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176 PART 2 • STRATEGY FORMULATION

FIGURE 6-1
A Comprehensive Strategic-Management Model

Chapter 10: Business Ethics/Social Responsibility/Environmental Sustainability Issues

Perform
External Audit
Chapter 3

Implement
Generate, Implement Strategies—
Develop Vision Establish Evaluate, Strategies— Measure
and Mission Long-Term Marketing, and Evaluate
Statements Objectives and Select Management Finance, Performance
Issues
Chapter 2 Chapter 5 Strategies Accounting, R&D, Chapter 9
Chapter 6 Chapter 7 and MIS Issues
Chapter 8

Perform
Internal Audit
Chapter 4

Chapter 11: Global/International Issues

Strategy Strategy Strategy
Formulation Implementation Evaluation
Source: Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988): 40.

A Comprehensive Strategy-Formulation Framework

Important strategy-formulation techniques can be integrated into a three-stage decision-
making framework, as shown in Figure 6-2. The tools presented in this framework are
applicable to all sizes and types of organizations and can help strategists identify, evaluate,
and select strategies.
Stage 1 of the formulation framework consists of the EFE Matrix, the IFE Matrix, and the
Competitive Profile Matrix (CPM). Called the Input Stage, Stage 1 summarizes the basic input
information needed to formulate strategies. Stage 2, called the Matching Stage, focuses upon
generating feasible alternative strategies by aligning key external and internal factors. Stage 2
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,
called the Decision Stage, involves a single technique, the Quantitative Strategic Planning
Matrix (QSPM). A QSPM uses input information from Stage 1 to objectively evaluate feasi-
ble alternative strategies identified in Stage 2. A QSPM reveals the relative attractiveness of
alternative strategies and thus provides objective basis for selecting specific strategies.