Process of strategic choice

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Process of strategic choice

  1. 1. Process of Strategic Choice
  2. 2. Content Introduction Strategic Choice- A Definition Process of Strategic Choice Subjective Factors in Strategic Choice Contingency Strategies Strategic Plan
  3. 3. IntroductionOrganizations continually face the challengeof exercising choice among alternatives.Strategic choice is an inalienable part of thedecision making process. The process ofstrategic choice is essentially adecision making process.
  4. 4. STRATEGIC CHOICE“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
  5. 5. Process of strategic choice
  6. 6. Focusing on strategic alternativesFocusing on alternative could be done byvisualizing the future state and workingbackwards. This done through gap analysis.
  7. 7. GAP AnalysisGAP ANALYSIS = Projected Performance – DesiredPerformance
  8. 8. Gap Analysis For Focusing on Strategic Alternatives Desired Performance performance Present Performance gap performance T1 T2 TIME
  9. 9. Strategic Alternative At the corporate level:2.Expansion Strategy3.Stability Strategy4.Retrenchment Strategy5.Combination Strategy
  10. 10. Expansion StrategyIf the performance GAP is large due toexpected environmental opportunity,Expansion Strategy would be seem to be afeasible alternative.
  11. 11. Stability StrategyIf the “Performance Gap” is narrow thenStability Strategy would be seem to be afeasible alternative.
  12. 12. Retrenchment StrategyIf the performance GAP is large due to Pastand expected bad performance thenRetrenchment Strategy would be seem to be afeasible alternative.
  13. 13. Combination Strategy In the complex scenario, where the multiple reason for the performance GAP then Combination Strategy would be seem to be a feasible alternative.
  14. 14. Strategic Alternatives At the business level: Organization need to think alternative ways of competing. Choice is essentially between positioning the business as being low-cost, differentiated or focused.
  15. 15. Strategic Alternatives At the business level: It needs to understand the conditions of the industry’s risk and benefit of each competitive positioning before making a choice. By reverting business definition (Page 40-44), (3 dimensions) –Customer group –Customer functions and –Alternative technologies.
  16. 16. Analyzing the strategies Alternatives An analysis has to rely on certain factors. These factors are termed as selection factors. 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.
  17. 17. Evaluating the strategic Alternatives Evaluation of strategic alternatives basically involves bringing together the analysis done on the basis of the objective and subjective factors. To observe what is important, both the factors have to be consider together.
  18. 18. Choosing From Among the Strategic Alternative This is the final step of making the strategic choice. One or more strategies have to be chosen for implementation. Also a blue print has to be made that will describe the strategy and the condition under which they operates.
  19. 19. Subjective Factors in Strategic ChoiceSubjective factors are essentially intuitive anddescriptive in nature. Here no “cut and dried”analytical models can be used. It considermany of the issues that can not probablyshould not be dealt within the application ofanalytical models.
  20. 20. Subjective Factors in Strategic Choice Consideration for Government Policies. Perception of critical success factors (CSFs) and dist . Commitment to past strategic actions. Strategist’s decision styles and attitude to risk. Internal Political Considerations. Timing and Competitor Considerations.
  21. 21. Consideration for Government Policies Strategies within organizations are aware of the crucial role the Government plays in setting down politics and priorities. In fact Government policies are the deciding factor which impact on the future prospects of companies.
  22. 22. Perception of critical success factors and distinctive competencies For consider several strategic alternatives, strategist could be guided by the distinctive competencies that the organization possesses and the CSFs that ensure success in any industry. 2–22
  23. 23. Commitment to past strategic actions Past strategic action shows that they move in an incremental fashion. By this strategist are more likely to start from where the organization is, and work up in the way that had been adopted by it to reach where it was.
  24. 24. Strategist’s decision styles and attitude to risk The decision style adopted by strategist, particularly by CEO and their attitude to risk is a determining subjective factors in strategic choice.
  25. 25. Internal Political Considerations. When strategy formulation is viewed as a political process, strategist are viewed as a coalition of interest. A dominant CEO is able to affect strategic choice a decisively.
  26. 26. Timing and Competitor Considerations When to exercise a strategic choice? When a particular strategic choice is to be made? For what time period is a strategic choice to be made? What are the competitor action?
  27. 27. Webster DictionaryInalienable: you areemphasizing that they have aright to it which can not bechanged or taken away.
