STRATEGIC CHOICE

Introduction Strategic choice is the next logical element in the strategic decision-making process. Good strategic choices have to be challenging enough to gain competitive advantage, but also achievable and within the resource capabitities of the organisation.

Importance of Strategic Choices Whether a business success or fails depends in large measure on the strategic choices made by the owner. The most successful companies can allocate scarce resources to the projects that have the greatest positive impact on revenue growth or improvements in productivity and efficiency that can increase profit margins.

Ansoff’s matrix The Ansoff Growth matrix is a marketing planning tool that helps a business determine its product and market growth strategy.

Market penetration

Maintain or increase the market share of current products.

Secure dominance of growth markets.

Restructure a mature market by driving out competitors.

Increase usage by existing customers.

Market development

New geographical markets.

New product dimensions or packaging.

New distribution channels.

Different pricing policies to attract different customers or create new market

segments.

Product development

Research & development and innovation.

Detailed insights into customer needs (and how they change).

Being first to market.

DiversificationDiversification is the name given to the growth strategy where a business markets new products in new markets.

Evaluation of Ansoff’s matrix The Ansoff matrix is one of the more popular analytical tools for business. It offers an easy way of understanding a company's present position relative to its products and markets. At the same time, it also enables an organization to chart its direction and determine what appropriate strategies for growth should be taken. While it has its own limitations and inherent risks, these can be overcome by careful analysis and with the help of the other analytical tools available

Force-field analysis Is a technique for identifyng and analysing the positive factors that support a decision (‘driving forces’) and negative factors that constraint it (‘restraining forces’).

Conducting a force-field analysis

Analyse the current situation and the

desired situation.

List all of the factors driving change

towards the desired situation.

List all of the constraining

factors against change towards the desired situation.

Allocate a numerical score to each force.

Chart the forces on the diagram.

Total the scores and establish from this

whether the change is really viable.

Discuss how the succes of the change or proposed decisión can be affected by decreasing the

strength of the restraining forces and increasing the strength of the driving forces.

Example of force-field analysis

Possible management strategies include: Staff could be trained (increase cost by 1) to help eliminate fear of technology (reduce staff concern about new technology, -2).

It would be important to show staff that

change is necessary for business survival (add a new force in

favor, +2).

Staff could be shown that new IT equipment would introduce new skills and interest to their Jobs (add a new force in favor, +1).

Managers could raise wages to reward staff

for higher productuvity (increase cost, +1, but reduce cost by loss of

staff, -2).

IT machines could be selected that are more

energy efficient (environmental impact new technology, -1).

Evaluation of force-field analysis This technique is widely used in 'change situation' for the reasons given, yet it has two main limitations as a strategic-choice method:- Unskilled or inexperienced managers could fail to identify all of the relevant forces involved in the change process. - The allocation of numerical values to the driving and constraining forces is rather subjective. For example, two managers independently undertaking the same force-field analysis could arrive at rather different values for the forces and, consequently, propose different decisions based on their assessments.