Page 67 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Unit 3: Planning

(b) Would the organisation obtain economies of scale, economies of scope or experience Notes
economy?
(c) Would it be suitable in terms of environment and capabilities?

Tools that can be used to evaluate suitability include:
(a) Ranking strategic options
(b) Decision trees
(c) What-if analysis
2. Feasibility: Feasibility is concerned with the resources required to implement the strategy
are available, can be developed or obtained. Resources include funding, people, time and
information.
Tools that can be used to evaluate feasibility include:

(a) Cash flow analysis and forecasting
(b) Break-even analysis
(c) Resource deployment analysis
3. Acceptability: Acceptability is concerned with the expectations of the identified
stakeholders (mainly shareholders, employees and customers) with the expected
performance outcomes, which can be return, risk and stakeholder reactions.
(a) Return deals with the benefits expected by the stakeholders (financial and non-
financial). For example, shareholders would expect the increase of their wealth,
employees would expect improvement in their careers and customers would expect
better value for money.
(b) Risk deals with the probability and consequences of failure of a strategy (financial
and non-financial).

(c) Stakeholder reactions deal with anticipating the likely reaction of stakeholders.
Shareholders could oppose the issuing of new shares, employees and unions could
oppose outsourcing for fear of losing their jobs, customers could have concerns over
a merger with regards to quality and support.
Tools that can be used to evaluate acceptability include:

(a) what-if analysis
(b) stakeholder mapping

General Approaches

In general terms, there are two main approaches, which are opposite but complement each other
in some ways, to strategic management:
1. Sociological Approach: The Sociological Approach deals primarily with human
interactions.
Assumptions:
(a) Bounded rationality,
(b) Satisfying behaviour,
(c) Profit sub-optimality.

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