This posts will discusses all elements of making a strategic business choice.
Strategic business choice refers to the process of deciding which course of action an organisation should take in order to achieve its goals. This involves evaluating the organisation’s internal and external environment, analysing its strengths and weaknesses, and identifying opportunities and threats. It also involves developing and implementing strategies that will help the organisation achieve its goals and gain a competitive advantage.
Strategy Clock
One tool that can be used to evaluate strategic business choices is the strategy clock, developed by Jean-Guy G. Gagné. The strategy clock consists of eight strategic options, ranging from low-cost to differentiation. The options are:
- Low cost: This strategy involves offering products or services at a lower price than competitors in order to attract price-sensitive customers.
- Best value: This strategy involves offering products or services that offer a good balance of quality and price, in order to appeal to a broad range of customers.
- Differentiation: This strategy involves offering unique or innovative products or services that are perceived as higher quality or more valuable than those of competitors.
- Customer intimacy: This strategy involves building strong, long-term relationships with customers and tailoring products or services to their specific needs.
- Operational excellence: This strategy involves maximising efficiency and minimising costs in order to offer products or services at a lower price than competitors.
- Innovation: This strategy involves continuously introducing new and improved products or services in order to stay ahead of competitors.
- Niche differentiation: This strategy involves targeting a specific segment of the market with a unique or specialised offering.
- Customer excellence: This strategy involves focusing on providing an exceptional customer experience in order to differentiate from competitors.
Critical Success Factors (CSF’s) & Key Threats
In order to develop a successful competitive strategy, it is important to consider both critical success factors and key threats. Critical success factors are the key areas that an organisation must excel in in order to be successful. These can include factors such as cost structure, product or service quality, customer service, and brand reputation. Key threats, on the other hand, are external factors that could potentially harm the organisation’s performance. These can include factors such as competition, changes in consumer behavior, or regulatory changes.
Ansoff Matrix
Business growth strategies are strategies that are designed to help organisations grow and expand. One tool that can be used to evaluate growth strategies is the Ansoff matrix, developed by Igor Ansoff. The Ansoff matrix consists of four options for growth: market penetration, market development, product development, and diversification.
- Market penetration: This strategy involves selling more of the organisation’s existing products or services to its existing market.
- Market development: This strategy involves entering new markets with the organisation’s existing products or services.
- Product development: This strategy involves introducing new products or services to the organisation’s existing market.
- Diversification: This strategy involves entering new markets with new products or services.
Strategy Evaluation
In addition to these growth strategies, it is also important to consider the feasibility, acceptability, and suitability of any strategic business choices. The suitability of a strategic choice refers to whether it is aligned with the organisation’s goals and capabilities. The acceptability of a strategic choice refers to whether it is acceptable to stakeholders, such as employees, customers, and shareholders. The feasibility of a strategic choice refers to whether it is realistically achievable given the organisation’s resources and constraints.
Summary: Strategic Business Choice
Overall, strategic business choice is a crucial aspect of organisational success. By evaluating strategic options using tools such as the strategy clock and Ansoff matrix, and considering factors such as critical success factors, key threats, suitability, acceptability, and feasibility, organisations can develop and implement strategies that will help them achieve their goals.
Once chosen your strategy, the next step is to choose your methods of strategic development. In other words how to develop your business strategy.