ELEMENTS OF STRATEGIC MANAGEMENT, TY BBA (Marketing), VNSGU
CHAPTER 1
STRATEGIC CHOICE
DEFINITION: “Strategic choice is the decision by an organization to select the strategy out of
alternative grand strategies that will best meet the company’s objective”.
STRATEGIC CHOICE PROCESS:
Objective
Focussing on Evaluation Decision Strategic
Alternatives factors choice
Subjective
All the steps involved in this diagram are explained in detail as follows;
STEP 1: FOCUSSING ON STRATEGIC ALTERNATIVES
All the organisations work to achieve strategic objectives. If the performance of the present business is
not fullfilling expectations of the organisation, then it becomes nessesary to take corrective actions. So,
we need to understand and remove the difference between actual perfomance & required perfomance.
Example – Let us assume that an organisation is growing at a rate of 20%. It is expecting to grow by
50% which is not possible in present environment. In order to achieve the expected growth, it can
decide to go for diversification (i.e. growth strategy). For diversification of business, the company has
many industries as alternatives. So it will focus on all those alternatives which can remove the above
difference in actual vs expected performance.
Generally accepted technique in focusing alternatives is “GAP ANALYSIS. It can be explained
graphically as follows;
C (Desired) GAP between B & C
Performance
B (Current performance)
1 Page
0 T1 Time T2
DR. ZAKIR PATEL, Prof, Naran Lala College of Comm. & Mgt, Navsari
Whatsapp: 9586075954
, ELEMENTS OF STRATEGIC MANAGEMENT, TY BBA (Marketing), VNSGU
From the above graph we can see that at time T1, the organisation is at point A. If that organisation
continues its perfomance with existing strategy then it will reach to point B. The difference in current
performance (B) and expected performance (C) is called GAP. Now to reach at point C at a time T2, the
organisation needs to change its strategy. So, the organisation will focus on only those alternatives
which will remove this GAP. Remaining alternatives are automatically rejected.
STEP 2: EVALUATION OF ALTERNATIVES
When the company is in more than one business, it can select more than one strategic alternative
depending upon the situation prevailing in the different businesses. It is necessary to analyse the position
of different businesses of the Company which is done by corporate portfolio analysis.
Portfolio analysis is an analytical tool which views a corporation as a portfolio of products or business.
Some of the important corporate portfolio analysis techniques are
1. BCG Matrix
2. GE Matrix
3. SPACE Matrix
STEP 3: DECISION FACTORS FOR IMPLEMENTATION
When any company has to take its decision of selecting strategy, different factors will affect the decision
process. These factors may be objective or subjective.
OBJECTIVE FACTORS
It defines well set criteria on the basis of which strategy action can be determined. These factors are
also well classified into organisational and environmental factors which are based on SWOT analysis.
Environmental factors: The strategy that perfectly fits with the environment is considered to be the best
strategy. This is because the environment is very different for different industries. It is
also different for different firms in the same industry. Companies depend on environment for the
following reasons;
Depends on owners, competitors, customers, government etc. for survival
Depends on environment for the required inputs
Choice of strategy depends on the following objective factors;
Organsiational factors: Strategies selected must fit with the organisations strengths and weaknesses.
Following are the organisational factors affecting choice of strategy.
Mission: For any organsiation, misision specifies “reasons for existence” & long term direction of
activity. Hence while making a decision on strategic choice, an organisation must select a strategy based
on the misssion statement. For example, NTPC has a mission of “TOTAL QUALITY”. Hence when
they decide strategies while providing electricity they can’t compromise with the quality by reducing
price or other means. So they select startegy which is consistent to their mission statement.
Business Definition: Business definition includes three dimension which includes customer groups,
products and technology. These are the bases on which orgnaisation can compete in market. Companies
2
must design their strategies after considering these three dimensions of business definition.
