This document discusses strategic choices for organizations. It identifies three categories of strategic choices: competitive strategies about how an organization competes, product market strategies about where an organization competes and growth strategies, and institutional strategies about an organization's method of growth. The document also examines Porter's generic strategies of cost leadership, differentiation, and focus. Additionally, it explores the options of organic versus inorganic growth and international strategies for expanding an organization.

1. Shahriar I
Strategic Choice
SBM:CLASS 2021
2

2. Shahriar I
Strategic
Choice
Strategic option
Strategic
decision
making
Evaluating
options
International
strategies
STRATEGIC CHOICE
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3. Shahriar I
1. Competitive strategies: How an organization competes?
2. Product Market Strategies: Where an organization competes
and growth strategy (remember Ansoff matrix)
3. Institutional strategies: Determines the method of growth
(organic and inorganic)
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THREE CATEGORIES OF STRATEGIC
CHOICES

4. Shahriar I
Strategic
Options
COST OR DIFFERENTIATION?
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5. Shahriar I 5
PORTER ARGUES THAT A FIRM SHOULD ADOPT A COMPETITIVE STRATEGY (PROFIT>COST)
THAT IS INTENDED TO ACHIEVE SOME FORM OF COMPETITIVE ADVANTAGE FOR THE
FIRM.
IN TERMS OF ECONOMIC THEORY, THIS IS 'EXCESS PROFIT' OR 'ECONOMIC RENT'.
THE EXISTENCE OF EXCESS PROFIT TENDS TO BE TEMPORARY BECAUSE OF THE EFFECT
OF THE FIVE COMPETITIVE FORCES.
(PORTER'S FIVE FORCES).
WHEN A COMPANY CAN CONTINUE TO EARN EXCESS PROFIT DESPITE THE EFFECTS OF
COMPETITION, IT POSSESSES A SUSTAINABLE COMPETITIVE ADVANTAGE.
COMPETITIVE STRATEGY: TAKING OFFENSIVE OR DEFENSIVE ACTIONS TO CREATE A
DEFENDABLE POSITION IN AN INDUSTRY, TO COPE SUCCESSFULLY WITH COMPETITIVE
FORCES.
TO BE SUCCESSFUL, PORTER ARGUES, A COMPANY MUST FOLLOW ONLY ONE OF THE
STRATEGIES.
IF THEY TRY TO COMBINE MORE THAN ONE, THEY RISK LOSING THEIR COMPETITIVE
ADVANTAGE AND BECOMING 'STUCK IN THE MIDDLE'.
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Porter’s Generic Strategy
Cost
leader
Differentiator
Stuck in
the
middle
Focused

6. Shahriar I
1. Set up production facilities to obtain economies of
scale
2. Use technology and high-tech systems to reduce
costs and/or enhance productivity.
3. Exploit the learning curve effect
4. Minimize overhead costs
5. Get favorable access to sources of supply and buy in
bulk wherever possible (to obtain
discounts for bulk purchases)
6. Product relatively standardized products
7. Relocate to cheaper areas (possibly in a different
country)
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COST LEADERSHIP

7. Shahriar I
Products may be divided into three categories.
1. Breakthrough products offer a radical performance advantage
over competition, perhaps at a drastically lower price.
2. Improved products are not radically different from their
competition but are obviously superior in terms of better
performance at a competitive price.
3. Competitive products derive their appeal from a particular
compromise of cost and performance. For example, cars are not all
sold at rock-bottom prices, nor do they all provide immaculate
comfort and performance. They compete with each other by trying
to offer a more attractive compromise than rival models.
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DIFFERENTIATION
Brand image
Special feature
Value chain

8. Shahriar I
Cost focus
Differentiation
focus
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FOCUS OR NICHE

9. Shahriar I
Home-Organic
Home-Inorganic
•M&A
•Acquisition
•JV
•Alliances
•Franchise
•License
International-Organic
•Export
•Overseas office
•Toll manufacturing
•MNC
•Global ops
International –Inorganic
•M&A
•Acquisition
•JV
•Alliances
•Franchise
•License
•Contract Manufacturing
Method of growth
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ORGANIC VS INORGANIC

10. Shahriar I
Strategic
Decision
Making
RIGHT OR WRONG?
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11. Shahriar I
Decision Making
Feasibility
Acceptability
Suitability
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DECISION MAKING

12. Shahriar I
Evaluating
Options
BLINK OR INFORMED?
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13. Shahriar I
1. net present value
2. internal rate of return
3. payback period
4. return on capital employed
5. return on investment
6. residual income
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QUANTITATIVE CRITERIA

14. Shahriar I
Analysis of main competitors
Marketing history/tactics
Competitive advantages
Analysis of resources
Strengths and weaknesses
Integration issues
Supplier analysis
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COMMERCIAL DUE DILIGENCE
Market growth expectations
Ability to achieve forecasts
CSF
KPI
Exit potential
Management appraisal
Strategic evaluation

15. Shahriar I
International
Strategies
BETTER OFF VS EXPANSION?
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16. Shahriar I
Cost or
Competence
Market Led
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KEY DECISION IN INTERNATIONAL
EXPANSION

17. Shahriar I
REFERENCES
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18. Shahriar I
QUESTIONS
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19. Shahriar I
LinkedIn
/shahriar81
Twitter
@shahriar17
Email
shahriar.halim@gmail.com
Phone
(880)1712535438
CONTACT DETAILS
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