The QSPM (The Quantitative Strategic Planning Matrix) is based on the SWOT analysis (Strengths, Weaknesses, Opportunities and Threats). The SWOT analysis is used to identify the internal and external factors that can affect the success of a strategy. The QSPM then takes this information and uses it to evaluate the relative attractiveness of each strategy.
The QSPM works by assigning a weight to each of the SWOT factors based on their importance to the organisation. The weights are then multiplied by the estimated impact of each strategy on each factor. The resulting scores are then added up to give an overall score for each strategy. The strategy with the highest score is then chosen as the best option.
The QSPM is a useful tool for organisations looking to make informed decisions about their strategies. It helps to ensure that decisions are based on facts rather than gut feelings and can help organisations to identify the best strategy for their particular situation.
Understanding the QSPM Matrix
QSPM is based on three primary inputs:
The critical success factors of your business unit.
The relative importance of each of these essential factors of success.
How you rate a particular strategy by each success factor.
These inputs are used to evaluate the relative attractiveness of different strategies. This relative attractiveness is expressed in terms of a number, the "Sum Total Attractiveness Score". The higher this score is, the more attractive the strategy is.
High-level summary of the steps:
Step 1: List the Critical Success Factors
List the success factors which apply to your organisation.
Step 2: Assign Weightings
Assign a weight to each of these critical success factors. The sum of all weights attached to internal factors should equal 1.0
Step 3: List the Strategies
Step 4: Assign Attractiveness Scores
Not attractive at all
Step 5: Calculate the Weighted Attractiveness Scores
For each Attractiveness Score/Weight combination on your QSPM table, calculate the Weighted Attractiveness Score (WAS) by multiplying the weight by the AS you have assigned for that factor.
Step 6: Sum the Total Attractiveness Scores
Sum all the WASs for each column and arrive at the Sum Total Attractiveness Score for each strategy. Record it in the bottom row. This represents the desirability of that particular strategy.
So to summarise:
QSPM is a useful analytical tool that helps you determine the relative attractiveness of different strategies.
It asks you to identify the essential external and internal critical success factors for your business unit and then helps you assess these strategies in light of these crucial factors of success. This effect is evaluated in numerical terms. The strategy that scores the highest is usually your best choice.