Assumptions be distinguish from those that are

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assumptions be distinguish from those that are unexamined, possibly wrong and potentially misleading 4. Help to isolate risks, contingencies and control factors. The actual results from a chosen strategy will almost always differ from the forecasts. To minimize the damage from these “surprises,” the management team needs to think through all the things that could go wrong, prepare contingency plans that acknowledge the likelihood of theses surprises and supply remedies in advance of their occurrence. This line of thinking will help to identify control factors that can be monitored as early indicators of trouble and can trigger remedial action. Flexibility and responsiveness can be built into the organization and the strategy when these protective measures are present. 15) According to the article “Evaluating Strategic Alternatives”, please define and describe the three fundamental issues that determine the payoff of a strategic choice. Please provide an example discussed in class or the textbook or a case where some of these issues apply. Financial results are the outcomes of decisions; they will be valued and meaningful only if they credibly address the three  fundamental issues that determine the payoff from a strategic choice:  The three payoffs are: 1. The prospects of superior profitability  depend on the attractiveness of the market opportunity and the ability of  the business to gain and sustain a competitive advantage.  2. The chances that superior profitability will be realized:   whether the intended strategy, which promises  superior – or at least acceptable- profitability, has a reasonable chance of being realized. Can this strategy be  implemented with the skills and resources at hand? If not, can deficiencies be overcome without too much extra cost or  time delay? 3. Whether the risk reward ratio is acceptable?  Specifically, what things might go wrong? Can the damage that  might be wrought be contained? Will credible forecasts of revenues, costs, and investments yield profit returns that  warrant taking these risks?
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Example – Johnson Controls (auto) had a hidden asset of market position. Were previously producing most valuable and complicated component of interior subsystem (seating). Used market position to expand and become systems integrator (complete cockpits). Addressed automakers’ higher order needs 16) According to the article “Evaluating Strategic Alternatives”, financial results / projections should be the last consideration in making a strategic decision. Please define and describe four reasons that support Day’s position.
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  • Winter '13
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