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Strategic Management
Notes Introduction
Strategic analysis and choice is essentially a decision-making process. This involves generating
feasible alternatives, evaluating those alternatives and choosing a specific course of action that
could best enable the firm to achieve its mission and objectives.
Alternative strategies do not come from a vacuum. They are derived from the firm’s present
strategies keeping in view the vision, mission, objectives and also the information gathered
from external and internal analysis. They are consistent with or built on past strategies that have
worked well.
9.1 Process for Strategic Choice
According to Glueck and Jauch, “strategic choice is the decision to select from among the
alternatives considered, the strategy which will best meet the enterprise objectives.”
This decision-making process consists of four distinct steps:
1. Focusing on a few alternatives.
2. Considering the selection factors.
3. Evaluating the alternatives.
4. Making the actual choice.
9.1.1 Focusing on a few Alternatives
Strategists never consider all feasible options that could benefit the firm because there are
innumerable options. So strategists should narrow down the choice to a reasonable number of
alternatives. But it is still difficult to tell what that reasonable number is. For deciding on a
reasonable number of alternatives, we can make use of the following concepts:
1. Gap analysis
2. Business Definition
Gap Analysis
In gap analysis, a company sets objectives for a future period of time, say three to five years of
time, and then works backward to find out where it can reach at the present level of efforts. By
analysing the difference between the projected and desired performance, a performance gap
could be found as shown in the figure below.
Figure 9.1: Gap Analysis
Desired performance
Gap
Projected performance
Where the gap is narrow, stability strategies would seem to be a feasible alternative. If the gap
is large, expansion strategies are more suitable to be considered. If the gap is large due to past
and expected bad performance, retrenchment strategies need to be considered.
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