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Strategy-Formulation Analytical

Framework’s Stages
External Factor Evaluation
OPPERTUNITIES Weight Rate Score
Use of Trans fat oils 0.08 4 0.32

Less price 0.12 4 0.48

Low fat food 0.08 2 0.16

Wide variety in menu 0.10 3 0.30

Ambience 0.12 3 0.36


External Factor Evaluation
Threat Weight Rate Score
Direct Competitors Are much .04 4 0.16
larger.
Global Recession .08 3 0.24

Competitors Financial Position .07 4 0.28

Fraudulent Cases .03 2 0.06

Customer Awareness .06 2 0.12

Dynamic Environment .03. 2 0.06

Total of Opportunities & Threat


Internal Factor Evaluation
Strength Weight Rate Score
Customer liking .09 4 0.36

Considered High ranking .08 4 0.32


brand
Innovators in product .11 4 0.44
services
Earning from international .10 3 0.30
market
Rich in taste (sandwich) .12 4 0.48
then its competitors
Internal Factor Evaluation
Weakness Weight Rate Score
Net income decrease .10 2 0.20

Decline revenue overseas .10 2 0.20

Restaurant closures .08 2 0.16

Increase in cost of .13 2 0.26


operations
Decline in assets and .09 2 0.18
share holder equity
Total of Strength 1 2.90
& Weakness
Success Donalds Rating WENDEY’
Factor Rating S

Innovators .05 3 0.15 3 0.15 4 0.2

Sales .10 4 0.40 4 0.40 3 0.3


Efficiency

Price .10 4 0.40 4 0.40 4 0.4


Competition

Global .20 4 0.80 3 0.60 2 0.4


Expansion

Product range .10 4 0.40 4 0.40 3 0.4

Advertising .20 4 0.80 3 0.60 2 0.4

Market Share .05 4 0.20 3 0.15 2 0.1

Product Quality .20 4 0.80 4 0.80 4 0.8

TOTAL 1 3.95 3.5 3.0


3.
Strategy-Formulation Analytical
Framework’s Stages
Strengths – S Weaknesses – W
Customer liking Net income decrease
Considered High ranking Decline revenue overseas
brand
Innovators in product Restaurant closures
services Increase in cost of
Earning from international operations
market Decline in assets and share
Rich in taste (sandwich) then holder equity
its competitors

Opportunities – O SO Strategies WO Strategies


Use of Trans fat oils
(S2+O2) = (W3,4+O1,2) = Possible Availability
Less price (S4+O3) = Development of Social Every Time
Low fat food Net Work
Wide variety in menu (S1+O1,5) = Service Development
Ambience (S7,S8+O4) = Offering Seasonal
Discount

Threats – T ST Strategies WT Strategies


Direct Competitors Are much
(S3+T2) = Strong Political Analysis (W2+T3) = Increased Brand Range
larger. (S9+T4) = Market Diversification
Global Recession (S5+T1) = Reasonable Spread Margin
Competitors Financial (S3+T3) = Continue Development
Position
Fraudulent Cases
SPACE Matrix
Aggressive
Conservative
Defensive
Competitive
Internal Dimensions

Financial Strength
Competitive Advantage
External Dimensions

Environmental Stability (ES)


Industry Strength (IS)
Internal Strategic External Strategic Position
Position
Financial Strength Rate Environmental Stability Rate

Current Ratio 5 (1.33) Technological changes -1

Return On Investment 5 (11%) Rate of inflation -2

Leverage 1 (2.89) Growth in Demand -3

Liquidity 4 (0.98) Price range of competing products -1

Working Capital 4 (0.79) Barriers to entry -4

Proprietary Ratio 2 (9.87%) Risk involved in business -4

Cash Cycle 5 Competition -1


TOTAL 26 TOTAL -16

AVERAGE (26/7) 3.71 AVERAGE (-16/7) -2.28


Internal Strategic Position External Strategic Position

Competitive Advantage Rate Industry Strength Rate

Market share -1 Growth potential 5

Customer Loyalty -1 Profit potential 4

capacity utilization -3 Financial stability 4

Technological know-how -1 Technological know-how 5

Control over suppliers & -1 Resource utilization 5


distributors

Ease of entry into market 4

TOTAL -7 TOTAL 27
AVERAGE(-7/5) -1.4 AVERAGE(27/6) 4.5
x-axis = CA(-1.4)+IS(4.5)=3.1

Y-axis = FS(3.71)+ES(-2.28)=1.43 FS
+6
Conservative +5 Aggressive
+4
+3
+2
+1

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

-2
-3

-4
Defensive Competitive
-5
-6
ES
IFE TOTAL SCORE

STRONG AVERAGE WEAK


3 to 4 2 to 2.99 1 to 1.99
E
F
E HIGH
3 to 4
T
O
T
Wendy’s
MEDIUM
A 2 to 2.99
L

S LOW
C 1 to 1.99
O
R
E
Hold & Maintain
RAPID MARKET GROWTH

Quadrant II Quadrant I
2. Market development 2. Market development
3. Market penetration 3. Market penetration
4. Product development 4. Product development
5. Horizontal integration 5. Forward integration
6. Divestiture 6. Backward integration
7. Liquidation 7. Horizontal integration
WEAK 8. Concentric diversification STRONG
COMPETITIVE COMPETITIVE
POSITION Quadrant III Quadrant IV POSITION
2. Retrenchment 2. Concentric diversification
3. Concentric diversification 3. Horizontal diversification
4. Horizontal diversification 4. Conglomerate
5. Conglomerate diversification
diversification 5. Joint ventures
6. Liquidation
SLOW MARKET GROWTH
Strategy-Formulation Analytical
Framework’s Stages
STRATEGIC ALTERNATIVES

Product Development Market Penetration

Strength Weight AS TAS AS TAS

Customer liking .09 4 .36 4 .36

Considered High .08 3 .24 3 .24


ranking brand
Innovators in .11 4 .44 4 .44
product services

Earning from .10 2 .20 4 .40


international market

Rich in taste .12 3 .36 3 .36


(sandwich) then its
competitors
STRATEGIC ALTERNATIVES

Product Development Market Penetration

Weakness Weight AS TAS AS TAS

Net income decrease .10 2 .28 4 .40

Decline revenue .10 1 .03 4 .40


overseas
Restaurant closures .08 --- --- --- ---

Increase in cost of .13 --- --- --- ---


operations
Decline in assets and .09 1 .04 4 .36
share holder equity
Opportunities
Use of Trans fat oils 0.08 3 .24 4 .32

Less price 0.12 4 . 48 4 .38

Low fat food 0.08 4 .32 3 .24

Wide variety in menu 0.10 3 .30 4 .40


STRATEGIC ALTERNATIVES

Product Development Market Penetration

Threat Weight AS TAS AS TAS

Direct Competitors .04 4 .16 4 .16


Are much larger.

Global Recession .08 2 .16 3 .24

Competitors .07 2 .14 4 .28


Financial Position

Fraudulent Cases .03 --- --- --- ---

Customer .06 2 .12 4 .24


Awareness

Dynamic .03 2 .06 2 .06


Environment
STRATEGIC ALTERNATIVES

Product Development Market Penetration

Weight AS TAS AS TAS

STAS 4.29 5.76


Both the strategies are highly desirable for Wendy’s
But! 2nd Strategy “Market Penetration” more
considerable than 1st “Product Development”.