Chapter 8 - Strategy Generation and Selection Overview Chapter 8 explains how to formulate effective strategies once the internal and external audits are completed. Chapter 8 presents and exemplifies six widely used strategic planning matrices: SWOT (Strengths-Weaknesses-Opportunities-Threats) Matrix, BCG (Boston Consulting Group) Matrix, SPACE (Strategic Position and Action Evaluation) Matrix, IE (Internal-External) Matrix, Grand Strategy Matrix, and the QSPM (Quantitative Strategic Planning Matrix). Chapter 8 also describes the nature and role of boards of directors in strategic planning. The Chapter 8 Learning Objectives presented in the textbook are reiterated below: 1. Describe a three-stage framework for choosing among alternative strategies. 2. Explain how to develop a Strengths-Weaknesses-Opportunities-Threats (SWOT) Matrix, Strategic Position and Action Evaluation (SPACE) Matrix, Boston Consulting Group (BCG) Matrix, Internal-External (IE) Matrix, and Quantitative Strategic Planning Matrix (QSPM). 3. Identify important behavioral, political, ethical, and social responsibility considerations in strategy analysis and choice. 4. Discuss the role of intuition in strategic analysis and choice. 5. Discuss the role of organizational culture in strategic analysis and choice. 6. Discuss the role of a board of directors in choosing among alternative strategies. Teaching Tips 1. This is arguably the most important chapter in the book, so we usually spend three or four 1.5-hour class sessions on this chapter. Six new, important matrices are presented that are widely used in strategic planning, so you need to make sure students can develop a SWOT, BCG, IE, SPACE, GRAND, and QSPM. 2. Figure 8-2 is very important because students need to understand the three stages in formulating strategies: Input, Matching, and Decision. Chapter 8 focuses on the Matching Stage. Make sure students understand that “matching internal with external factors” is the KEY to formulating strategies effectively. 3. The SWOT Matrix is the most widely used strategic planning matrix in the world, so carefully go over Figure 8-3 titled “A SWOT Matrix for a Retail Computer Store.” Note the matching notation after each strategy (S4, O3) because students will need to include this notation in the SWOT for their case company. Note the two basic alternative strategies faced by this store: 1) remodel existing store or 2) build a new store in new location. The QSPM presented later in this chapter will answer which of these two alternatives is best. 4. The BCG is the second most widely used strategic planning matrix in the world, so carefully go over the material and example BCG’s in the book. Perhaps the major strategy decision large firms face annually is what divisions/segments of the firm should we devote more or less resources in the future. Emphasize for students to be as “divisional as possible” in preparing all nine strategic planning matrices. Recommend that students prepare, if possible, a BCG by product and a BCG by region for their case company, to illustrate best where the team is taking the firm over the next three years. 5. Carefully cover the “QSPM for a Retail Computer Store” presented in Table 8-9 so students will understand the process of developing a QSPM. 6. Focus on the “Special Note to Students” at the end of this chapter. These sections that end each chapter are special, important tips for students to do well, primarily on their oral case analysis presentation. 7. This chapter is so important that we usually cover all the end-of-chapter review questions either as homework or classwork, or as a part of my lecturing. All these questions are designed to apply Chapter 8 concepts and techniques. Do one half of the review questions in class on day and the other half another day. Answers to End-of-Chapter Review Questions 1. Unilever has done really well for decades. How does Unilever do so well? How can they continue to prosper? Answer: As the 3rd-largest consumer products company Unilever has been successful due to its strategic responsiveness to changes in the company’s external environment. The top managers at Unilver do not hesitate to make such changes when they are warranted. For instance, Unilver began phasing out the use of the microplastics in all personal care products 2012 in response to pressure from environmental groups and scientists who complained that such components contribute to the degradation of the environment. 2. Give an internal and external opportunity of Unilever. Show how those two factors are related to reveal a feasible alternative strategy. Answer: One of Unilver’s primary internal strengths resides in the firm infrastructure activity of the company’s value chain. Its top management team is clearly tuned into the trends that continue to emerge in the company’s external environment and acts with speed and precision to exploit such opportunities whether they involve the development of new products or the liquidation of existing businesses. An external opportunity that faces Unilver is the growth of the consumer marketplace in emerging countries like China and India where consumers have the capacity to earn and spend more on desirable brands from the major consumer products companies. One of the strategies that Unilever has used successfully to develop the Indian market is to penetrate by increasing its stake in Hindustan Unilver to 67%. 3. What do you believe are the three major external opportunities that Unilever faces? Answer: The three major external opportunities that Unilver faces are economic growth in emerging markets, the increased availability of organic raw materials to be used in environmentally friendly products, and the economic recovery under way in the United States. 4. Develop a SPACE Matrix for Unilever. Explain the implications of your Matrix. Answer: As the chapter states the axes of the SPACE Matrix represent two internal dimensions (financial position [FP] and competitive position [CP]) and two external dimensions (stability position [SP] and industry position [IP]). The SP Axis refers to the volatility (stability) in the external environment is based on the expected impact of changes in core external factors such as technology, economy, demographic, seasonality, etc.) The IP axis is an indicator of the expected growth in the industry. The SPACE Matrix presented below indicates that Unilever is a strong competitor in an unstable industry that has reasonable growth prospects. Hence, the recommended profile is competitive with foci on market development, market penetration, product development, and vertical integration. 