Strategic Choices Essay

Globalization and complexity of businesses have challenged the formulated tragedies for organization (Daniel, 2006); so Strategic planning has experienced a period of decline and prosperity (Miniature, 1994). One of the well-known strategists has introduced ten schools of strategies as design school, planning school, positioning school, entrepreneur school, cognitive school, learning school, power school, cultural school, environmental school, and configuration school in the format of three paradigms as perspective paradigm, descriptive paradigm and configuration paradigm (Miniature, Alsatian & Lamp’, 1998).

In his opinion strategy is a combination of science and art which descriptive radium by including design school, planning school and positioning school with their diverse tools like SOOT, Internal-External Matrix, SUM, BCC Matrixes and so on are related to science part of strategic management. Perspective paradigm by including positioning school, entrepreneur school, cognitive school, learning school, power school, cultural school and environmental school are the art part of strategic management.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

So the perfect situation for an organization is doing both Planning strategically and strategic planning(Lion,2008) -Spread of quantitative tools still continues for example Norton and Kaplan in 1992 introduced balanced cored cards(AI Maid,2006). BBS is a tool designed for ensuring the correct implementation of strategies.

In 2003 another quantitative approach in strategy named robust strategy was introduced (Element, 2010) Robust strategy tries to maintain formulated strategies in the changing environment with the use of minimizing future regret function and scenario planning concepts (Hammerings, 2006) This strategy combines human and computer capabilities(Lacked, 2005). Davenport et al. Proposed a new qualitative approach named poised strategy however they mentioned the important role of quantitative tools in strategy rumination (Davenport, 2006). However using quantitative tools must not impede strategic thinking (Brunet, 1986).

Considering above cases it must be mentioned that despite of evolution of perspective and descriptive paradigms which are accompanied by introduction of new quantitative and qualitative tools using the previously introduced tools and regarding them respectfully are still required. Applying quantitative and qualitative tools simultaneously assist organizations greatly in forming and creating future (Gibson, 1998). Iran has long been an important player in world oil markets. Iran has been a major beneficiary of recent developments in world oil markets.

World oil prices have soared in response to (1) rapid growth in global demand, fed by voracious new users in China and India (2) declining oil production in the COED; and (3) security concerns in important producing areas such as Iraq and Nigeria (Shoot, 2006). Petrochemical industry which is considered as subset of oil and gas industries is a producer of raw materials of downstream industries So developments of petrochemical industry even in the countries in which there are not hydrocarbon resources are very vital. The main reason is the investment feasibility and profitability in petrochemical projects.

Today, tendency to invest in joint petrochemical projects in countries with hydrocarbon resources has increased due to cost reduction. Since 1979, IIS economic sanctions against Iran have become not only the most important tool of its foreign policy, but also an objective at times (Czarina , 2008). Banks role for today’s economics are foundation of buildings. They play their roles by collecting deposits, transferring risk, funding and facilitating transaction. Any constraints on bank industry could dead to banks malfunction. Due to sanctions; money received by international transactions and exports would not be simply transferred.

Therefore, this research surveys the implemented strategy in the case companies in banking and petrochemical industries which on one hand are two effective industries and on the other hand are under the influence of international sanctions. SPACE Matrix Miniature has introduced up’s for strategy definition: strategy as a Plan, strategy as a Ploy, strategy as a Pattern, strategy as a Position strategy as a Perspective (Miniature, 1987). According to the definition of position; organizations should determine the position of themselves in their industry and market.

SPACE and SOOT matrixes are considered two significant and applicable tools for defining the strategic position of organizations (Reader, 1998), (Banned gender, 2012). The difference between the two matrixes mentioned are that SOOT matrix focuses on strength and weakness(as internal factors) and opportunity and threats (as external factors) to recommend strategies for organizations but SPACE matrix focuses on financial strengths and competitive advantage (as internal factors)and environmental stability and industry strength(as external actors) for formulating strategies (David, 201 1).

