Page 165 - DCOM506_DMGT502_STRATEGIC_MANAGEMENT

Unit 9: Strategic Analysis and Choice

Business Definition Notes

In deciding on what would be a manageable number of alternatives, it is advisable to start with
the business definition. Business definition, as discussed earlier, determines the scope of activities
that can be undertaken by a firm. It tries to answer three basic questions clearly: (i) who is being
satisfied? (ii) what is being satisfied? and (iii) how the need is being satisfied?

Figure 9.2: Three Dimensions of a Business Definition

Customer Needs

Customer
Alternative Groups
Technologies

The three dimensions along which a business is defined help a strategist to chalk out alternatives
in a systematic manner.

9.1.2 Considering Selection Factors

The concepts of Gap Analysis and Business definition would help the strategist to identify a few
workable alternatives. These must be analysed further against a set of selection criteria.
Selection factors are the criteria against which the alternative strategies are evaluated. These
selection factors consist of:

1. Objective factors
2. Subjective factors.
1. Objective factors are based on analytical techniques such as BCG matrix, GE matrix etc.
and are hard facts or data used to facilitate a strategic choice. They are also called rational,
normative or prescriptive factors.
2. Subjective factors, on the other hand, are based on one’s personal judgment or descriptive
factors such as consistency, feasibility, etc. which are discussed in the previous unit.

9.1.3 Evaluating the Alternatives

After narrowing down the alternative strategies to a few alternatives, each alternative has to be
evaluated for its suitability to achieve the organisational objectives. Evaluation of strategic
alternatives basically involves bringing together the results of the analysis carried out on the
basis of objective and subjective criteria.
9.1.4 Making the Actual Choice

An evaluation of alternative strategies leads to a clear assessment of which alternative is most
suitable to achieve the organisational goals. The final step, therefore, is to make the actual
choice. One or more strategies have to be chosen for implementation. Besides the chosen strategies,
some contingency strategies should also be worked out to meet any eventualities. In both the
above two steps, a number of portfolio analyses like BCG, nine–cell matrix etc., can be useful.

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