5. Develop a BCG Matrix for Unilever. Explain the implications of your Matrix. Answer: The BCG growth share matrix below depicts the revenue and profit shares of each of Unilever’s 4 main divisions: Refreshments (the Star), Foods (the Cash Cow), Home Care As is indicated in the chapter the implications for each business vary by its relative market share (competitive position) and the growth rate of the industry. The Question Mark (the Home Care division) in Quadrant 1 has relatively low relative market share position, yet it competes in a high-growth industry. This division is likely to need access to cash in order to become more competitive. Yet, its capacity to create returns is likely to be relatively low. Decisions need to be made about whether to strengthen this division by pursuing an intensive strategy (market penetration, market development, or product development) or to sell it. The Star (Refreshments) in Quadrant II represent the organization’s best long-run opportunities for growth and profitability. This divisions has a relatively high share of the market and operates in a high growth industry. This division should receive substantial investment to maintain or strengthen its dominant positions. Forward, backward, and horizontal integration; market penetration; market development; and product development are appropriate strategies for this division to consider. The Cash Cow (Foods) in Quadrant III has a high relative share of the market but competes in an industry that is characterized by low growth. This division generates cash in excess of its and makes financial resources available to other divisions within the portfolio. This division should be managed to maintain its strong position for as long as possible. Product development or diversification may be attractive strategies. However, as the division becomes weak, retrenchment or divestiture can become a more appropriate strategy. The Dog (Personal Care) in Quadrant IV has a relatively low share of the market and competes in a slow-growth industry. Because of its weak competitive position this business may be trimmed down through retrenchment or liquidated. It is also possible that this division may recover after strenuous asset and cost reduction, to become a viable, profitable division. 6. Develop a QSPM for Unilever that includes two strategies, six internal factors, and six external factors. What strategy appears to be best for Unilever to pursue? Answer: The two strategies that were compared using the QSPM Matrix were market development and retrenchment. Given the prevailing trends in both the internal and external environments it is clear that a market development strategy is preferable to a retrenchment strategy. 7. Do a Google search using the key terms “boards of directors.” What new information did you learn that was not given in the chapter? Answer: Boards of Directors often now include diverse roles such as Chief Diversity Officers to ensure inclusivity, and Cybersecurity Experts to address increasing digital threats. Additionally, there is a growing trend towards board evaluations and self-assessments to improve performance and governance. This modern approach highlights a shift towards more specialized expertise and rigorous oversight. 8. In preparing a SPACE Matrix, which axis would the European political and economic unrest fall under? Answer: In the lower right or competitive quadrant. In preparing a SPACE Matrix, European political and economic unrest would fall under the "External Environment" axis, specifically under "Threats". This axis evaluates external factors that could negatively impact the firm's strategic position, such as instability and uncertainty affecting market conditions and business operations. 9. In preparing a BCG Matrix, what would be the best range for the IGR axis as applied to the beverage industry? Answer: Students’ answers may vary. See page 267; refer to “The Boston Consulting Group (BCG) Matrix.” In the BCG Matrix, the Industry Growth Rate (IGR) axis for the beverage industry typically ranges from low to high growth. For the beverage industry, a common range might be 3% to 10% growth, reflecting varying segments such as rapidly growing functional drinks versus mature soda markets. This helps categorize products into Stars, Question Marks, Cash Cows, or Dogs based on their growth potential. 10. List four reasons why the IE Matrix is widely considered to be superior to the BCG Matrix. Answer: • The IE Matrix is based on 2 key dimensions: the IFE total weighted scores on the x axis and the EFE total weighted scores on the y axis. • IE Matrix can be divided into 3 major regions that have different strategy implications • IE Matrix has five product segments • IE Matrices are more effective to formulate strategies and allocate resources among divisions. 11. Is there a limit to the number of strategies that could be examined in a QSPM? Why? Answer: There is no limit because strategies may be examined sequentially or simultaneously. 12. Go to Adidas’ website and examine what you can find about the company’s board of directors. Evaluate Adidas’ board based on guidelines presented in the chapter. Answer: On Adidas’ website, the board of directors includes a mix of experienced leaders from diverse backgrounds. Evaluating Adidas’ board: 1. Diversity: The board features members with varied expertise and international experience. 2. Expertise: Includes professionals with backgrounds in finance, technology, and global business. 3. Independence: The board has independent members ensuring unbiased decision-making. Adidas’ board aligns well with effective governance guidelines, fostering a balance of experience, diversity, and independence. 13. Explain why the CEO of a firm should not also be chairperson of the board of directors. Answer: The CEO should not be the chairperson of the Board of Directors because they are responsible to effectively managing the Company. If they were Chair they could cover up any wrongdoings. 14. In preparing a QSPM, what should be done if the TAS for each strategy turns out to be identical? Answer: Students’ answers may vary, depending on their interpretation. See page 275, “The Quantitative Strategic Planning Matrix.” If the Total Attractiveness Scores (TAS) for each strategy in a QSPM are identical, the next steps are: 1. Reevaluate Factors: Ensure that the weights and attractiveness scores are accurately reflecting the strategic importance and impact of each factor. 2. Consider Qualitative Aspects: Assess non-quantifiable elements like strategic fit and alignment with organizational goals. 3. Seek Additional Data: Gather more information to differentiate the strategies based on their potential outcomes and implementation feasibility. 4. Consult Stakeholders: Engage with key decision-makers to provide insights on strategic preferences and practical considerations. 15. Summarize in your own words the “Special Note to Students” section given at the end of the chapter. Answer: Students must not only know the financial aspects/calculations but must be able to interpret and analyze these findings. The "Special Note to Students" emphasizes the importance of applying theoretical concepts from the chapter to real-world scenarios. It advises students to use case studies and practical examples to deepen their understanding, and encourages them to critically evaluate and discuss strategic frameworks. This approach helps bridge the gap between academic learning and practical application in strategic management. 16. Develop a Grand Strategy Matrix for Unilever and include one rival firm. Answer: 17. Explain what should be done if the SPACE vector coordinate point is (0, 0). Answer: If the SPACE Matrix vector coordinate point is (0, 0), it indicates a neutral position with no clear competitive advantage or disadvantage. Actions to consider include: 1. Reevaluate Factors: Review and adjust the weights and scores for accuracy. 2. Conduct Further Analysis: Explore additional strategic factors or market conditions. 3. Develop New Strategies: Focus on identifying and addressing underlying strengths and weaknesses. 4. Seek Expert Input: Consult with industry experts or stakeholders for insights and guidance. 18. Why on a QSPM should you work row by row instead of column by column? Answer: QSPM is designed to determine the relative attractiveness of feasible alternative actions. Hence it moves from Stage 1 to Stage 2 etc which is row by row and not column by column. 19. When constructing a SPACE Matrix, would it be appropriate to use a 1 to 10 scale for all axes? Answer: It is not appropriate as it depends on the type of organizations and the industry. Using a 1 to 10 scale for all axes in a SPACE Matrix can be appropriate as long as it maintains consistency and clarity. This scale allows for a more nuanced evaluation of factors such as industry attractiveness and competitive strength. However, ensure that the scale is consistently applied and clearly defined to avoid misinterpretation. 