Innovation Alphabet
Quantitative Strategic Planning Matrix (QSPM)
in a nutshell
Quantitative Strategic Planning Matrix (QSPM) is a management tool that provides an analytical method for objectively evaluating the most suitable strategy among the list of alternatives. The Matrix is based on the collection of data and the use of quantitative factors for strategic planning so as to minimize the subjective and intuitive input of business managers.
Steps
1) Start with the IFE & EFE Matrices to derive internal strengths and weaknesses and external opportunities and threats, respectively. Then place the data obtained in the left column of the QSPM.
2) Just as with the IFE & EFE matrices, assign a weight to each factor and place them in the first right column.
3) Review the developed matrices, and identify some alternative strategies, which will be further evaluated. The alternative strategies are reported in the top row of the matrix, possibly grouping them in mutually exclusive clusters.
4) Now determine the attractiveness scores (AS) for each factor and each possible strategy from the following question: “Does it make a difference in deciding which strategy to pursue?” If the answer is yes, the attributable values range from 1 to 4 in ascending order of attractiveness.
5) Calculate the Total Attractiveness Score (TAS), which is the product of multiplying the weights by the attractiveness scores. The TAS indicates the relative attractiveness of each key factor and its individual strategy. The higher the score, the higher the interest in the strategic alternative.
6) Finally, the total sum of attractiveness is quantified by adding up all the Total Attractiveness Scores in each column of the QSPM. This is the crucial step. The highest score will reveal the most attractive strategy among the proposed alternatives.
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Application Fields
• Decision-making: In the process leading to the development of an effective strategy for a company, the clearest possible objective consideration of internal and external factors proves to be crucial, as it enables a complete and comprehensive picture to be drawn. In this way, the strategy that ultimately turns out to be successful will be so with merit.
• Strategy: A support against indecision, impulse, and subjectivity. As the name of the Matrix suggests, this tool is essential for selecting a strategy that can help a business grow in its industry. But first it is necessary to have in mind the general state and context in which one has decided to land.
• Transversality: The QSPM is not only applicable by large companies, but also and especially for SMEs or nonprofit organizations. Implementing an effective strategy, after all, must be the goal of any business, regardless of size or ambition.
Industries
• QSPM in the retail industry
A hypothetical Quantitative Strategic Planning Matrix applied to Starbucks could reveal some key aspects to be improved. For example, considering internal and external factors, the company would do better to reduce costs and try to distinguish itself from competitors. Or, again, Starbucks might consider conceiving a beverage never tasted before.
• QSPM in the E-commerce industry
Analyzing Amazon through a QSP Matrix could point to a possible strategy of approaching the Asian market. Here, the direct competitor Alibaba is very present. Consequently, the study and identification of Chinese e-commerce weaknesses could point the Silk Road to the American giant.
• QSPM in the IT industry
BaridSoft Company is a company that offers products related to the IT sector, and especially in the field of Office Automation. A QSPM analysis conducted by the International Journal of Scientific Management and Development revealed how the joint analysis of internal and external factors can lead to gathering key opportunities for solving critical contexts.
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