Professional Documents
Culture Documents
Chapter 9
Learning Outcomes
Describe the nature of strategic options Explain the key areas of strategic decisions Understand and describe the 4 criteria for strategic options Understand financial tools used to evaluate strategic options
Key Definitions
Strategic, tactical and operational decisions Goods Services Industrial products, consumer products Convenience, shopping and specialty products Product lifecycle Suitable Feasible Acceptable
Strategic Analysis
Strategic Analysis
INTERNAL ANALYSIS
PRODUCTS AND MARKETS Market Segmentation Kotlers product benefit Copelands product typology Product life cycle BCG Matrix GEC Matrix Chap 5
FINANCIAL ANALYSIS Hamel and AND Prahalad PERFORMANCE Core Competence INDICATORS ORGANISATIONAL Sources of finance Porter CULTURE WACC and CAPM Value Chain Handys typology Ratio Analysis analysis Miles & Snow culture Benchmarking types
HUMAN RESOURCES Audit Analysis
Chap 2
Chap 3
Chap 4
Pgs. 33-111
EXTERNAL ANALYSIS
SPENT Macroenvironment Socio-demographic Political Economic Natural Technological
COMPETITIVE ADVANTAGE Competitive Positioning Porters generic Resource-based/Core Competence Prahalad and Hamel Knowledge-based Stonehouse and Pemberton
Chap 6
Strategic options/choice
Pgs. 115-177
Strategic Decisions
LEVELS
STRATEGIC TACTICAL
OPERATIONAL Level of decision-making Focus Scope Time horizon Complexity Degree of uncertainty
Products and markets (Chapter 5) Generic strategy and scope (Chapter 8) Growth and development options (Chapter 11)
Which products should we produce? In which markets should we sell our products?
Product and market categories Product features Product and market portfolios Life cycle considerations
Goods/services Consumer/industrial products Convenience, shopping or specialty products (Copelands classification) Geographic area International decisions Benefits and risks
Markets
Product Features
Focuses on the benefits of the product Decisions may be based on Kotlers 5 levels of product benefit
Core benefit Basic product Expected product Augmented product Potential product
Internal external
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?
Suitable fitting, appropriate Is the strategic option appropriate for achieving the strategic goal? Example: a cost leadership strategy may not be suitable if the strategic goal is to create a premium brand
Feasible capable of being done or carried out Feasibility will often depend on the organizations physical, financial, human and intellectual resources Example: a strategy that involves diversification (new products for new markets) may require a large capital investment cost. If the organization has difficulty getting the capital, the strategy is not feasible.
Acceptable capable of being received For strategy, the proper question is: Is the strategy acceptable to the stakeholders? Remember, stakeholder influence differs based on power and interest
The strategy is not worth pursuing unless it either results in superior performance or above average profits
Cash-flow forecasting
The organization forecasts (predicts) the expected income from the strategic option Example
Investment Appraisal
Payback period
Cost/benefit analysis comparing the costs of the strategic option (including financial and opportunity costs), with the benefits (financial and intangible benefits) Impact analysis Sensitivity analysis