evaluating and selecting strategies 1
TRANSCRIPT
-
8/3/2019 Evaluating and Selecting Strategies 1
1/16
Evaluating and SelectingEvaluating and Selecting
StrategiesStrategies
Prof. Rushen Chahal
-
8/3/2019 Evaluating and Selecting Strategies 1
2/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
3/16
Strategic Analysis
Evaluation and
Selection of Strategies
Strategic Process (so far)
-
8/3/2019 Evaluating and Selecting Strategies 1
4/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
5/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
6/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
7/16
Identifying Strategic OptionsIdentifying Strategic Options
Product and Market
Decisions
Generic Strategy
Decisions
Growth and
Development Decisions
-
8/3/2019 Evaluating and Selecting Strategies 1
8/16
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?
-
8/3/2019 Evaluating and Selecting Strategies 1
9/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
10/16
Generic Strategy DecisionsGeneric Strategy Decisions
Cost Leadership? Differentiation?
Cost Focus? Focused
Differentiation?
-
8/3/2019 Evaluating and Selecting Strategies 1
11/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
12/16
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?
-
8/3/2019 Evaluating and Selecting Strategies 1
13/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
14/16
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.
-
8/3/2019 Evaluating and Selecting Strategies 1
15/16
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
-
8/3/2019 Evaluating and Selecting Strategies 1
16/16
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