  28. 28. Internal Political Consideration Here it means, Inter-relationship and power structure and balance. The political behavioral in organisation is perfectly naturally legitimate… politics and power are neither good nor bad. They are natural.
  29. 29. Critical success factor (CSF) This is the term for an element that is necessary for an organization or project to achieve its mission. CSF are those few things that must go well to ensure success for a manager or an organization, and, therefore, they represent those managerial or enterprise area, that must be given special and continual attention to bring about high performance. CSFs include issues vital to an organizations current operating activities and to its future success.“ Source- Wikipedia
  30. 30. Distinctive competence Distinctive competence of a firm refers to a set of activities or capabilities that a company is able to perform better than its competitors and which gives it an advantage over them. Distinctive competence can lie in different area such as technology, marketing activities, or management capability. Source- Wikipedia
  31. 31. Decision making process Because it consists of: –Setting objectives –Generating alternatives. –Choosing one or more alternatives. –Finally implementing the chosen alternatives.
  32. 32. Intuitive Webster: It feels that it is true although it have no evidence or proof of it. Oxford: having or, perceived by intuition.
  33. 33. Contingency strategies This strategy is formulate in advance to deal with uncertainties that are a natural part of business. There are few approach to help companies to develop and implement this strategy i.e. model of contingency planning process: Identifying contingency events; Establishing the trigger points and; Developing strategies and tactics.
  34. 34. Strategic Plan Strategic plan (also called a corporate, group or perspective plan), is a document which provides information regarding the differences elements of strategic management and the manner in which an organization and its strategist propose to put the strategies into action. Basic steps in a strategic planning process are as follows:
  35. 35. Step One - Getting Ready An organization that determines it is indeed ready to begin strategic planning must perform five tasks to pave the way for an organized process: – Identify specific issues or choices that the planning process should address. – Clarify roles (who does what in the process). – Create a Planning Committee. – Develop an organizational profile. – Identify the information that must be collected to help make sound decisions.
  36. 36. Step Two - Articulating Mission and VisionIt is like an introductory paragraph. a mission statementmust communicate the essence of an organization tothe reader. It describes an organization in terms of its:Purpose - why the organization exists, and what it seeks to accomplish.Business - the main method or activity through which the organization tries it fulfil this purpose.Values - the principles or beliefs that guide an organizations members as they pursue the organizations purpose.
  37. 37. Step Three - Assessing the SituationOnce an organization has committed to why itexists and what it does, it must take a clear-eyed look at:- Its current situation.- Part of strategic planning, thinking, andmanagement is an awareness of resources and- An eye to the future environment, so that anorganization can successfully respond tochanges in the environment.
  38. 38. Step Three - Assessing the Situation- Situation assessment (means obtainingcurrent information about the organizationsstrengths, weaknesses, and performanceinformation) that will highlight the criticalissues that the organization faces and that itsstrategic plan must address.
  39. 39. Step Four - Developing Strategies, Goals, and ObjectivesOnce an organizations mission has beenaffirmed and its critical issues identified, it istime to figure out what to do about them. Thebroad approaches to be taken and the generaland specific results to be sought (the goalsand objectives). This strategies may comefrom individual inspiration, group discussion,formal decision-making techniques, and so on.
  40. 40. Step Five - Completing the Written PlanThe mission has been articulated, the criticalissues identified, and the goals and strategiesagreed upon. This step essentially involvesputting all that down on paper!
  41. 41. Format for a Strategic Plan1. INTRODUCTION 1.1 Background and organizational profile2. MISSION STATEMENT 2.1 Vision 2.2 Mission 2.3 Values3. ASSESSING THE SITUATION 3.1 Introduction 3.2 Review of Past Performance 3.3 Strengths, Weaknesses, Opportunities and Threats Analysis 3.4 Critical Issues
  42. 42. Format for a Strategic Plan4. STRATEGIES, GOALS AND OBJECTIVES 4.1 Approaches to be taken (Strategies) 4.2 General and specific results (Goals and Objectives)5. IMPLEMENTATION STRATEGY 5.1 Implementation of the strategies 5.2 Action Planning (activities, budget & financing etc.) *Source- IGNOU Book
  43. 43. References Strategic Management and Business Policy- -Prof. Azhar Kazmi Strategic management (IGNOU Books) www.wikipedia.com www.google.com
  44. 44. 2–44
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