Each of internal and external factors in the SPACE matrix has its own specific measures. Financial strength factor are measured by: Return on investment, leverage, liquidity, capital required, cash flow, ease of exit from market and risk involved in business. Competitive advantage factor are measured by: market share, product quality, product life cycle, customer loyalty, technological know-how and vertical integration. Industry Strength factor are measured by: growth capital, profit potential, financial stability, technological know-how, resource utilization, capital intensity, eases of entry into market.

Environmental stability factor are measured by: technological change, rate of inflation, demand variability, barriers to entry into market, competitive pressure, price range of competing products (Kodak Hussein, 2009) Space matrix includes four positions which are: Aggressive position, conservative position, defensive position, conservative position. Horizontal axis in space graph shows IFS (Financial Strength) and CA (Competitive Advantage); vertical axis shows SEES (Environmental Stability) and IS (Industrial Strength) (Hunger, 2007) Horizontal axis in space graph shows IFS (Financial

Strength) and CA (Competitive Advantage); vertical axis shows SEES (Environmental Stability) and IS (Industrial Strength). After assessing the business across four dimensions mentioned above SPACE matrix can recommend four different strategies the company is using: Aggressive strategy, competitive strategy, conservative strategy and defensive strategy. By definition, the CA and IS values in the SPACE matrix are plotted on the X axis. CA values can range from 1 to 6. IS values can range from +1 to +6. The IFS and SEES dimensions of the model are plotted on the Y axis.

SEES values can be between -1 and -6. IFS values can range from +1 to +6 The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental stability (SEES) and financial strength (S) dimensions. Research method Researches can be quantitative or qualitative (Neumann, 2010)Another classification of researches indicates that researches are categorized in two basic and applied researches (Dandified,2006).

The main purpose of this research is to determine strategic position of three case companies in banking and petrochemical industries. This research is an applied research. Sample of this research includes experts of these two industries. To evaluate strategic position of selected companies, we used standard questionnaires introduced by Reader and Low and 120 questionnaires have been distributed among the part of the questionnaires which is about financial strength ; data has been gathered from financial statement of case companies from Tehran Stock Exchange (TTS) website.

Data analysis This article is based on a quantitative research approach. For calculating SPACE dimensions scores, 60 questionnaires for banking Industry and 60 questionnaires for petrochemical industry scaled O to 6 were distributed. Each factor within each strategic dimension is rated using appropriate rating scale. Then averages are calculated. Adding individual strategic dimension; averages have provided values that are plotted on the axis X and Y. Calculations are summarized in the following tables.

Conclusion and recommendation In this research, SPACE matrix which is an important and applicable tool for strategy formulation has been used for determining strategic position of case companies in two strategic industries in Iran which are banking and theoretical industries. Since international sanction against Iran directly and significantly affects these two industries, SPACE matrix has been computed for two banks that are influenced by sanctions and also listed in TTS.

Rest Its shows that strategic position of case company in petrochemical industry (Organization K) as well as Bank M and Bank S is located on aggressive area of SPACE matrix. Despite of international sanction, the main reason that led to all 3 case companies locating in aggressive posture is the IS for both industries in Iran have been ranked high scores. There are 8 factors in IS dimension and 2 factors high in both banking and petrochemical industries. Score of IFS dimension for non-governmental bank (2. 15) is more than governmental bank (1. 5); it means bank S has better financial performance than bank M. Since best position in SPACE matrix is the aggressive position, companies can do the followings by relying on their abilities and strength: Exploitation of external opportunities Decreasing of internal weaknesses Avoidance Of external threats So organizations in aggressive posture should use the following strategies: Us Mary: Analysis: Strategic planning is a three step process including formulation; implementation and review and adjustment.

Different tools for formulation step have been introduced yet. SPACE matrix which stands for Strategic Position and Action Evaluation is one of these tools which have gained high reliability for considering macroeconomic, microeconomic and financial factors in the process of determining the position of the organization. On the other hand, Accelerating process of determining the vaporization and banking industry development the GAP implies that both banking and petrochemical industries are two vital wings of Iran’s economic.