relate or check the
alignment of the result of BCG Matrix to the current situation of the company. Also, the
student can also comment if the company is already doing or already in that quadrant.
Proof, indicators, evidence must be mentioned here especially in oral defense to prove
that the company is in question marks, stars, cash cows or dogs. [– 3 quality sentences
min]

6.4) Internal-External (IE) Matrix

(Definition and principles of Internal and External (I.E.) Evaluation must be explained
here. How IE Matrix can be constructed must be also mentioned here. For review of
creating IE Matrix check pages 216 to 219 of textbook.) [– 3 quality sentences]
Figure 6. _ : IE Matrix of Company

IFE Total Weighted Score

Strong Average Weak

4.0 3.0 2.0 1.0

High III
I II
EFE Total Weighted Score

3.0
Delete this instruction
Medium
IV V VI
Plot the score of IFE in the top most
horizontal axis and EFE score in the left most
vertical axis. Then extend the lines, until
2.0 intersection is visible

Low
VII VIII IX
1.0

Note: Locate in the I.E. Matrix if the company is in region of grow and build, hold and
maintain or harvest or divest. Logo of the company must be placed also in that region.

Must also show and explain here again the score in EFE and IFE

Information about IFE

-(min of 2 sentence explanations regarding total score of IFE and its interpretation)

Information about EFE

-(min of 2 sentence explanations regarding total score of EFE and its interpretation)

Relevance of I.E.
After discussion and construction of IE Matrix, ANALYSIS will proceed. The analysis
must explain which cell or zone does the company fall, based on EFE and IFE score.
The student or strategist must relate or check the alignment of the result of IE Matrix to
the current situation of the company. Also, the student can also comment if the
company is already doing the harvesting or divesting, holding and maintaining or
growing and building. In the ANALYSIS, the student must also identify the feasible
Alternative Strategies or Alternative Strategies being recommended in the region in the
cell. (check page 217 for the feasible strategies in each quadrant or powerpoint lecture
slide) The alternative strategies are tallied at the end of this chapter. [– 3 quality
sentences min]

6.5) Grand Strategy (GS) Matrix

(Definition and principles of Grand Strategy Evaluation must be explained here. How
GS is being constructed should be also mentioned here. For review of creating GS
Matrix check pages 219 to 220 of textbook.) [– 3 quality sentences]

GS Matrix *Note: Any industry whose annual growth in sales

exceeds 5% could be considered to have rapid
growth.
Rapid Market Growth (Delete this)

Quadrant II Quadrant I
Strong Competitive Position
Weak Competitive Position

Quadrant III Quadrant IV

 Slow Market Growth

Note: Locate in the GS Matrix if the company is in quadrant I, II, III or IV. Logo of the
company must be placed also inside the GS Matrix.

Must also show and explain here about market growth and competitive position
pertaining to GS Matrix.

Information about market growth

-(min of 2 sentence explanations)
*Note: Any industry whose annual growth in sales exceeds 5% could be considered to
have rapid growth.

Information about competitive position

-(min of 2 sentence explanations)

Relevance of GS

After discussion and construction of GS Matrix, Analysis will proceed. The analysis must
explain which quadrant does the company fall, based on competitive position and
market growth. The student or strategist must relate or check the alignment of the result
of GS Matrix to the current situation of the company. Also, the student can also
comment if the company is already doing or already in that quadrant.) In the analysis,
the student must identify the feasible Alternative Strategies or Alternative Strategies
being recommended in the quadrant where the company is located. (check page 220 for
the feasible strategies in each quadrant or powerpoint lecture slide). Proof, indicators,
evidence must be mentioned here especially in oral defense to prove that the company
is in quadrant I, II, III or IV in the GS Matrix. The alternative strategies are tallied at the
end of this chapter. [– 3 quality sentences]

6.6) Tally of Alternative Strategies from Matching Stage Matrices

(Discussion on tallying of strategies that came from evaluation of SWOT, SPACE, BCG,
IE and GS must be explained here. This is still part of the Matching stage of strategy
formulation framework wherein this will reveal the top 3 Alternative Strategy) [– 1
sentences]