20. If Unilever has the leading market share in Russia, where along the top axis of a BCG would their Russia Operations be plotted? Answer: If Unilever’s Russia operations have leading market share the business would be classified as either a star (in the case that the market growth rate is high) or as a cash cow (in the case that the market growth rate is low). 21. Develop a SWOT Matrix for yourself. Answer: Students’ answers will vary, however they should show an understanding of: Strengths, Weaknesses, Opportunities and Threats Strengths: Strong problem-solving skills, effective communication, and adaptability. Weaknesses: Procrastination, occasional difficulty with delegation. Opportunities: Access to educational resources, networking events. Threats: High competition in desired field, evolving industry demands. SWOT Matrix: Leverage strengths and opportunities to address weaknesses and mitigate threats. Focus on professional development and expanding network to enhance career prospects. 22. Why is “matching” internal with external factors such an important strategic management activity? Answer: To enable the organization to know whether they have the capabilities to meet external changes. Matching internal with external factors is crucial because it aligns a firm's strengths and weaknesses with opportunities and threats in the market. This ensures strategies are realistic and achievable, enhances competitive advantage, and improves adaptability to changing conditions. It creates a cohesive approach that maximizes effectiveness and resource utilization. 23. Diagram the strategy formulation framework that includes three stages and nine analytical tools. Which stage and tool do you feel is most important? Why? Answer: Student answers will vary depending on the product/industry chosen. Hence, the importance of each stage and tool will vary. However, the students’ diagram on the three stages and nine analytical tools are similar for all students. Strategy Formulation Framework: 1. Stage 1: Environmental Analysis • Tools: PESTEL Analysis, Industry Analysis, SWOT Analysis 2. Stage 2: Internal Analysis • Tools: Value Chain Analysis, Financial Ratio Analysis, Resource-Based View 3. Stage 3: Strategy Development • Tools: TOWS Matrix, BCG Matrix, SPACE Matrix Most Important Tool: SWOT Analysis (Stage 1), as it integrates both internal and external factors, forming the foundation for strategic decision-making and identifying key areas for focus and improvement. 24. Develop an example SWOT Matrix for your college or university with two items in each quadrant. Make sure your strategies clearly exemplify “matching” and show this with (S1, T2) type notation. Answer: Student answers will vary. However, students should demonstrate their understanding of: • SWOT matrix namely: Strengths; Weaknesses; Opportunities • SO Strategies • WO Strategies • Threats & the ST Strategies • WT Strategies. SWOT Matrix: Strengths: 1. Strong academic reputation (S1) 2. Diverse student body (S2) Weaknesses: 1. Limited campus facilities (W1) 2. High tuition fees (W2) Opportunities: 1. Growing demand for online courses (O1) 2. Partnerships with local businesses (O2) Threats: 1. Increasing competition from other universities (T1) 2. Economic downturn affecting student enrollment (T2) Strategies: 1. Leverage academic reputation to develop online courses (S1, O1) 2. Use partnerships to enhance campus facilities (O2, W1) 25. Develop an example SPACE Matrix for a global company that you are familiar with. Include two factors for each of the four axes (SP, IP, SP, and CP). Answer: Student answers may vary, depending on their choice. However, students should demonstrate their understanding on configuration of Space Matrix, namely, Conservative; Aggressive; Defensive; Competitive. SPACE Matrix for Apple Inc.: Strengths (SP): 1. Strong brand reputation 2. Innovative product design Weaknesses (WP): 1. High product pricing 2. Dependency on third-party suppliers Opportunities (OP): 1. Expansion into emerging markets 2. Growth in wearable technology Threats (TP): 1. Intense competition from other tech giants 2. Rapid technological changes Matrix Analysis: Apple’s strong brand reputation and innovation are leveraged to seize emerging market opportunities while addressing competition and tech changes. 26. What would be an appropriate SP rating for Unilever? Answer: Using the SPACE Matrix to evaluate Unilever an appropriate SP rating can be seen below as -3.0. 27. Discuss the pros and cons of divulging divisional information to stakeholders. Answer: The pros and cons can be found on page 267, see Table 8-5 “Reasons to (or Not to) Disclose Financial Information by Segment (by Division).” Pros: 1. Transparency: Builds trust with stakeholders by providing a clear view of divisional performance. 2. Informed Decisions: Helps investors and partners make well-informed decisions based on divisional strengths and weaknesses. Cons: 1. Competitive Disadvantage: Revealing detailed divisional data can give competitors insights into weaknesses and strategic plans. 2. Potential Misinterpretation: Stakeholders might misinterpret or misuse the information, leading to incorrect assumptions about the company's overall health. 28. Develop an example BCG Matrix for a company that has three divisions with revenues of 4, 8, and 12 and profits of 5, 3, and 2, respectively. Answer: BCG matrix comprises of two major components: • horizontal axis – Relative Market Share Position • vertical axis – Industry Sales Growth Rate In these two components, there are: Stars, Question Marks, Cash Cows, and Dogs. Students may plot revenue of 4, profit 5 as Stars; 8 and profits 3 as Cash Cows and lastly Dogs. 29. Develop a SPACE Matrix for a firm that is a weak competitor competing in a slow growing and unstable industry. Label axes and quadrants clearly. Answer: Students will generally plot the firm in the Competitive quadrant of the SPACE MATRIX. Students should demonstrate understanding of the 4 quadrant of the SPACE Matrix. SPACE Matrix for a Weak Competitor in a Slow-Growing, Unstable Industry: Axes: • Strengths (SP) • Weaknesses (WP) • Opportunities (OP) • Threats (TP) Strengths (SP): 1. Limited market share 2. Outdated technology Weaknesses (WP): 1. High operational costs 2. Inefficient management Opportunities (OP): 1. Potential for niche market focus 2. Possible strategic partnerships Threats (TP): 1. Rapidly declining industry demand 2. Increasing competition Matrix Analysis: The firm’s position would likely fall in the "Defensive" quadrant due to its weaknesses and threats. Strategies should focus on mitigating risks and conserving resources. 30. Discuss the limitations of a BCG analysis and the limitations of a SPACE analysis. Answer: BCG Analysis views every business as a Star, Cash Cow, Dog or Question Mark which is an oversimplification. Many businesses fall right into the middle of the BCG Matrix and thus are not easily classified. Furthermore, it does not reflect whether or not various divisions or their industries are growing over time; that is, the matrix has no temporal qualities, but rather it is a snapshot of an organization at a given point of time. SPACE Analysis requires numerous variables which sometimes are confusing and cause errors. Furthermore, SPACE Analysis is tailored only to a particular organization being studied and based on actual information as much as possible – sometimes may not be possible. 