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Strategy

Strategy. Evaluating Strategic Options Pete Considine. Staffordshire University. Learning Outcomes. At the end of this weeks learning sessions you are expected to be able to understand:

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Strategy

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  1. Strategy Evaluating Strategic Options Pete Considine Staffordshire University BLB10089-3 Tutor Pete Considine

  2. Learning Outcomes • At the end of this weeks learning sessions you are expected to be able to understand: • Identify the methods by which strategies can be pursued: organic development, mergers and acquisitions, and strategic alliances • Employee three success criteria for evaluating strategic options: suitability, acceptability, and feasibility • Use a range of different techniques for evaluating strategic options BLB10089-3 Tutor Pete Considine

  3. Exhibit 10.4 Strategic Options (Johnson et al. 2008.p365) BLB10089-3 Tutor Pete Considine

  4. The TOWS Matrix to Develop Options –( a re visit from last week) BLB10089-3 Tutor Pete Considine Exhibit 7.2

  5. Weaknesses • Lack of discipline amongst the group • Vigilance in decline • Loss of control within the band (Lack of focus/direction of men when not raiding) • Band too large –risk of capture • Strengths • Willingness & loyalty of men • Large numbers • Allies in farmers and townsfolk • Income not taxed • Reputation TWOS on Robin Hood (model from Johnson et al, 2005 Exploring Corporate Strategy • Opportunities • Unpopularity of Prince John • Join forces with the Barons’ in plot to return King Richard • Transit tax • Geographical expansion S3, O2 Objective to work with Allies to Return King Richard Etc etc W3, O4 Objective: Overcome risk of capture by moving into new areas Etc • Threats • Lack of game and food supplies (Growing number of band members – draining all the resources) • Revenues in decline • Retribution if caught conspiring • Travellers avoiding forest S2, T1 Deploy spare resources to source food supplies Wx,Ty etc BLB10089-3 Tutor Pete Considine

  6. Ref JLThompson Strategic Management 4th ed chp 19 BLB10089-3 Tutor Pete Considine

  7. Ref JLThompson Strategic Management 4th ed chp 19 BLB10089-3 Tutor Pete Considine

  8. Ref J. L. Thompson Strategic Management (2001) BLB10089-3 Tutor Pete Considine

  9. Ref JLThompson Strategic Management 4th ed chp 19 BLB10089-3 Tutor Pete Considine

  10. Ref J. L. Thompson Strategic Management (2001) BLB10089-3 Tutor Pete Considine

  11. Exhibit 10.1 Strategy Methods and Evaluation BLB10089-3 Tutor Pete Considine

  12. Evaluation Criteria Continued • Johnson Et al (2008) use a similar approach to Thompson to evaluating strategic options with the “SAFe” acronym Suitability Acceptability Feasibility BLB10089-3 Tutor Pete Considine

  13. Success Criteria for Strategic Options • Suitability • Whether strategy addresses circumstances in which organisation is operating • Linked to strategic position • Rationale of strategy • Acceptability • The expected performance outcomes (e.g. risk/return) • Meeting expectations of stakeholders • Feasibility • Whether strategy can be made to work in practice • Linked to strategic capability BLB10089-3 Tutor Pete Considine

  14. Evaluation Tools for Assessing Suitability • TOWS Matrix • Relative suitability of options • Ranking strategic options • Decision trees • Scenarios BLB10089-3 Tutor Pete Considine

  15. Suitability – Strategic Position Exhibit 10.5 BLB10089-3 Tutor Pete Considine

  16. Examples of Suitability - Directions for Growth BLB10089-3 Tutor Pete Considine

  17. Examples of Suitability - Methods of Growth BLB10089-3 Tutor Pete Considine

  18. Why Strategies may be Unsuitable • Biased • Not addressing all three factors of environment, capability and expectations • Relative suitability • Other options may be more suitable • Elements of strategy not internally consistent • Competitive strategy, development direction and development method BLB10089-3 Tutor Pete Considine

  19. Return Profitability Cost-benefit Real options Shareholder value analysis Risk Financial ratios Sensitivity analysis Stakeholder reactions Assessing Acceptability BLB10089-3 Tutor Pete Considine

  20. Evaluation Tools for Assessing Suitability • TOWS Matrix • Relative suitability of options • Ranking strategic options • Decision trees • Scenarios BLB10089-3 Tutor Pete Considine

  21. Criteria for Acceptability BLB10089-3 Tutor Pete Considine

  22. Criteria for Acceptability BLB10089-3 Tutor Pete Considine

  23. Assessing profitability (1) BLB10089-3 Tutor Pete Considine Exhibit 7.8a

  24. Assessing profitability (2) BLB10089-3 Tutor Pete Considine Exhibit 7.8b

  25. Feasibility • Financial • Funds flow forecasting – timing of new funding • Break-even analysis • Resource deployment • Resources and competences needed • Threshold • Unique resources/core competences • Scale, quality of resource, timetable for change BLB10089-3 Tutor Pete Considine

  26. Resource Deployment BLB10089-3 Tutor Pete Considine Exhibit 7.10

  27. Key Points • Three success criteria for strategic options • Suitability • Acceptability • Feasibility • Or Appropriate, Feasible & Desirable after JL Thompson) • Weighted Scores of strategic options against strategic objectives can give an overview • A Range of analytical techniques for evaluation of strategic options have been reviewed BLB10089-3 Tutor Pete Considine

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