Tally of Alternative Strategies from Matching Stage Matrices

SWOT SPACE BCG IE GS Total

1. Forward Integration (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)
2. Backward Integration (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)
3. Horizontal Integration In the tallying,
(use x symbol)
use X(usesymbol
(use x symbol) x symbol) in (use
strategy
x symbol) (use x symbol) (use # symbol)

4. Market Penetration occurrence

(use x symbol)
for the matrix
(use x symbol)
column,
(use x symbol)
instead of(use x symbol)
(use x symbol) (use # symbol)

5. Market Development Number.

(use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)

6. Product Development (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)
Of course, use Number
(use x symbol)
symbol for
(use x symbol)
total
(use x symbol) (use x symbol) (use # symbol)
7. Related Diversification (use x symbol)
column.
8. Unrelated Diversification (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)

9. Retrenchment (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)
Check example below
10. Divestiture (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)

11. Liquidation (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use x symbol) (use # symbol)

Relevance of Tally Table

After discussion and construction of Tally of Alternative Strategies, Analysis will
proceed. In the evaluation, the student must identify and highlight the top 3 Alternative
Strategies that has the highest frequency. Take note that the Top 3 alternative
strategies here have no ranking or prioritization. [– 3 quality sentences]

In rare situation, sometimes Top 4 Alternative Strategies can be generated.

 Example of Tallying. Based on the tallying, the highest are Backward Integration,
Horizontal Integration and Unrelated Diversification.
(Delete this example of tallying)

6.7) Quantitative Strategic Planning Matrix (QSPM)

(Definition and principles of QSPM must be explained here. QSPM is the decision stage
where best strategies could be achieved. How QSPM is being constructed should be
also mentioned here. ) [– 3 quality sentences]

Table of Quantitative Strategic Planning Matrix

Top Alternative Top Alternative Top Alternative

Strategy 1 Strategy 2 Strategy 3
(based on tallying table) (based on tallying table) (based on tallying table)
Key Factors Weight AS TAS AS TAS AS TAS
Opportunities
O1.
Use Same 8 Opportunity Factors from Do not duplicating the scores per factor in order
Same weight with EFE (delete this text book)

EFE to emphasize the relative attractiveness of each

strategy . So, no double 1’s, 2’s, 3’s and 4’s in a
(delete this text book reminder)
raw
If the factor has no effect, then put dash to all in
the raw. Read pp 223 to 224 of textbook
(delete this text box)
Threats
T2.
Use Same 8 Threat Factors from EFE
(delete this text book)

ALL FONTS INSIDE THIS TABLE:

FONT TYPE: ARIAL
FONT SIZE: 10
SPACING: 1.0
BOARDER, SHADING, HEIGHT AND WIDTH OF
THIS TABLE SHOULD BE SMALL AND CANNOT
BE ADJUSTED
(Delete this)

Total Weight for Opportunities and Threats 1.00

Strengths
E (delete this text book)
S1.
Use same 8 Strength Factors from IFE
(delete this text book)

Weaknesses
W1.
Use same 8 Weakness Factors from
IFE
(delete this text book)

Total Weight for Opportunities and Threats 1.00

Sum Total Attractiveness Score Sum Sum Sum
of TAS of TAS of TAS

Note: It is advisable that the strama student must double check the rates and other
computations inside the QSPM in order to validate the resulting prioritization of strategies.

1 – not attractive, 2 – somewhat attractive, 3 – reasonably attractive, 4 – highly attractive

Attractiveness Scores (AS) are determined by examining each key external or internal
factor, one at a time, and asking the question “Does this factor affect the choice of
strategies being made?” (Does Opportunity No. 2 highly affects the strategy no. 1? Or
Does strategy no. 1 attractive in capitalizing that opportunity 2, Does strategy no. 1
solves weakness no. 5?) If the answer to this question is yes, then the strategies should
be compared relative to that key factor (Please check complete instruction of QSPM
below or in pages 221 - 224).