31. Prepare an IE Matrix for a company with two divisions that have 30 and 60 in revenues to go with 10 and 15 in profits. Answer: The IE (Internal External) Matrix is designed for multidivisional firms with different business units to compete in different industries. IE Matrix is based on two key dimensions: the IFE total weighted scores and EFE total weighted scores. Each division of an organization should construct an IFE Matrix and an EFE Matrix for its part of the organization. Bearing this, students will then plot the IE Matrix chart. 32. Develop a Grand Strategy Matrix with two example companies in each quadrant, i.e., companies that you know something about and that you would place in those quadrants. Answer: Grand Matrix is a four-quadrant matrix. The companies may be placed in different quadrants. Students should understand the different quadrants: • Quadrant 1: firms are in excellent strategic position • Quadrant 2: firms need to evaluate their present approach to the market place seriously • Quadrant 3: firms compete in slow-growth industries and have weak competitors • Quadrant 4: firms have a very strong competitive position but in a slow growth industry. 33. Develop a QSPM for yourself—given two strategies: 1) go to graduate school or 2) begin working full-time. Answer: Student answers may vary. Students should bear the following steps in mind when developing their strategies: • Step 1 Make a list of the firm’s key external opportunities / threats and internal strengths / weaknesses in the left column of the QSPM • Step 2 Assign weights to each key external opportunities / threats and internal • Step 3 Examine the Stage 2 (matching) matrices, and identify alternative strategies that the organization should consider implementing • Step 4 Determine the Attractiveness Scores (AS) • Step 5 Compute the Total Attractiveness Scores • Step 6 Compute the Sum Total Attractiveness Score QSPM for Personal Strategies: 1. Go to Graduate School: • Attractiveness Score (AS): 8 • Weight: 0.6 • Total Attractiveness Score (TAS): 4.8 2. Begin Working Full-Time: • Attractiveness Score (AS): 6 • Weight: 0.4 • Total Attractiveness Score (TAS): 2.4 Analysis: Pursuing graduate school has a higher TAS (4.8) due to the long-term benefits of advanced education, while starting work full-time has a lower TAS (2.4) but may offer immediate income and experience. 34. Would a QSPM analysis be useful without the weight column? Why or why not? Answer: A QSPM analysis would not be so useful without the weight column. This is because the weights would indicate the relative importance of each factor that will eventually be the basis of specific strategy formulation. 35. Discuss the characteristics of successful strategists in terms of political actions within the firm. Answer: The characteristics are: • Successful strategists were found to let weakly supported ideas and proposals die through inaction and to establish additional tests for strongly supported ideas considered unacceptable but not openly opposed. • Successful strategists kept a low political profile on unacceptable proposals and strive to let most negative decisions come from subordinates or a group consensus, reserving their personal vetoes for big issues and crucial moments. • Successful strategists did a lot of chatting and informal questioning to stay abreast of how things were progressing and to know when to intervene; led strategy but did not dictate it. They gave few orders, announced few decisions, depended heavily on informal questioning, and sought to probe and clarify until a consensus emerged. • Successful strategists ensured that all major power bases within an organization were represented in, or had access to, top management. • Successful strategists minimized their own political exposure on highly controversial issues. 36. In order of attractiveness to you, rank the political tactics presented in Chapter 8. Answer: Students may rank the political tactics according to their individual perception of attractiveness. The political tactics are: • Equifinality – achieve similar results using different means of paths • Satisfying – achieving satisfactory results with an acceptable strategy • Generalization – shifting focus from specific issues to more general ones • Focus on Higher –Order Issues – raising an issue to a higher level, many short – term interests can be postponed in favor of long term interests • Provide Political Access on Important issues – Strategy and policy decisions with significant negative consequences for middle managers will motivate interventions behavior from them. If middle managers do not have an opportunity to take a position on such decisions in appropriate political reforms, they are capable of successfully resisting the decisions after they are made. Ranking of Political Tactics: 1. Building Coalitions: Strengthens support by aligning with allies. 2. Persuasion and Negotiation: Facilitates agreement through effective communication. 3. Use of Expertise: Gains credibility by showcasing specialized knowledge. 4. Resource Allocation: Influences outcomes by controlling valuable resources. 5. Covert Actions: Useful for discreet influence but carries higher risk. Note: The ranking reflects a preference for transparent and collaborative tactics over more secretive or resource-based approaches. 37. For a business in your city, list in order of importance the top eight board-of-director duties and responsibilities listed in the chapter. Answer: Student answers may vary, depending on their perception of duties and responsibilities of top eight boards of directors. Top Eight Board-of-Director Duties and Responsibilities: 1. Strategic Oversight: Ensure the company’s strategy aligns with its goals and adjust as necessary. 2. Financial Stewardship: Oversee financial performance and ensure accurate reporting and auditing. 3. CEO Selection and Evaluation: Hire, evaluate, and, if needed, replace the CEO. 4. Risk Management: Identify and manage major risks facing the company. 5. Governance and Compliance: Ensure the company adheres to laws, regulations, and ethical standards. 6. Shareholder Interests: Represent and protect the interests of shareholders. 7. Succession Planning: Develop and maintain a plan for leadership succession. 8. Stakeholder Communication: Maintain transparent communication with stakeholders and manage public relations. Note: The ranking emphasizes oversight and strategic roles critical for guiding the company’s long-term success. 38. Discuss the pros and cons of Sweden’s new board-of-director rule regarding women. Answer: Student answers may vary. Some of the pros include women ask different questions and make different suggestions in boardrooms which is helpful because women form a significant number of consumers worldwide. However, imposing a minimal percentage of women as directors may result in unqualified women being appointed board members to meet quotas. Sweden's New Board-of-Director Rule Regarding Women: Pros: 1. Increased Diversity: Promotes gender diversity, bringing different perspectives and improving decision-making. 2. Enhanced Company Performance: Studies suggest diverse boards can lead to better financial performance and innovation. 3. Social Equity: Contributes to gender equality, aligning with broader societal goals for fairness. Cons: 1. Potential Tokenism: Risk of appointing women to meet quotas without ensuring they are the best candidates, which could undermine effectiveness. 2. Resistance and Backlash: May face opposition from those who believe board positions should be based solely on merit, potentially causing organizational friction. 3. Implementation Challenges: Companies might struggle with finding qualified female candidates or may be pressured into short-term fixes rather than long-term solutions. 