Chapter 8: Strategicoptions and choice
PurposePurpose ofpresentationProvide clarity andanswer questionsGoing forward
Chapter 8Chapter learning objectivesLeadComponentC2: Discuss how to generate and developoptions(a-b) Discuss how to frame key strategicquestions and diagnose an organisation’sstarting position.D1: Evaluate options(a) Develop criteria for evaluation(b) Evaluate options against criteria(c) Recommend appropriate optionsD2: Produce strategy by the integration ofchoices into coherent strategy(b) Portfolio analysisE2: Advise on resources allocation tosupport strategy implementation(b) Align resources allocation to supportstrategic choices.
SECTION 1: STRATEGIC EVALUATION ANDCHOICE
Strategic evaluation and choice•What should we do to enable us to have the best chance ofachieving our objectives?•What strategy should we follow?•Maybe there are many ways to achieve the end result.
SECTION 2: KEY STRATEGIC QUESTIONS
Key strategic questions
SECTION 3: STRATEGIC OPTIONS – THE STRATEGIC MODELS
Strategic options – the strategic modelsThere are several models that you must be familiar with.•Porter: Generic strategies looks at competitive strategy•Ansoff: product market matrix directions for growth•Boston Consulting Group (BCG): growth share matrix•These models suggest several possible strategies that theorganization could adopt.•The organization can pick the one that best fits its circumstanceswhich it will have identified from the internal and external analysisthat it has undertaken.
Strategic options – the strategic modelsBenefits:•These models provide a useful starting point for the discursiveprocess as they initiate discussion amongst the management teams•They are well known and as such have credibility•They generate options that can be used in the debate and allowcomparison•They can in some instances be linked to each other to enhancetheir analysis•They can be used simply or be developed into more complicatedapplications
Strategic options – the strategic modelsLimitations:•They are simplistic – most are two by two models.•Given the prominence in management education undue emphasistends to be placed upon them and there is a tendency at times tothink that the models will provide a solution.•They are dated and were produced when environments were verydifferent.•They tend to suggest that strategic choice is a straightforwardprocess.•They serve as a good basis for analysis but are not perfect and donot apply to every situation.
SECTION 4: PORTER’S GENERIC STRATEGIES
Porter’s Generic Strategies
Porter’s Generic StrategiesCost leadership strategy•Business organizing itself to be the lowest cost producer•Does not mean producing an inferior product•Potential benefits are:–Business can earn higher profits by charging the same price as competitorsor even moving to undercut where demand is elastic–Let's a company build defense against price wars–Allows price penetration entry strategy into new markets–Enhances barriers to entry–Develops new market segments
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Term
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