(After filling up and computing the Sum of Total Attractiveness Score for each of
the alternative strategy, the student or strategist must explain the new ranking and
prioritization of the strategies to be implemented)

Relevance of QSPM
After discussion and construction of QSPM, ANALYSIS will proceed. In the ANALYSIS,
the student or strategies must report which of the 3 alternative strategies is the most
attractive, the ranking and the magnitude of differences. The full blown details of the
implementation of the strategies will be in chapter 7. (Note: Sometimes the OM student
may need to further check if the Strategy Ranked #1 is really the best strategy. Result of
QSPM is a mathematical approach, intuition and experience maybe applied. It is
advisable that the strama student must consult his/her friend or connection to the
company) [– 3 quality sentences]

Ranking of Alternative Alternative Strategy Sum Total Attractiveness

Strategy Score obtained from QSPM
1
2
3
 Instruction in Constructing the QSPM (delete this in the actual Strama Paper)
Conceptually, the QSPM determines the relative attractiveness of various strategies based on the extent to which key external and internal critical
success factors are capitalized upon or improved. The relative attractiveness of each strategy within a set of alternatives is computed by
determining the cumulative impact of each external and internal critical success factor. Any
number of sets of alternative strategies can be included in the QSPM, and any number of strategies can make up a given set, but only strategies
within a given set are evaluated relative to each other.

Step 1 Make a list of the firm’s key external opportunities/threats and internal strengths/weaknesses in the left column of the QSPM. This
information should be taken directly from the EFE Matrix and IFE Matrix.

Step 2 Assign weights to each key external and internal factor. These weights are identical to those in the EFE Matrix and the IFE Matrix. The
weights are presented in a straight column just to the right of the external and internal critical success factors.

Step 3 Examine the Stage 2 (matching) matrices, and identify alternative strategies that
the organization should consider implementing. Record these strategies in the top row of the QSPM. Group the strategies into mutually
exclusive sets if possible.

Step 4 Determine the Attractiveness Scores (AS) defined as numerical values that indicate the relative attractiveness of each strategy
considering a single external or internal factor. Attractiveness Scores (AS) are determined by examining each key external or internal factor, one
at a time, and asking the question “Does this factor affect the choice of strategies being made?” If the answer to this question is yes, then the
strategies should be compared relative to that key factor. Specifically, Attractiveness Scores should be assigned to each strategy to indicate the
relative attractiveness of one strategy over others, considering the particular factor.

The range for Attractiveness Scores is

1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and 4 = highly attractive.

By attractive, we mean the extent that one strategy, compared to others, enables the firm to either capitalize on the strength, improve on the
weakness, exploit the opportunity, or avoid the threat. Work row by row in developing a QSPM. If the answer to the previous question is no,
indicating that the respective key factor has no effect upon the specific choice being made, then do not assign Attractiveness Scores to the
strategies in that set. Use a dash to indicate that the key factor does not affect the choice being made.

Note: If you assign an AS score to one strategy, then assign AS score(s) to the other. In other words, if one strategy receives a dash, then all
others must receive a dash in a given row.

Step 5 Compute the Total Attractiveness Scores. Total Attractiveness Scores (TAS) are defined as the product of multiplying the weights (Step
2) by the Attractiveness Scores (Step 4) in each row. The Total Attractiveness Scores indicate the relative attractiveness of each alternative
strategy, considering only the impact of the adjacent external or internal critical success factor. The higher the Total Attractiveness Score, the
more attractive the strategic alternative (considering only the adjacent critical success factor).

Step 6 Compute the Sum Total Attractiveness Score. Add Total Attractiveness Scores in each strategy column of the QSPM. The Sum Total
Attractiveness Scores (STAS) 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. The magnitude of the difference between the Sum
Total Attractiveness Scores in a given set of strategic alternatives indicates the relative desirability of one strategy over another.

Note the use of dashes to indicate which factors do not affect the strategy choice being considered. If a particular factor affects one strategy but
not the other, it affects the choice being made, so attractiveness scores should be recorded for both strategies. Never rate one strategy and not
the other.

Note that there are no double 1’s, 2’s, 3’s, or 4’s in a row. Never duplicate scores in a row. Never work column by column; always prepare a
QSPM working row by row. If you have more than one strategy in the QSPM, then let the AS scores range from 1 to “the number of strategies
being evaluated.” This will enable you to have a different AS score for each strategy. These are all important guidelines to follow in developing a
QSPM. Avoid giving each strategy the same AS score. Again work row by row, not column by column. These are important guidelines to follow in
constructing a QSPM.

(Note: Sometimes the OM student may need to further check if the Strategy Ranked #1 here in QSPM is really the best strategy.
Result of QSPM is a mathematical approach, intuition and experience maybe applied.)