39. Develop a SPACE Matrix for your college or university. Answer: Student answers may vary. However, students should have a clear understanding of the 4 quadrant in this Matrix, and to place his/her College into the respective quadrant to be supported by the reasoning. SPACE Matrix for University: Axes: • Strengths (SP) • Weaknesses (WP) • Opportunities (OP) • Threats (TP) Strengths (SP): 1. Strong academic reputation 2. Diverse program offerings Weaknesses (WP): 1. Limited campus facilities 2. High tuition costs Opportunities (OP): 1. Expansion of online education 2. Partnerships with local industries Threats (TP): 1. Decreasing government funding 2. Increasing competition from other institutions Matrix Analysis: The university's position would likely be in the "Competitive" quadrant, indicating a need to leverage strengths and opportunities while addressing weaknesses and threats. 40. Develop a BCG Matrix for your college or university. Answer: Depending on the student college, different students may develop different compositions within the BCG Matrix: Question Marks, Stars, Cash Cows and Dogs. Students should give their rationale in putting their college or university into the respective quadrant. BCG Matrix for University: Axes: • Market Growth Rate (Vertical Axis) • Relative Market Share (Horizontal Axis) Categories: 1. Stars (High Market Share, High Growth Rate) 2. Question Marks (Low Market Share, High Growth Rate) 3. Cash Cows (High Market Share, Low Growth Rate) 4. Dogs (Low Market Share, Low Growth Rate) Matrix: 1. Stars: • High-demand programs (e.g., popular tech and business courses with strong enrollment growth and high demand) 2. Question Marks: • Emerging fields (e.g., new or niche programs like AI or sustainability that have potential but are still developing in popularity and enrollment) 3. Cash Cows: • Established core programs (e.g., traditional undergraduate degrees with steady enrollment and stable funding) 4. Dogs: • Declining programs (e.g., programs with decreasing enrollment and minimal growth potential, such as certain outdated majors) Analysis: The university should focus on enhancing its Stars, evaluating and potentially revitalizing Question Marks, maintaining Cash Cows efficiently, and considering phasing out or restructuring Dogs. 41. Explain the limitations of the BCG, SPACE, and SWOT. Answer: Business is dynamic and not static. Viewing every business as a Star, Cash Cow, Dog or Question Mark is an oversimplification; many businesses fall right in the middle of the BCG matrix and thus not easily classified. The BCG Matrix does not reflect whether or not various divisions or their industries are growing over time; that is the matrix has no temporal qualities but rather it is a snapshot of an organization at a given point in time. Other variables, such as market size and competitive advantages are important in making strategic decisions about various divisions. SPACE: Makes use of numerous variables which may be confusing and difficult in practical situation. SPACE Matrix also depends on gathering as much factual information as possible, though sometimes it may not be possible. SWOT: The analysis does not show how to achieve a competitive advantage, so it must not be an end in itself. SWOT is a static assessment in time. As circumstances, capabilities, threats and strategies change, the dynamics of a competitive environment may not be revealed in a single matrix. SWOT analysis may lead the firm to overemphasize a single internal or external factor in formulating strategies. 42. Develop a QSPM for a local company that you are familiar with. Answer: Students should use the factors of QSPM in developing a QSPM for a local company. The basic format considers key external and internal factors and top row consists of feasible alternative strategies. Students should understand this concept and its weight in QSPM. QSPM for Local Coffee Shop: Strategies: 1. Expand Online Ordering 2. Open a New Location Key External Factors: 1. Growing Demand for Convenience (Opportunity) • Attractiveness Score (AS): 8 • Weight: 0.6 • TAS for Online Ordering: 4.8 • TAS for New Location: 4.8 2. Increasing Competition (Threat) • Attractiveness Score (AS): 4 • Weight: 0.4 • TAS for Online Ordering: 1.6 • TAS for New Location: 1.6 Analysis: Both strategies have the same TAS (4.8 for Online Ordering and New Location), indicating they are equally attractive. The coffee shop should consider implementing both strategies to leverage opportunities and address threats effectively. 43. Write a short essay that reveals your recommendation to firms regarding disclosure of financial information. Answer: Student answers will encompass the two broad categories: reasons to disclose and reasons not to disclose. Basically, the followings are the points for considerations: Reasons to disclose: 1. Transparency is a good thing in today’s world 2. Investors will better understand the firm which can lead to greater support 3. Managers/employers will better understand the firm, which should lead to greater commitment 4. Disclosure enhances the communication process both within the firm and with outsiders Reasons NOT to disclose: 1. Can become free competitive information for rival firms 2. Can hide performance failures 3. Can reduce rivalry among segments 44. Explain why a before and after BCG and IE analysis can be so useful in presenting a strategic plan for consideration. Answer: BCG and IE are designed specifically to enhance a multidivisional firm’s efforts to formulate strategies. BCG portrays differences among divisions in terms of relative market share position and industry growth rate. It allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization. IE Matrix is similar to the BCG Matrix in that both tools involve plotting organization divisions in a schematic diagram. However, there are some important differences. A common practice is to develop a BCG Matrix and an IE Matrix for the present and then develop projected matrices to reflect expectations of the future. 45. Find an example company on the Internet that has both a Cash Cow and a Question Mark division. Answer: Example: Procter & Gamble (P&G) • Cash Cow: Tide (dominates the detergent market with strong brand loyalty and steady revenue) • Question Mark: Gillette Razors (facing intense competition and fluctuating market dynamics with potential for growth but uncertain performance) P&G's portfolio illustrates how established brands with consistent revenue (Cash Cows) can coexist with emerging or uncertain market segments (Question Marks) requiring strategic focus. 46. Regarding a Grand Strategy Matrix, identify two companies that would be located in your judgment in each quadrant—identify eight firms total. Answer: Grand Strategy Matrix Quadrants: 1. Quadrant I (Rapid Growth, Strong Competitive Position): • Apple (innovative products and strong market presence) • Tesla (leading in electric vehicles with rapid growth) 2. Quadrant II (Rapid Growth, Weak Competitive Position): • Uber (expanding rapidly but facing regulatory and competitive challenges) • Beyond Meat (growing plant-based market but still establishing competitive strength) 3. Quadrant III (Slow Growth, Weak Competitive Position): • Sears (struggling with declining sales and competitive pressures) • Kodak (facing slow growth due to technological obsolescence) 4. Quadrant IV (Slow Growth, Strong Competitive Position): • Johnson & Johnson (stable industry position with steady growth) • Coca-Cola (strong brand presence but slow market growth) These examples illustrate how companies can be positioned based on their growth prospects and competitive standing. 