Strategic choice is a decision making process. Strategic choice could be defined as the decision to select from among the grand strategies considered, the strategy which will best meet the enterprise’s objectives. The decision involves focusing on a few alternatives, considering the selection factors, evaluating the alternatives against three criteria, and making the actual choice. The four steps in the process of strategic choice are; •
Focusing on alternative
Considering the selected factors
Evaluation of strategic alternatives
Making the strategic choice
FOCUSING ON ALTERNATIVES: Focusing on a few alternatives aims at narrowing down the choice to a manageable number of feasible strategies. It is possible to consider all many alternatives would make the process unproductive. In deciding what would be a reasonable number of alternatives, it is advised to start with the business definition. Focusing on alternatives could be done by visualizing a future state and working backwards from it. This is done through a gap analysis. A company set objectives for a future period of time and then works backwards to find out where it can reach through the present level of efforts. By analyzing the difference between projected and desired performance, a gap can be found. Where a gap is narrow, stability strategies would seem to be a feasible alternative. If the gap is large, expansion strategies are more suitable. If it is large due to past and expected bad performance, retrenchment strategies may be more suitable.
CONSIDERING THE SELECTED FACTORS: Narrowing the strategic choice to a few alternatives is made easier by considering the business definition and a thorough gap analysis. These analyses are subjected to further analysis and such analysis has to rely on certain factors called selection factors. They determine the criteria on which the evaluation of strategic alternatives can be based. The selection factors can be divided into two groups: the objective and subjective factors. Objective factors are based on analytical techniques and are hard facts or data used to facilitate a strategic choice. They could also be termed as rational, normative or prescriptive factors. Subjective factors are based on one’s personal judgment and collective or descriptive factors.
EVALUATION OF STRATEGIC ALTERNATIVES: This involves bringing together the results of the analysis carried out on the basis of the objective and subjective factors. The steps for analyzing the different alternatives on the basis of selection factors lie at the heart of such an evaluation. There is no set procedure and strategies, any approach which suits the circumstances may be used.
MAKING THE STRATEGIC CHOICE: An evaluation of strategic choices lead to a clear assessment of which alternative is the most suitable under the existing conditions. The final step is to make the strategic choice. One or more strategies have to be chosen for implementation.
CORPORATE LEVEL STRATEGIC ANALYSIS
This treats a corporate entity as constituting a portfolio of businesses under a corporate umbrella. The strategic alternatives are basically the grand strategies of stability, expansion, retrenchment, and combination strategies. Corporate level strategic analysis is relevant to the case diversified corporation which has several businesses. For companies that are single business entities, business level strategic analysis is sufficient.
CORPORATE PORTFOLIO ANALYSIS
This is a set of techniques that evolved during the mid 1960’s and before long became a management fad. In the 1970’s, a tendency to discredit these techniques arose when it was realized that the assumptions did not always hold. Corporate folio analysis could be defined as a set of techniques that help strategists in taking strategic decisions with regard to individual products or businesses in a firm’s portfolio. It is used for competitive analysis and corporate strategic planning in multiproduct and...
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