Page
DR. ZAKIR PATEL, Prof, Naran Lala College of Comm. & Mgt, Navsari
Whatsapp: 9586075954
CHAPTER 1
STRATEGIC CHOICE
DEFINITION: “Strategic choice is the decision by an organization to select the strategy out of
alternative grand strategies that will best meet the company’s objective”.
STRATEGIC CHOICE PROCESS:
Objective
Focussing on Evaluation Decision Strategic
Alternatives factors choice
Subjective
All the steps involved in this diagram are explained in detail as follows;
STEP 1: FOCUSSING ON STRATEGIC ALTERNATIVES
All the organisations work to achieve strategic objectives. If the performance of the present business is
not fullfilling expectations of the organisation, then it becomes nessesary to take corrective actions. So,
we need to understand and remove the difference between actual perfomance & required perfomance.
Example – Let us assume that an organisation is growing at a rate of 20%. It is expecting to grow by
50% which is not possible in present environment. In order to achieve the expected growth, it can
decide to go for diversification (i.e. growth strategy). For diversification of business, the company has
many industries as alternatives. So it will focus on all those alternatives which can remove the above
difference in actual vs expected performance.
Generally accepted technique in focusing alternatives is “GAP ANALYSIS. It can be explained
graphically as follows;
C (Desired) GAP between B & C
Performance
B (Current performance)
1 Page
0 T1 Time T2
DR. ZAKIR PATEL, Prof, Naran Lala College of Comm. & Mgt, Navsari
Whatsapp: 9586075954
, ELEMENTS OF STRATEGIC MANAGEMENT, TY BBA (Marketing), VNSGU
From the above graph we can see that at time T1, the organisation is at point A. If that organisation
continues its perfomance with existing strategy then it will reach to point B. The difference in current
performance (B) and expected performance (C) is called GAP. Now to reach at point C at a time T2, the
organisation needs to change its strategy. So, the organisation will focus on only those alternatives
which will remove this GAP. Remaining alternatives are automatically rejected.
STEP 2: EVALUATION OF ALTERNATIVES
When the company is in more than one business, it can select more than one strategic alternative
depending upon the situation prevailing in the different businesses. It is necessary to analyse the position
of different businesses of the Company which is done by corporate portfolio analysis.
Portfolio analysis is an analytical tool which views a corporation as a portfolio of products or business.
Some of the important corporate portfolio analysis techniques are
1. BCG Matrix
2. GE Matrix
3. SPACE Matrix
STEP 3: DECISION FACTORS FOR IMPLEMENTATION
When any company has to take its decision of selecting strategy, different factors will affect the decision
process. These factors may be objective or subjective.
OBJECTIVE FACTORS
It defines well set criteria on the basis of which strategy action can be determined. These factors are
also well classified into organisational and environmental factors which are based on SWOT analysis.
Environmental factors: The strategy that perfectly fits with the environment is considered to be the best
strategy. This is because the environment is very different for different industries. It is
also different for different firms in the same industry. Companies depend on environment for the
following reasons;
Depends on owners, competitors, customers, government etc. for survival
Depends on environment for the required inputs
Choice of strategy depends on the following objective factors;
Organsiational factors: Strategies selected must fit with the organisations strengths and weaknesses.
Following are the organisational factors affecting choice of strategy.
Mission: For any organsiation, misision specifies “reasons for existence” & long term direction of
activity. Hence while making a decision on strategic choice, an organisation must select a strategy based
on the misssion statement. For example, NTPC has a mission of “TOTAL QUALITY”. Hence when
they decide strategies while providing electricity they can’t compromise with the quality by reducing
price or other means. So they select startegy which is consistent to their mission statement.
Business Definition: Business definition includes three dimension which includes customer groups,
products and technology. These are the bases on which orgnaisation can compete in market. Companies
2
must design their strategies after considering these three dimensions of business definition.
Page
DR. ZAKIR PATEL, Prof, Naran Lala College of Comm. & Mgt, Navsari
Whatsapp: 9586075954