47. For a non-profit company, list in order of importance the top 10 board-of-director duties and responsibilities. Answer: Student answers may vary; however, students must indicate the rationale in the selection of listing the order of importance of the duties and responsibilities. Top 10 Board-of-Director Duties for a Non-Profit: 1. Governance and Oversight (Ensure legal and ethical compliance) 2. Strategic Planning (Guide the organization’s mission and long-term strategy) 3. Financial Stewardship (Oversee budgeting and financial health) 4. Fundraising and Resource Development (Support and promote fundraising efforts) 5. Executive Director Evaluation (Hire, evaluate, and support the executive director) 6. Policy Setting (Establish and review organizational policies) 7. Risk Management (Identify and mitigate organizational risks) 8. Community Engagement (Represent and advocate for the organization) 9. Compliance (Ensure adherence to laws and regulations) 10. Performance Monitoring (Assess organizational performance and impact) 48. Regarding the principles of good governance in the chapter, list in order of importance the top seven guidelines. Answer: Student answers may vary; however, students should understand the reasons for choosing the top seven guidelines out of the 14 guidelines as presented in the book. Top 7 Guidelines for Good Governance: 1. Transparency (Ensure open and clear communication of decisions and actions) 2. Accountability (Hold board members and executives accountable for their actions) 3. Integrity (Promote ethical behavior and adherence to laws and regulations) 4. Responsibility (Define and execute board roles and responsibilities effectively) 5. Equity (Ensure fair treatment and inclusiveness in decision-making) 6. Strategic Leadership (Guide long-term strategic direction and planning) 7. Effective Oversight (Monitor organizational performance and compliance rigorously) Answers to the End-of-Chapter Assurance of Learning Exercises ASSURANCE OF LEARNING EXERCISE 8A: SHOULD UNILEVER PENETRATE SOUTHEAST ASIA FURTHER? Purpose Unilever is featured in the opening chapter case as a firm that engages in excellent strategic planning. Unilever is the world’s third-largest consumer goods company (behind Procter & Gamble and Nestlé). Some of Unilever’s best selling brands are Aviance, Ben & Jerry’s, Dove, Flora/Becel, Hellmann’s, Knorr, Lipton, Lux/Radox, Omo/Surf, Sunsilk, Toni & Guy, VO5, Wall’s, and PG Tips. The purpose of this exercise is to give you experience investigating a particular region of the world to determine whether a firm should expand more deeply into that region of the world. Unilever has recently began construction of a new factory in Yangon, Myanmar, and by 2015 expects to provide direct and indirect employment for over 2,000 people in Myanmar. The company currently employs close to 200 Myanmar employees at its factory in Thailand, of which a number are being moved back to Myanmar to help kick-start its operations in the country. Instructions Step 1: Go to Unilever’s corporate website and download the company’s most recent Annual Report. Examine the narrative and tables related to their operations in Southeast Asia. Step 2: Research the competitive climate and business culture of Myanmar and two other countries in Southeast Asia as well as the operations of rival Nestlé. Step 3: Develop six recommendations for Unilever based on your assessment of their present and potential operations in Southeast Asia. Teaching Notes Students’ answers will vary; however, students should show understanding of SWOT. ASSURANCE OF LEARNING EXERCISE 8B: PERFORM A SWOT ANALYSIS FOR UNILEVER’S GLOBAL OPERATIONS Purpose Unilever’s global and domestic business segments could be required annually to submit a SWOT analysis to corporate top executives who merge divisional analyses into an overall corporate analysis. This exercise will give you practice performing a SWOT analysis. Instructions Step 1: Review Unilever’s global operations as described in the company’s most recent Annual Report. Unilever recently acquired 82 percent of the Russia-based beauty company Kalina. Step 2: Review industry and competitive information pertaining to Unilever’s global operations, especially as compared to rival Procter & Gamble. Step 3: Join with two other students in class. Together, develop a global SWOT Matrix for Unilever’s global business segment. Follow all the SWOT guidelines provided in the chapter, including (S4, T3)-type notation at the end of each strategy. Include three strategies in each of the four (SO, ST, WT, WO) quadrants. Avoid generic strategy terms such as Forward Integration. Step 4: Turn in your team-developed SWOT Matrix to your professor for a classwork grade. Teaching Notes Students’ answers will vary; however, students should show understanding of SWOT. 1. List key external opportunities 2. List key external threats 3. List key internal strengths 4. List key internal weaknesses 5. Match internal strengths with external opportunities and record the resultant SO strategies in the appropriate cell 6. Match internal strengths with external opportunities and record the resultant WO Strategies 7. Match internal strengths with external threats and record the resultant ST Strategies 8. Match internal weaknesses with external threats and record the resultant WT Strategies ASSURANCE OF LEARNING EXERCISE 8C: PREPARING A BCG MATRIX FOR UNILEVER Purpose This exercise will give you practice preparing both a by-product and a by-region -based BCG Matrix. Unilever has four major product segments of the company: Personal Care, Food, Refreshment, and Home Care. The company also has three major geographic segments: Europe, The Americas, and Asia/AMET/RUB. Instructions Step 1: Review Unilever’s global operations as described in the company’s most recent Annual Report and Form 10K. Step 2: Prepare an up-to-date BCG matrices for Unilever’s 1) four product categories and 2) three geographic divisions. Step 3: Write a two-page executive summary to reveal the strategic implications of your analyses. Teaching Notes Students should show an understanding of: 1. BCG Matrix portrays differences among divisions in terms of relative market share position and industry growth rate. 2. It allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share and the industry growth rate of each division relative to all other divisions in the organization. 3. Relative market share position is defined as the ratio of a division’s own market share (or revenue) in a particular industry to the market share (or revenue) held by the largest rival firm in that industry. ASSURANCE OF LEARNING EXERCISE 8D: DEVELOPING A SWOT MATRIX FOR ADIDAS AG Purpose The most widely used strategy formulation technique among firms worldwide is the SWOT Matrix. This exercise requires development of a SWOT Matrix for adidas. Matching key external and internal factors in a SWOT Matrix requires good intuitive and conceptual skills. You will improve with practice in developing a SWOT Matrix. Instructions Recall from Exercise 1B that you already may have determined adidas’ external opportunities/threats and internal strengths/weaknesses. This information could be used to complete this exercise. Follow the steps outlined as follows: Step 1: On a separate sheet of paper, construct a large nine-cell diagram that will represent your SWOT Matrix. Appropriately label the cells. Step 2: Appropriately record adidas’ opportunities/threats and strengths/weaknesses in your diagram. Step 3: Match external and internal factors to generate feasible alternative strategies for adidas. Record SO, WO, ST, and WT strategies in appropriate cells of the SWOT Matrix. Use the proper notation to