The Quantitative Strategic Planning Matrix
Strategic planning is something that takes place in all organizations. In fact, it could be said that strategic planning and decision making takes place every single day. Every choice that comes across the desk of a manager or owner is strategic in nature, as even small choices are going to impact the future of the organization in some manner. As the leader of an organization, it is critical that you make quality, logical decisions on a daily basis.
Some of the decisions you make are going to be based on little more than a ‘gut’ feeling. However, trusting your gut instinct isn’t always enough, as you will sometimes want to have numbers behind the choices you make. When that is the case, the Quantitative Strategic Planning Matrix – or QSPM – is a helpful tool. When you know how to use this tool effectively, it can provide you with some justification for the choices you make.
The ultimate goal of the QSPM method is to pick the right strategy to move forward with based on the information available at hand. If you would like to construct your own QSPM in order to make a sound decision on a given problem, consider following the steps below.
1 – Internal Factors
To get started on the process of constructing a QSPM, you are first going to develop a list of strengths and weaknesses from within your organization. What is it that you have within your organization which puts you in a position of advantage? What is it that you feel you are missing? Filling out a few points under both the strengths and weaknesses category will give you a great start to your matrix. Remember, as this point, you are only dealing with considerations inside of your organization. Both the strengths and weaknesses which you identify should be listed down the left side of a piece of paper – or down the left side of a computer spreadsheet.
2 – External Factors
In much the same way, you are now going to look outside your organization for opportunities and threats which exist in the market. Possible opportunities include a new market which is expanding, or the struggles of a competitor. On the other hand, threats can include strong competition or decreasing market prices. The external factors you identify should be listed further down the left side of your paper or spreadsheet.
3 – Strategy Alternatives
With all of your strengths, weaknesses, opportunities, and threats identified, it is now time to get into the process of outlining strategies. These are the strategies that you are going to be choosing from, with the help of the completed matrix. All of the strategies you wish to consider should be listed across the top of your matrix. You will obviously need to have at least two options in play, but you can have many more than that if you so choose. Under each strategy option, you will need to have room for three columns – a weight, an ‘attractiveness score’, and a total.
4 – Weighting the Factors
For each internal and external factor which you have included in your matrix, you will need to assign a weight. The weights are going to assign a perceived importance to each of the factors, so you will need to take time to think through how much influence each factor is expected to have in practical application. The weights of your internal factors should add up to 100%, as should the weights from your external factors. Expect to spend a bit of time on this step until you are happy with the weighting distribution you have established. When finished, you should have weights under each of your proposed strategy alternatives. Since different strategies are going to place different importance on your various factors, it makes sense to have unique weights for each alternative.
5 – Attractiveness Scores
Just as you did with the weights, you are now going to assign attractiveness scores for each factor, both internal and external. These scores are going to be on a scale from 1 to 4, where a 1 is equal to not attractive and a 4 is equal to highly attractive. If the factor in question will have no effect on the choice you are making, you can rate the attractiveness score as a zero. Go through the entire matrix you have created until all of your factors have both a weight and an attractiveness score.
6 – Do the Math
To finish up the QSPM process, you are going to do the math required to settle on final scores for all of your alternatives. This math is quite simple – you are going to multiply the weight by the attractiveness score, and you are then going to add those scores up within each column. With your math complete, you can now compare the totals for each alternative which was included in the matrix. The highest total score should be seen as the best overall option.
Obviously, any tool like the QSPM is only going to be as good as the information which is put into the system. If you don’t take the time necessary to develop accurate weights and attractiveness scores, you won’t be able to place much faith in the final outcome of the process. To get the most from QSPM, you have to take each step along the way seriously. Only then will you be able to base important decisions on the outcome of this analysis.
Using QSPM is not always going to be necessary, but it is a handy tool when you have a number of options in front of you to consider. Specifically, this matrix method is ideal when you are making a rather important decision and you wish to go on something other than ‘gut’ instinct. Since the QSPM system will give you scores to look at in the end, it may be just what you need to have greater confidence in your choices.
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