Strategic Management

1. STRATEGY ANALYIS AND
CHIOCE
By
Group No. 4 (S4 MBA)
Under the Leadership of
Miss. Sunaina T Suku
MSN Institute of Management and Technology
2013-2015

2. “When a crisis forces choosing among alternatives, most
people will choose the worst possible one”
Rudin’s Law
“Life is full of lousy options”
General P. X. Kelley
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3. Doing Great in a Weak Economy…How ?
A case of Apple Inc
Geoff Colvin, “The World’s Most Admired Companies,” Fortune
(March 16, 2009): 76–86.
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4. Introduction
• Organizations continually face the challenge of
exercising choice among alternatives.
• Strategic choice is an inalienable part of the
decision making process.
• The process of strategic choice is essentially a
decision making process.
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5. • Some strategy option is more appropriate than
other
• Strategist should evaluate the existing
alternatives before choosing the best strategy
• Strategy analysis and choice enable the firm to
achieve its mission and objectives.
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6. Definition
The decision to select from among the grand
strategies considered, the strategy which will
best meet the enterprise’s objective. The
decision involves focusing on a few
alternatives considering the selection factors,
evaluating the alternatives against these
criteria and making the actual choice.”
- Prof. Azhar Kazmi
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7. Approaches for strategic choice
• Planned approach :This approach involves formal
appraisal of the relevant strategic options for suitability,
acceptability and feasibility
• Enforced choice approach :An organization has various
stakeholder. The dominate stakeholders play an important
role in strategic choice. Their expectations considered.
• Experience based approach :Managers possess an
experience curve. Past experience of managers a
guideline for strategic choice.
• Command approach :The strategic choice is based on the
command of top management. It is top down approach.
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8. Process of selecting Strategies
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Focusing on Strategic Alternatives
Evaluating the Strategic Alternatives
Considering Decision Factors
Choosing the best Choice

9. Focusing on Strategic Alternatives
• It involves identification of all alternatives.
• The strategist examines what the organization
wants to achieve (desired performance) and
what it has really achieved (actual performance).
• This done through gap analysis.
• GAP ANALYSIS = Actual Performance –
Desired Performance
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10. Result of GAP analysis Strategy
Large gap due to expected
environmental opportunities
Expansion Strategy
Narrow Stability Strategy
Large due to bad performance Retrenchment Strategy
Multiple reasons Combination Strategy
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11. Evaluating the Strategic Alternatives
• The next step is to assess the pros and cons of
various alternatives and their suitability.
• The tools which may be used are portfolio
analysis, GE business screen and corporate
Parenting.
• Analysis done on the basis of the objective and
subjective factors.
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12. • The Objective Factors- Based on analytical
techniques and hard facts or data.
• The Subjective Factors- Based on one’s
personal judgment, collective or descriptive
factors.
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13. The Objective Factors-
Environmental factors
• Volatility of
environment
• Input supply from
environment
• Powerful stakeholders
Organizational factors
• Organization’s
mission
• Strategic intent
• Business definition
• Strengths and
weaknesses
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14. The Subjective Factors-
• Strategies adopted in the previous period;
• Personal preferences of decision- makers;
• Management’s attitude toward risk;
• Pressure from stakeholders;
• Pressure from corporate culture; and
• Needs and desires of key managers.
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15. Constructing Corporate scenario
• Corporate scenario consists of Performa
balance sheets and income statement which
forecasts the strategic alternative’s impact on
various divisions.
• First: 3 sets of estimated figures for optimistic,
pessimistic and most likely conditions are
manipulated for all economic factors and key
external strategic factors.
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16. • Second: Common size financial statements with
projections are drawn.
• Third: Based on historical data from previous
years balance sheet projection for next 5 years
for Optimistic (O), Pessimistic (P), and Most
likely (M) are developed
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17. Evaluating and Selecting Criteria
Johnson et al (2008)
• Suitability
• Feasibility
• Acceptability (SFA)
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18. Suitability
• It analyzes an organization’s position first and
then changes in the environment and assesses
the fit between these keeping in view the
organizational goal (expectation of stakeholders)
• It evaluates the rationale of the strategic option
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19. • Then needs to define suitability criteria for assessing
the strategy e.g. it could be environmental suitability,
capability suitability and expectation suitability.
• The next thing is to have a selection criterion. This
could be based on
ranking (score cards)
 decision trees
scenario matching
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20. Acceptability
• Here an outcome based view of strategy is taken
and strategy performance expectation is judged.
• The performance of strategy in this case is
measured in terms of return, risk and
stakeholder reactions
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21. • Returns are calculated based on the benefits
stakeholders are expected to get by pursuing
the particular strategy
• The risk of a strategy in this area concerns the
probability of its failure and possible
consequences thereafter
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22. Feasibility
• It considers whether an organization has the required
resources, capabilities and competences to implement
the strategy in practice
• Financial feasibility is established by forecasting and
analyzing cash-flows and/or break-even analysis, among
others.
• Assessment of the availability of other resources, as
deemed necessary to carry out activities involved in the
strategy implementation is also done
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23. Some other Factors
• Cultural Factors
• Political Factors
• Organizational Factors
• Competitive Advantages
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