indicate the rationale for the strategies. Try to include four strategies in each of the four strategy cells. Step 4: Compare your SWOT Matrix to another students’ SWOT Matrices. Discuss any major differences. Teaching Notes Students should show understanding of the eight steps in constructing a SWOT matrix: 1. List key external opportunities 2. List key external threats 3. List key internal strengths 4. List key internal weaknesses 5. Match internal strengths with external opportunities and record the resultant SO strategies in the appropriate cell 6. Match internal strengths with external opportunities and record the resultant WO Strategies 7. Match internal strengths with external threats and record the resultant ST Strategies 8. Match internal weaknesses with external threats and record the resultant WT Strategies ASSURANCE OF LEARNING EXERCISE 8E: DEVELOPING A SPACE MATRIX FOR ADIDAS AG Purpose Should adidas pursue aggressive, conservative, competitive, or defensive strategies? Develop a SPACE Matrix for adidas to answer this question. Elaborate on the strategic implications of your directional vector. Be specific in terms of strategies that could benefit adidas. Instructions Step 1: Join with two other persons in your class and develop a joint SPACE Matrix for adidas. Step 2: Diagram your SPACE Matrix on the board. Compare your Matrix with other teams’ matrices. Step 3: Discuss the implications of your SPACE Matrix. Teaching Notes SPACE Matrix is a four-quadrant framework which indicates the four strategies, namely, aggressive, conservative, and defensive or competitiveness. The following steps are in the developing a SPACE Matrix: 1. Select a set of variables to define financial position (FP); competitive position (CP); stability position (SP), and industry position (IP). 2. Assign a numerical value ranging from +1 (worst) to +7 (best) to each of the variables that make up the FP and IP dimensions. Assign a numerical value ranging from -1(best) to -7 (worst) to each of the variables that make up the SP and CP dimensions. On the FP and CP axes, make comparison to competitors. On the IP and SP axes, make comparison to other industries. 3. Compute an average score for FP, CP, IP, and SP by summing the values given to the variables of each dimension and then dividing by the number of variables included in the respective dimension. 4. Plot the average scores for FP, IP, SP, and CP on the appropriate axis in the SPACE Matrix. 5. Add the two scores on the x-axis and plot the resultant point X. Add the two scores on the y-axis and plot the resultant point Y. Plot the intersection of the new xy point. 6. Draw a directional vector from the origin of the SPACE Matrix through the new intersection point. This vector reveals the type of strategies recommended for the organization: aggressive, competitive, defensive, or conservative. ASSURANCE OF LEARNING EXERCISE 8F: DEVELOPING A BCG MATRIX FOR ADIDAS AG Purpose Portfolio matrices are widely used by multidivisional organizations to help identify and select strategies to pursue. A BCG analysis identifies particular divisions that should receive fewer resources than others. It may identify some divisions to be divested. This exercise can give you practice developing a BCG Matrix. Instructions Step 1: Place the following five column headings at the top of a separate sheet of paper: Divisions, Revenues, Profits, Relative Market Share Position, and Industry Growth Rate. Down the far left of your page, list adidas, Reebok, and TaylorMade. Turn back to the Cohesion Case and find information to fill in all the cells in your data table. Step 2: Complete two BCG Matrices for adidas: 1) Include Reebok, TaylorMade, and adidas and 2) include Geographic Regions of the World. Step 3: Compare your BCG Matrix to other students’ matrices. Discuss any major differences. Teaching Notes Students should show an understanding of: 1. BCG Matrix portrays differences among divisions in terms of relative market share position and industry growth rate. 2. It allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share and the industry growth rate of each division relative to all other divisions in the organization. 3. Relative market share position is defined as the ratio of a division’s own market share (or revenue) in a particular industry to the market share (or revenue) held by the largest rival firm in that industry. ASSURANCE OF LEARNING EXERCISE 8G: DEVELOPING A QSPM FOR ADIDAS AG Purpose This exercise can give you practice developing a Quantitative Strategic Planning Matrix (QSPM) to determine the relative attractiveness of various strategic alternatives. Instructions Step 1: Join with two other students in class to develop a joint QSPM for adidas. Step 2: Go to the board and record your strategies and their Sum Total Attractiveness Scores. Compare your team’s strategies and sum total attractiveness scores to those of other teams. Be sure not to assign the same AS score in a given row. Recall that dashes should be inserted all the way across a given row when used. Step 3: Discuss any major differences. Teaching Notes The six steps of the QSPM are: 1. Make a list of the firm’s key external opportunities/threats and internal strengths/ weaknesses in the left column of QPSM 2. Assign weights to each key external and internal factor 3. Examine the stage 2 (matching) matrices and identifying alternative strategies that the organization should consider implementing 4. Determine the attractiveness Scores (AS) 5. Compute the Total Attractiveness Scores 6. Compute the Sum Total Attractiveness Score. ASSURANCE OF LEARNING EXERCISE 8H: DEVELOPING A SWOT MATRIX FOR UNILEVER Purpose The most widely used strategy formulation technique among American firms is the SWOT Matrix. This exercise requires development of a SWOT Matrix for Unilever. Matching key external and internal factors in a SWOT Matrix requires good intuitive and conceptual skills. You will improve with practice in developing a SWOT Matrix. Instructions Step 1: On a separate sheet of paper, construct a large nine-cell diagram that will represent your SWOT matrix. Appropriately label the cells. Step 2: Determine six opportunities and six threats, and six strengths and six weaknesses for Unilever. Step 3: Match external and internal factors to generate feasible alternative strategies for Unilever. Record SO, WO, ST, and WT strategies in appropriate cells of the SWOT Matrix. Use the proper notation to indicate the rationale for the strategies. Try to include two strategies in each of the four strategy cells. Compare your SWOT Matrix to another student’s SWOT Matrix. Discuss any major differences. Teaching Notes Student answers may vary between groups; however, the objective of the exercise is for students to display their understanding of the process of SWOT Matrix. ASSURANCE OF LEARNING EXERCISE 8I: DEVELOPING A SPACE MATRIX FOR UNILEVER Purpose Should Unilever pursue aggressive, conservative, competitive, or defensive strategies? Develop a SPACE Matrix for Unilever to answer this question. Elaborate on the strategic implications of your directional vector. Be specific in terms of strategies that could benefit Unilever. Instructions Step 1: Join with two other persons in class and develop a joint SPACE Matrix for Unilever. Step 2: Diagram your SPACE Matrix on the board. Compare your matrix with other teams’ matrices. Step 3: Discuss the implications of your SPACE Matrix. Teaching Notes Student answers may vary between groups; however, the objective of the exercise is for students to display their understanding of the process of SPACE Matrix. ASSURANCE OF LEARNING EXERCISE 8J: DEVELOPING A BCG MATRIX FOR YOUR COLLEGE OR UNIVERSITY Purpose