Making strategic choices

Formulating a strategy involves analysis of environment and matching the results to goals/aims of the organisation so that a strategic choice can be made from key alternative strategies. A basic model indicating the place of strategic choice in the overall process of strategy formulation may be given by the above figure. The model suggests that choices are made in the light of organisational goals and aims and the evaluations of its internal and external environment. The chosen strategies are intended to meet the principal goals of the organisation in terms of direct stakeholders satisfaction i.e. those who have a prime stake in the organisations results such as customers, shareholders or suppliers. The fact that some strategic choices are aimed at deflecting the competition (indirect stakeholders) is implied in the results to be achieved by direct stakeholders but it is not stated directly in this model. The extent to which goals are attained provides a feedback to the organisations senior management and may lead to appropriate definition of organisations goals/aims. This process can be repeated when new strategies have to be developed.

Strategic Options Open To Business Organisations

Business organisations have the following strategic options:-

•    Consolidation (i.e. strengthen its activities by following previous strategy).
•    Market penetration – (build on current position)
•    Market development _ (seeking new markets)
•    Product/service development i.e. developing new products/services
•    Price leadership – i.e. offering most competitive prices in the market
•    Differentiation – i.e. developing a product or service that is seen to be unique in the industry.
•    Niche strategy – (i.e. developing a distinctive marketing mix aimed at a specialists market)
•    Growth via acquisitions and joint ventures
•    Divestments i.e. selling off part of the business/subsidiary
•    Withdrawal i.e. selling up-entirely/closing down/liquidation.

The objective of these strategies (apart from withdraw) is two fold:-

•    To ensure the general health and survival of the business
•    To attain increased growth and prosperity.