The Strategy Formulation Process

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Presentation transcript:

The Strategy Formulation Process Chapter 11 Strategic Choice (c) Macmillan & Tampoe 2001

strategy formulation process Figure 11.1 Results of the strategy formulation process Results of Process Chosen Strategy Strategic Intent CONTEXT Strategic Assessment Available Options (c) Macmillan & Tampoe 2001

Logically viable options/ Figure 11.2 Choosing a strategy from among strategic options Logically viable options/ Chosen Strategy Aligned but Infeasible Options Strategic Intent Choice Criteria/ No options identified Strategic Assessment Available Options Feasible but Unaligned Options (c) Macmillan & Tampoe 2001

Linking into available strategic options Figure 11.3 Structure for making strategic choice What Options are available? Options about products, markets and services Options to improve resources & capabilities Options of method on how to progress Linking into available strategic options Choice Criteria -Assessment -Intent Theoretical Frameworks for making strategic choice Making the Choice Who should be involved in the Choice? Chosen Strategy (c) Macmillan & Tampoe 2001

Figure 11.4 Options for Markets and Products New Present Product New Present Market Geography (the third dimension) ‘Do Nothing’ Withdraw Consolidate Market penetration Present Product Development Market Need Market Development Diversification (related or unrelated) New (c) Macmillan & Tampoe 2001 Adapted from: Ansoff, I Corporate Strategy

Options for building resources, capabilities and competence Resources as important as markets and products Capabilities may take time to build Particular capability may relate to particular market/product options True competence may depend on a subtle combination of resources and capabilities (c) Macmillan & Tampoe 2001

Options in methods of implementation Internal development Acquisition Contractual arrangements Strategic alliances and partnerships (c) Macmillan & Tampoe 2001

Strategic Options Product/market, resource/capability and implementation method may be grouped to form strategic options Small number Combining top-down and bottom-up thinking Strategic Options tested: Aligned with strategic intent Feasible in terms of capabilities and resources Acceptable to those who have to approve and implement it (c) Macmillan & Tampoe 2001

Who should be involved with strategic choice? Political as much as logical process Political reality revealed by asking: Who stands to gain or lose? How will existing coalitions be affected? Who may be seen to have originated choices? Board approval is one thing Support from those who will make it happen is also essential (c) Macmillan & Tampoe 2001

Porter’s 3 Generic Strategies Cost Leadership Differentiation Focus (c) Macmillan & Tampoe 2001

Figure 11.6 The Strategy Clock High Low Price Perceived Added Value Low price/ added value 1 2 3 4 5 6 7 8 Low Price Hybrid Differentiation Focused Strategies Destined for ultimate failure Source: Bowman & Faulkner (1995) (c) Macmillan & Tampoe 2001