Portfolio matrices are widely used by multidivisional organizations to help identify and select strategies to pursue. A BCG analysis identifies particular divisions that should receive fewer resources than others; or it may identify some divisions to be divested. This exercise can give you practice developing a BCG Matrix for a college or university. Instructions Step 1: Place the following five column headings at the top of a separate sheet of paper: Divisions, Revenues, Profits, Relative Market Share Position, and Industry Growth Rate. Down the far left of your page, list Schools at your college. Step 2: Complete two BCG Matrices for your college or university. Include the School of Business, the School of Education, and the School of Nursing—or any other three Schools. Step 3: Compare your BCG Matrix to other students’ Matrices. Discuss any major differences. Teaching Notes Depending on the students’ College or University, answers may vary. The objective is however, for students to show understanding of BCG Matrix process. ASSURANCE OF LEARNING EXERCISE 8K: DEVELOPING A QSPM FOR A COMPANY THAT YOU ARE FAMILIAR WITH Purpose This exercise can give you practice developing a Quantitative Strategic Planning Matrix (QSPM) to determine the relative attractiveness of various strategic alternatives. Instructions Step 1: Join with two other students in class to develop a joint QSPM for a company that all of you are familiar with. Step 2: Record your strategies and their Sum Total Attractiveness Scores. Compare your team’s strategies and sum total attractiveness scores to those of other teams. Be sure not to assign the same AS score in a given row. Recall that dashes should be inserted all the way across a given row when used. Discuss any major differences. Teaching Notes Students’ answers will vary; however, students should show understanding of QSPM process. ASSURANCE OF LEARNING EXERCISE 8L: FORMULATING INDIVIDUAL STRATEGIES Purpose Individuals and organizations are alike in many ways. Each has competitors, and each should plan for the future. Every individual and organization faces some external opportunities and threats and has some internal strengths and weaknesses. Both individuals and organizations establish objectives and allocate resources. These and other similarities make it possible for individuals to use many strategic management concepts and tools. This exercise is designed to demonstrate how the SWOT Matrix can be used by individuals to plan their futures. As one nears completion of a college degree and begins interviewing for jobs, planning can be particularly important. Instructions On a separate sheet of paper, construct a SWOT Matrix. Include what you consider to be your major external opportunities, your major external threats, your major strengths, and your major weaknesses. An internal weakness may be a low grade point average. An external opportunity may be that your university offers a graduate program that interests you. Match key external and internal factors by recording in the appropriate cell of the matrix alternative strategies or actions that would allow you to capitalize upon your strengths, overcome your weaknesses, take advantage of your external opportunities, and minimize the impact of external threats. Be sure to use the appropriate matching notation in the strategy cells of the matrix. Because every individual (and organization) is unique, there is no one right answer to this exercise. Teaching Notes Students will use the SWOT Matrix to analyze his/her own internal and external environment. ASSURANCE OF LEARNING EXERCISE 8M: THE MACH TEST Purpose The purpose of this exercise is to enhance your understanding and awareness of the impact that behavioural and political factors can have on strategy analysis and choice. Instructions Step 1: On a separate sheet of paper, write down numbers 1 to 10. For each of the 10 statements given as follows, record a 1, 2, 3, 4, or 5 to indicate your attitude, where 1 = I disagree a lot. 2 = I disagree a little. 3 = My attitude is neutral. 4 = I agree a little. 5 = I agree a lot. 1. The best way to handle people is to tell them what they want to hear. 2. When you ask someone to do something for you, it is best to give the real reason for wanting it, rather than a reason that might carry more weight. 3. Anyone who completely trusts anyone else is asking for trouble. 4. It is hard to get ahead without cutting corners here and there. 5. It is safest to assume that all people have a vicious streak, and it will come out when they are given a chance. 6. One should take action only when it is morally right. 7. Most people are basically good and kind. 8. There is no excuse for lying to someone else. 9. Most people forget more easily the death of their father than the loss of their property. 10. Generally speaking, people won’t work hard unless they’re forced to do so. Step 2: Add up the numbers you recorded beside statements 1, 3, 4, 5, 9, and 10. This sum is Subtotal One. For the other four statements, reverse the numbers you recorded, so a 5 becomes a 1, 4 becomes 2, 2 becomes 4, 1 becomes 5, and 3 remains 3. Then add those four numbers to get Subtotal Two. Finally, add Subtotal One and Subtotal Two to get your Final Score. Your Final Score Your Final Score is your Machiavellian Score. Machiavellian principles are defined in a dictionary as “manipulative, dishonest, deceiving, and favoring political expediency over morality.” These tactics are not desirable, are not ethical, and are not recommended in the strategic management process! You may, however, encounter some highly Machiavellian individuals in your career, so beware. It is important for strategists not to manipulate others in the pursuit of organizational objectives. Individuals today recognize and resent manipulative tactics more than ever before. The National Opinion Research Center used this short quiz in a random sample of U.S. adults and found the national average Final Score to be 25.1 The higher your score, the more Machiavellian (manipulative) you tend to be. The following scale is descriptive of individual scores on this test: • Below 16: Never uses manipulation as a tool. • 16 to 20: Rarely uses manipulation as a tool. • 21 to 25: Sometimes uses manipulation as a tool. • 26 to 30: Often uses manipulation as a tool. • Over 30: Always uses manipulation as a tool. Test Development The Mach (Machiavellian) test was developed by Dr. Richard Christie, whose research suggests the following tendencies: 1. Men generally are more Machiavellian than women. 2. There is no significant difference between high Machs and low Machs on measures of intelligence or ability. 3. Although high Machs are detached from others, they are detached in a pathological sense. 4. Machiavellian scores are not statistically related to authoritarian values. 5. High Machs tend to be in professions that emphasize the control and manipulation of individuals—for example law, psychiatry, and behavioral science. 6. Machiavellianism is not significantly related to major demographic characteristics such as educational level or marital status. 7. High Machs tend to come from a city or have urban backgrounds. 8. Older adults tend to have lower Mach scores than younger adults.2 Notes 1. Richard Christie and Florence Geis, Studies in Machiavellianism (Orlando, FL: Academic Press, 1970). Material in this exercise adapted with permission of the authors and Academic Press. 2. Ibid. 82–83. Teaching Notes This test is self explanatory; the answer is given at the end of the question. Solution Manual for Strategic Management: Concepts and Cases Fred R. David, Forest R. David 9781292016894
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