View
224
Download
0
Category
Preview:
Citation preview
7/29/2019 Evaluating Strategies
1/28
Evaluating and Selecting
StrategiesChapter 9
7/29/2019 Evaluating Strategies
2/28
Learning Outcomes
Describe the nature of strategic options
Explain the key areas of strategicdecisions
Understand and describe the 4 criteria forstrategic options
Understand financial tools used toevaluate strategic options
7/29/2019 Evaluating Strategies
3/28
Key Definitions
Strategic, tactical and operational decisions
Goods
Services
Industrial products, consumer products Convenience, shopping and specialty products
Product lifecycle
Suitable Feasible
Acceptable
7/29/2019 Evaluating Strategies
4/28
Strategic Analysis
Evaluation and
Selection of Strategies
7/29/2019 Evaluating Strategies
5/28
Strategic Analysis
7/29/2019 Evaluating Strategies
6/28
Hamel andPrahalad
Core Competence
PorterValue Chain
analysis
HUMANRESOURCESAudit Analysis
ORGANISATIONALCULTURE
Handys typology
Miles & Snow culture
types
INTERNAL ANALYSIS
FINANCIALANALYSIS
ANDPERFORMANCE
INDICATORSSources of finance
WACC and CAPM
Ratio Analysis
Benchmarking
PRODUCTS ANDMARKETS
Market
Segmentation
Kotlers product
benefitCopelands product
typology
Product life cycle
BCG Matrix
GEC Matrix
Pgs. 33-111
Chap 2 Chap 3 Chap 4 Chap 5
7/29/2019 Evaluating Strategies
7/28
EXTERNAL ANALYSIS
SPENTMacro-
environment
Socio-demographicPolitical
Economic
Natural
Technological
INDUSTRYPorters 5-forces
Resource-based
COMPETITIVE ADVANTAGECompetitive Positioning
Porters generic
Resource-based/Core
Competence Prahaladand Hamel
Knowledge-based
Stonehouse and Pemberton
ANSOFFsProduct/Growth Matrix
Strategicoptions/choice
Strategicoptions/choice
Pgs. 115-177
Chap 6 Chap 7 Chap 8
7/29/2019 Evaluating Strategies
8/28
Evaluating and Selecting Strategies
7/29/2019 Evaluating Strategies
9/28
Strategic Decisions
STRATEGIC
TACTICAL
OPERATIONALLevel of decision-making
Focus
Scope
Time horizon
Complexity
Degree of uncertainty
LEVELS
7/29/2019 Evaluating Strategies
10/28
Evaluation and Selection of
Strategies: The Process
Strategic Analysis
Evaluating and selecting strategy
Identifying Strategic
Options
Applying Evaluation
Criteria
7/29/2019 Evaluating Strategies
11/28
Identifying Strategic Options: 3
Areas of Focus
Products and markets (Chapter 5)
Generic strategy and scope (Chapter 8)
Growth and development options (Chapter11)
7/29/2019 Evaluating Strategies
12/28
Identifying Strategic Options
Product and Market
Decisions
Generic Strategy
Decisions
Growth and
Development Decisions
7/29/2019 Evaluating Strategies
13/28
Product and Market Decisions
Two questions are answered:
Which products should we produce?
In which markets should we sell ourproducts?
7/29/2019 Evaluating Strategies
14/28
Product and Market Decisions
(cont.)
Decisions to be made include:
Product and market categories
Product features
Product and market portfolios
Life cycle considerations
7/29/2019 Evaluating Strategies
15/28
Product and Market Categories
Decisions to be made include:
Products Goods/services
Consumer/industrial products Convenience, shopping or specialty products
(Copelands classification)
Markets
Geographic area International decisions
Benefits and risks
7/29/2019 Evaluating Strategies
16/28
Product Features
Focuses on the benefits of the product
Decisions may be based on Kotlers 5levels of product benefit
Core benefit
Basic product
Expected product
Augmented product
Potential product
7/29/2019 Evaluating Strategies
17/28
Product and Market Portfolios
Should the portfolio be broad or narrow?
7/29/2019 Evaluating Strategies
18/28
Generic Strategy Decisions
Cost Leadership or differentiationstrategy?
Cost Focus or Focused Differentiation?
7/29/2019 Evaluating Strategies
19/28
Growth and Development
Decisions
Generic growth direction (Ansoffs GrowthMatrix) Market penetration
Market development Product development
Diversification
Mechanisms for generic growth strategies Internal
external
7/29/2019 Evaluating Strategies
20/28
Applying Evaluation Criteria
Four criteria can be used to assess eachoption:
Is the strategic option suitable?
Is the strategic option feasible?
Is the strategic option acceptable?
Will the strategic option give the organization
a competitive advantage?
7/29/2019 Evaluating Strategies
21/28
Is the strategy suitable?
Suitable fitting, appropriate
Is the strategic option appropriate forachieving the strategic goal?
Example: a cost leadership strategy maynot be suitable if the strategic goal is tocreate a premium brand
7/29/2019 Evaluating Strategies
22/28
Is the strategy feasible?
Feasible capable of being done or carried out
Feasibility will often depend on theorganizations physical, financial, human and
intellectual resources Example: a strategy that involves diversification
(new products for new markets) may require alarge capital investment cost. If theorganization has difficulty getting the capital, thestrategy is not feasible.
7/29/2019 Evaluating Strategies
23/28
Is the strategy acceptable?
Acceptable capable of being received
For strategy, the proper question is: Is thestrategy acceptable to the stakeholders?
Remember, stakeholder influence differsbased on power and interest
7/29/2019 Evaluating Strategies
24/28
Will the strategy lead to competitive
advantage?
The strategy is not worth pursuing unlessit either results in superior performance orabove average profits
7/29/2019 Evaluating Strategies
25/28
In Support of Evaluation Criteria:
Financial Tools
Cash-flow forecasting
Investment appraisal
7/29/2019 Evaluating Strategies
26/28
Cash-flow forecasting
The organization forecasts (predicts) theexpected income from the strategicoption
Example
http://localhost/var/www/apps/conversion/tmp/scratch_1/cash%20flow%20forecast%20example.xlshttp://localhost/var/www/apps/conversion/tmp/scratch_1/cash%20flow%20forecast%20example.xls7/29/2019 Evaluating Strategies
27/28
Investment Appraisal
Payback period
7/29/2019 Evaluating Strategies
28/28
In Support of Evaluation Criteria:
Other Tools
Cost/benefit analysis comparing thecosts of the strategic option (includingfinancial and opportunity costs), with
the benefits (financial and intangiblebenefits)
Impact analysis
Sensitivity analysis
Recommended