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Classifying Strategic Alternative (SA)

(On the basis of degree of risks)


Further Classification

Low Risk Strategic Alternative High Risk Strategic Alternative

Niche Vertical Integration (back-forward) Horizontal expansion Diversification

Generic Strategy Alternative


Role of Strategist in Strategic Alternative Strategist 1. SBU Manager 2. Top Manager 3. Corporation Planner 4. Board of Directors 5. Consultants 6. Functional Levels Gen. Strategic Alternative Regularly Regularly Occasional Rarely Occasional Prepare proposal Analyse Strategic Alternative Regularly Regularly Regularly Occasional Rarely Regularly
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STRATEGIC ALTERNATIVE

1. Small Organizations 2. Large Organization

Brain Storming Session


Special Meetings

Outside Consultants Joint Meeting

Strategic Alternatives
1. 2. 3. 4. 5. Mission Statement Choice of products or services Choice of markets Technologies to be adopted around Strategic interest a) What, Why, When b) Should we be in the same business? (Stability) c) Should we get out or add some parts? (Retrenchment) d) Should we expand into new business by adding new function, prod, markets (Expansion) e) Should we carry out alternative combinations b,d or c,b .. (Combination)

Analysis and Diagnosis of the Industry Environment


A. Markets and Customers Style, PLC, Customer segments, Foreign opportunities.

B.

Suppliers
Availability of needed input, Costs of input, exit and entry of suppliers, Power of suppliers.

C.

Competitors
Concentration ratio (numbers of firms and market share control Capacity utilization, exit and entry barriers (especially foreign threats of entry). Competitive behaviour, strategic graphs, availability and costs of substitutes from other industries.
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Internal Analysis & Diagnosis


SWOT Analysis

Strength

Threat

Weakness

Opportunity

Endogenous Exogenous

Impediments Endowments

Internal Factors to be analyzed


1.
2.

Marketing & Distribution


R&D Engineering factors [Offensive & Defensive]

3.
4.

Corporate resources & Personal factors


Finance & Accounting

Functional area profiting [R & D, Manufacturing, Marketing, Finance, Management]


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Opportunity and Threat Matrix


1. Threat Matrix
SERIOUSNESS

HIGH

Major Threat
3

Moderate Threat
4 Minor Threat
LOW
8

LOW

Moderate Threat
HIGH

Probability of Occurrence

Opportunity and Threat Matrix


2. Opportunity Matrix
ATTRACTIVENESS

HIGH

Very Attractive
3

Moderately Attractive
4 Least Attractive
LOW
9

LOW

Moderately Attractive
HIGH

Probability of Occurrence

BCG Growth Matrices


Balanced and Unbalanced Portfolio
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Business Growth %

High

Stars

Question Mark

Low

Cows
High

Dogs
Low

Relative Market Share

GE Nine Cell Matrices


HIGH

Indutsry Attractiveness

MEDIUM

GREEN

INVEST / EXPAND

YELLOW

LOW
RED

SELECT / EARN

STRONG

WEAK

AVERAGE

HARVEST/ DIVEST

Business Strength/Competitive Position


Industry attractiveness factors: Market size & growth share, industry profit margin, competitive intensity, seasonality, economies of scale, technology, social-environmental-legal and human aspects Business Strength/Competitive Position: Relative market share, profit margins, ability to compete on price & quality, knowledge of customer, competitive strengths & weaknesses, technological capability, 11 calibre of management

Hofers Product/Market Evolution Matrix


Development
A

Growth
B

Shakeout
C

Maturity / Saturation
Decline Strong

Average

Weak

A-High Potential deserves Expansion; B-Strong Competitive Position but product entering shakeout stage hence cautious expansion; C-Dog; D- Use it for cash generation; E-Potential Loser

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