Decision stage is the last stage of strategy formulation in which a tool is used called Quantitative Strategic Planning Matrix or QASM Matrix. There are a number of alternative strategies and the Quantitative Strategic Planning Matrix (QSPM) can be used to objectively evaluate the most suitable strategy among the list of all the alternative strategies. The data is collected and a matrix is developed by using quantitative method for strategic planning. The identification of the external & internal crucial success factor is regarded as the basis of QSPM Matrix. The relative attractiveness of feasible alternative action can be determined by only specially designed technique of QSPM Matrix.
The best alternative strategies are objectively indicated by this technique. The alternative strategies are objectively evaluated by using the inputs from the analysis of stage 1 & matching results from analysis of stage 2. In fact QSPM matrix is considered as the stage 3 while stage 1 includes the Internal Factor Evaluation Matrix, External Factor Evaluation Matrix & Competitive Profile Matrix and stage 2 includes SPACE Matrix, TOWS Matrix, SWOT Analysis, Internal External Matrix, BCG Matrix and Grand Strategy Matrix. All the required data ids obtained from these two stages.
Preparation of QSPM Matrix
There is a complete procedure of preparing QSPM matrix. First of all there are certain key external and internal factors. Strengths & weaknesses are included in the internal factor category while opportunities & threats are included in the external factor category. It is identical to old IFE & EFE in which all factors are given certain weight. The importance given to external & internal factors is specified through assigned weight. The sum of all the weights should be equal to
- When the weights are assigned to all the factors then the next step is to make analysis of the matrices of stage
- In order to point out the alternative strategies that should be implemented. The alternative strategies identified from the SPACE Matrix, TOWS, IE Matrix, BCG Matrix and Grand Strategy Matrix is listed in the top row of Quantitative Strategic Planning Matrix (QSPM).
Similar feasible alternatives are generated by these matching tools. However it is not necessary to evaluate every suggested alternative strategy by the matching techniques in a QSPM matrix. Sound intuitive judgments of the strategists are required in selecting the strategies to be included in the QSPM Matrix. When each strategy is assigned by certain weight then the attractiveness score of each strategy is determined & after that total attractiveness score is also ascertained. That strategy is most feasible that has highest total attractiveness score.
Steps in Preparation of Quantitative Strategic Planning Matrix
Following are some of the steps of preparation of QSPM matrix.
- In the left column of the Quantitative Strategic Planning Matrix (QSPM)
- In the left column of the Quantitative Strategic Planning Matrix (QSPM) key external opportunities & threats & internal strengths & weaknesses are listed
- Each key internal & external factor has assigned by certain weight
- The matching matrices stage 2 is examined so that alternative strategies are identified in order to consider the implementing decision.
- The Attractiveness Scores (AS) are determined
- The Total Attractiveness Scores are computed
- The Sum Total Attractiveness Score is computed
Following are some of the limitations of the Quantitative Strategic Planning Matrix (QSPM)
- Intuitive judgments & educated assumptions are required.
- The effectiveness of the QSPM depends on the prerequisite inputs from previous stages
- Only those strategies are evaluated that are related to one another in a given set
Advantages of QSPM Matrix:
Following are some of the advantages of the QSPM matrix.
- Consideration of set of strategies is made in a sequential or simultaneous manner
- The relevant internal & external factors are integrated in the decision making process