Evaluating and Selecting Strategies 1

8/3/2019 Evaluating and Selecting Strategies 1

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Evaluating and SelectingEvaluating and Selecting

StrategiesStrategies

Prof. Rushen Chahal


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Learning OutcomesLearning Outcomes

y Describe the nature of strategic options

y Explain the key areas of strategic

decisions

y Understand and describe the 4 criteria

for strategic options


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Strategic Analysis

Evaluation and

Selection of Strategies

Strategic Process (so far)


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Hamel and

Prahalad

Core Competence

Porter

Value Chain

analysis

HUMAN

RESOURCES

Audit Analysis

ORGANISATIONAL

CULTURE

Handys typology

Miles & Snow culture

types

INTERNAL ANALYSIS

FINANCIAL

ANALYSIS

AND

PERFORMANCEINDICATORS

Sources of finance

WACC and CAPM

Ratio Analysis

Benchmarking

PRODUCTS AND

MARKETS

Market

Segmentation

Kotlers productbenefit

Copelands product

typology

Product life cycle

BCGMatrix

GEC

M

atrix

Pgs. 33-111

Chap 2 Chap 3 Chap 4 Chap 5


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EXTERNALANALYSISEXTERNALANALYSIS

SPENT

Macro-

environmentSocio-demographic

Political

Economic

Natural

Technological

INDUSTRYPorters 5-forces

Resource-based

COMPETITIVE ADVANTAGE

Competitive Positioning

Porters generic

Resource-based/CoreCompetence Prahalad

and Hamel

Knowledge-based

Stonehouse and Pemberton

ANSOFFs

Product/GrowthMatrix

Strategic

options/choiceStrategic

options/choice

Pgs. 115-177

Chap 6 Chap 7 Chap 8


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Evaluation and Selection of Strategies:Evaluation and Selection of Strategies:

The ProcessThe Process

Strategic Analysis

Evaluating and selecting strategy

Identifying Strategic

Options

Applying Evaluation

Criteria


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Identifying Strategic OptionsIdentifying Strategic Options

Product and Market

Decisions

Generic Strategy

Decisions

Growth and

Development Decisions


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Product and Market DecisionsProduct and Market Decisions

y Two questions are answered:

Which products should we produce?

In which markets should we sell our

products?


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Product and Market DecisionsProduct and Market Decisions

(cont.)(cont.)y Decisions to be made include:

Product and market categories

Product features

Product positioning

Product and market portfolios

Life cycle considerations

y Tools to use include (from Chapter 5):

BCG Matrix

Product life cycle Market segmentation strategies

Product positioning strategies

Copelands classifications


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Generic Strategy DecisionsGeneric Strategy Decisions

Cost Leadership? Differentiation?

Cost Focus? Focused

Differentiation?


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Growth and Development DecisionsGrowth and Development Decisions

y Generic growth direction (Ansoffs

Growth Matrix)

Market penetration

Market development

Product development

Diversification

y Mechanisms for generic growth strategies Growth vs. downsizing/contracting

Internal growth vs. external growth


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Applying Evaluation CriteriaApplying Evaluation Criteria

y Four criteria can be used to assess each

option:

Is the strategic option suitable?

Is the strategic option feasible?

Is the strategic option acceptable?

Will the strategic option give the organization

a competitive advantage?


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Is the strategy suitable?Is the strategy suitable?

y Suitable fitting, appropriate

y Is the strategic option appropriate for

achieving the strategic goal?

y Example: a cost leadership strategy may

not be suitable if the strategic goal is to

create a premium brand


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Is the strategy feasible?Is the strategy feasible?

y Feasible capable of being done orcarried out

y Feasibility depends on the organizations

physical, financial, human and intellectualresources

y Example: a strategy that involvesdiversification (new products for newmarkets) may require a large capitalinvestment cost. If the organization hasdifficulty getting the capital, the strategy isnot feasible.


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Is the strategy acceptable?Is the strategy acceptable?

y Acceptable capable of being received

y For strategy, the proper question is: Is the

strategy acceptable to the stakeholders?

y Remember, stakeholder influence differs

based on power and interest


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Will the strategy lead to competitiveWill the strategy lead to competitive

advantage?advantage?

y The strategy is not worth pursuing unless

it either results in superior performance

or above average profits

Evaluating and Selecting Strategies 1

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