Strategic Management and Decision Process
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
• 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