Quantitative Strategic Planning Matrix (QSPM)
Quantitative Strategic Planning Matrix: This article explains the Quantitative Strategic Planning Matrix (QSPM) in a practical way. After reading it you will understand the basics of this powerful quality management tool.
What is the Quantitative Strategic Planning Matrix (QSPM)?
The Quantitative Strategic Planning Matrix (QSPM) is a strategic management approach for top-level management. The method is also used to formulate the marketing strategy.
A QSPM is mainly used in evaluating different strategic options and determining the most attractive of the strategies at hand. The method shows the user which of the selected options is the most feasible and prioritizes it over other options.
Inherent in conducting such an analysis is conducting an analysis on a company’s internal and external environment (such as a SWOT analysis). In addition, various studies are carried out, pros and cons are carefully evaluated and certain courses of action are decided.
The process of executing a QSPM consists of the three phases used for formulating strategies:
- Define strategic factors
- Strategic analysis (SWOT), measuring advantages and disadvantages of each option
Elements in the Quantitative Strategic Planning Matrix (QSPM)
The left column of the Quantitative Strategic Planning Matrix consists of the main external and internal factors. These are determined in phase 1 of the formulation process. The input for this column can be obtained from the EFE / IFE matrix.
The top row of the matrix contains the feasible alternative strategies. These are determined in phase 2 of the process. These are derived from, for example, the TOWS Matrix, BCG Matrix or SPACE Matrix.
Interpretation of the matrix
The Quantitative Strategic Planning Matrix determines the relative attractiveness of different options based on the degree to which internal and external critical success factors are used or improved. This relative attractiveness is determined by determining the cumulative impact of each critical success factor.
An example. The management of organization X has the ambition to grow the business significantly. To do so, they consider 3 options: expand by buying out competitors, improve sales through market and product development, or diversify.
A selection may include issuing shares or selling a division to raise capital. These alternatives options are completely different and the Quantitative Strategic Planning Matrix helps determine the attractiveness of these sets.
Step-by-step plan for implementing the Quantitative Strategic Planning Matrix (QSPM)
The six steps that must be followed to develop a QSPM are explained below.
The first step involves making a list of all of an organization’s external opportunities and threats. These are positioned in the leftmost column. Then, add all internal strengths and weaknesses to the same column. The information listed here should come directly from the EFE/IFE Matrix.
A minimum of 10 external factors and 10 internal factors must be included in the QSPM Matrix.
2. Weighted Score
Assign a weight to each of the important internal and external factors. The weight of each aspect should be the same as those used in the EFE / IFE Matrix. The weight of each aspect is recorded in the column immediately to the right of the first left column.
3. Identify Alternative Options
The third step involves examining the alternative strategies an organization should consider. These strategies are included in the top row of the QSPM. Group the options in a clear way.
4. Determine Attractiveness Scores (AS)
In the fourth step, the attractiveness scores should be defined as numerical values. Attractiveness scores are determined by examining each factor one at a time. The same question is always asked: does this factor influence the choice of which strategy to choose?
Attractiveness scores are added to indicate the relative attractiveness of a strategy relative to another strategy.
The different values used are:
0. Not relevant
1. Not attractive
2. Somewhat attractive
3. Fairly attractive
4. Very attractive
If the factor has no impact or effect on the choice made, do not rate the element.
Then calculate the total attractiveness scores (TAS). This score is shown at the very bottom of the matrix.
The total scores indicate the relative attractiveness of each option. The higher the TAS, the more attractive the alternative is.
Develop the QSPM in a team
Developing the Quantitative Strategic Planning Matrix requires making a number of subjective decisions and assessments. It is therefore advisable to do this together with other experts. This increases the chance that the decisions made are ultimately the best for the organization.
The fact that subjectivity is part of the process is also the main focus of critics of this technique. Ongoing discussion and potential conflicts may lead to different interpretations of the data.
The assessment of attractiveness scores requires intuitive decisions, even if they are based on objective information generated by the EFE / IFE Matrix analysis.
Summary Quantitative Strategic Planning Matrix
The Quantitative Strategic Planning Matrix is an effective method for exploring and choosing different strategic options. The method is usually applied by the senior management of a company, for example by management of the marketing team.
The left column of the matrix lists the most important internal and external factors that say something about the attractiveness of the various alternatives. These alternatives are listed in the top row.
A weighted score is assigned to these factors. The higher the weighted score, the more important this factor.
Partly due to the subjective estimation of the attractiveness score for the alternatives, it is advisable to apply the technique in a group setting. This increases the chance that the decisions taken will ultimately be in favor of the organization.
QSPM template / worksheet
To set-up Quantitative Strategic Planning Matrix, you can use this ready-to-use QSPM template / worksheet in a .DOC format.
It’s Your Turn
What do you think? Do you recognize the explanation about the Quantitative Strategic Planning Matrix (QSPM)? Are there other methods and techniques that you think could be used in combination with the QSPM? When did you have to weigh different alternatives against each other? Did you use this method at the time? Do you have any tips or comments?
Share your experience and knowledge in the comments box below.
- David, M. E., David, F. R., & David, F. R. (2017). The quantitative strategic planning matrix: a new marketing tool. Journal of strategic Marketing, 25(4), 342-352.
- David, M. E., David, F. R., & David, F. R. (2009). The Quantitative Strategic Planning Matrix (QSPM) applied to a retail computer store. The Coastal Business Journal, 8(1), 42-52.
- David, F. R. (1986). The strategic planning matrix—a quantitative approach. Long Range Planning, 19(5), 102-107.
- Garthinda, D., & Aldianto, L. (2012). Business strategy recommendation for warung lepak restaurant using quantitative strategic planning matrix (QSPM). Indonesian Journal of Business Administration, 1(3), 66289.
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Janse, B. (2022). Quantitative Strategic Planning Matrix (QSPM). Retrieved [insert date] from Toolshero: https://www.toolshero.com/strategy/quantitative-strategic-planning-matrix/
Published on: 03/17/2022 | Last update: 03/17/2022
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