Concept of robustness of strategy best strategy may

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- Concept of robustness of strategy, best strategy may be variance/fault tolerant - Careful of assumptions that are biased: o Anchoring (rooting beliefs in certain outcomes) o Selective perception (expectations influence perceived results) o Illusion of control (success based on effort while failure based on external events) o Availability (basing assessment on readily available information rather than required data) 5: Will the forecast financial results be achieved and increase shareholder value? - Look to other ways to measure shareholder value (discounted cash flow) Subject these alternatives to a rigorous strategy review (Diamond-E, etc.) 15
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BU481 – Midterm #2 Questions- List 1 & 2 2010 4. According to the article “Evaluating Strategic Alternatives”, please define and describe the five tests that should be used to assess and rank strategic alternatives. What is /are the difference(s) between the Diamond E framework and this set of tests? Tests Definitions 1. How attractive is the market opportunity Analysis around PEST and how it relates to the company’s current situation Market size and growth Cyclicality of the market Present and future competitive environment The breakdown of the market segmentation and how it can develop in the future Ease of channel access Break Even share 2. How sustainable is the competitive advantage Supply side barriers: o Distinctive capabilities : complex set of skills and knowledge that ensure superior coordination of activities and high utilization of assets o Proprietary Technology : Product, process, and managerial innovations can be protected by copyrights, patents and confidentiality o Economies of Scale/Scope: sustainable cost advantages can be created through investments that can not be readily duplicated by competitors either they cant afford it or they do not have the capacity to compete Demand side barriers: o Consumer/Channel Relationships : currently, channels and consumers are looking for more personal relationship with their joining businesses. The ability to engage in problem solving together reduces overall wait time and faster time to market o Brand Equity : serves as a proxy for quality and creates positive images in consumers’ minds. It represents a long history of success and that’s why it’s a significant and durable advantage 3. What are the prospects for successful implementation Feasibility: Does the business possess the necessary skills and resources? o Does the business have: financial/physical resources, access to markets, technology and servicing capabilities and individuals and organizations Supportability: Do the key implementers understand the strategy and are they committed to it? o The elements of the strategy must be readily communicable o Strategy should challenge and motivate key personnel Consistency: Does the strategy hold together?
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