STRATEGIC OPTIONS AND CHOICE

Introduction
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Organizations have to embark on strategies which can help them achieve their goals. An organization s strategy is ideally a logical response to factors in the environment, It is the outcome of strategic analysis, a sequel on analysis of strengths, weaknesses, opportunities and threats.

Introduction
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An organization's strategy may be appropriate or inappropriate, may have short or long term gains. Organizations differ in the quality of their response as well as the ability to translate strategies into concrete achievements. Organizations often have a wide range of strategies to choose from

Strategic Choice involves understanding the nature of stakeholder expectations.Introduction ‡ ‡ ‡ A strategic choice leads to a strategic direction for the organization. organizations have to choose those that are consistent with their vision. desire to succeed and the capabilities in their organization. identifying strategic options. . values. and then evaluating and make strategic choice(s). mission. In a nutshell.

products and services. options to improve resources and capabilities or on improving processes.The Process of Identifying Strategic Options and Making Choices ‡ The Strategic choice starts with finding the available options. the next step is to integrate all the available strategic options. strategic choices are made. impact of options on each other and the after effect of the options on the organization. ‡ Once the individual options are found on various areas. ‡ The options can be about market. ‡ Taking all these into consideration. ‡ The integrations is based on the relationship of those options. .

The Process of Identifying Strategic Options and Making Choices ‡ Johnson and Scholes a leading author on strategy breaks the options into three questions namely: ‡ On what basis do we decide to compete? ‡ Which direction should we choose? ‡ How are we going to achieve the chosen direction? .

and thereby enjoys greater margin than the undifferentiated product ? . thereby achieving advantage via superior profitability? Or ± Is it wishing to differentiate itself and the customer is prepared to pay a premium price for the added value which the customer perceives in the product. then it faces two options: ± Option 1: Is it seeking to compete by achieving lower costs than its rivals and charging similar prices for the products and services. which it offers.On what basis do we decide to compete? ‡ Prof Michael Porter an authority on strategic options states that if your company is wishing to obtain competitive advantage over its rivals.

which are defined as: ‡ Cost leadership. ‡ Focus. . ‡ Differentiation.On what basis do we decide to compete? ‡ Options 2: What is the scope of the area in which your company wishes to obtain competitive advantage? Is it industry-wide or is it restricted to a specific niche? ‡ The answers to these two options leave you and your company faced with three generic strategic options.

Product development. Market development. ‡ Six generic options are recommended as follows± ± ± ± ± ± Do nothing. Diversification. Market penetration.Which direction should we choose ? ‡ This involves choosing which strategic options to take by way of deciding which products/markets to choose as a way forward for the business. . Withdrawal.

How are we going to achieve the chosen direction? ‡ The final problem that an organization must overcome is to decide how to develop the chosen strategic options. ± internal development. ± external development/acquisition. ‡ The development options available are: ± joint development. .

In line with this policy. . Government has taken the policy option to disengage from a large number of social and economic activities in preference for private sector initiative. many government establishments have been privatized while others are at advanced stage of privatization.Some Common Strategic Option Privatization (Government) The main policy thrust of government today in Nigeria and other parts of the world is reduction in the size of government.

processes. challenges. ‡ Privatization has provided the basis of introducing new philosophy. in organizations. management. values.Some Common Strategies Privatisation ‡ The main logic in the privatization policy is to enable enterprises operate efficiently and competitively in a deregulated economy and with minimum interference. rewards. etc. ‡ The arguments for and against privatisation are engaging . competencies.

‡ Before the distress in the banking sector in the 1990s.Some Common Strategies Contraction of Operation ‡ To contract is to scale down operations. ‡ An organization may be too large and operationally inefficient. many of them had over-expanded and had more branch networks than was feasible. .

efficiency and better service to the clientele. quality service delivery. distinctiveness ‡ The notion here is that it is much better to keep operations at manageable level for better control. .Some Common Strategies Contraction of Operation ‡ Many government organizations engaged in too many activities and services and became inefficient and ineffective. specialization. value creation. ‡ Scaling down of operations can lead to increased focus.

develop projects and services or undertake new lines of businesses with a view to increase output. ‡ Public hospitals open new clinics at the village level to move services nearer to the local populace. ‡ An organization may take the deliberate strategy to open new branches.Some Common Strategies Expansion and Growth ‡ Every organization looks forward to an opportunity to expand services and to grow. ‡ More schools may be opened to improve literacy levels .

Some Common Strategies Expansion and Growth ‡ Commercial establishments expand services presumably to reach customers and to widen market outreach or in anticipation of future prospects. expansion may lead to ineffectiveness and business failure. ‡ Without consideration of feasibility and viability. .

. ‡ Recruitment in many organizations was driven by extraneous factors. more than by the need to increase production or meet market demands. ‡ Many public and private sector organizations buckle under the weight of bloated workforce.Some Common Strategies RightRight-Sizing (Government) ‡ Right-sizing may take the form of increase or decrease Rightin the workforce but more of the latter.

‡ An organization which pursue right-sizing as a strategy may utilize part-time staff and consultants to handle some of their schedules (beware of morale and union factors).Some Common Strategies Right-Sizing (Government) ‡ Public sector reforms. cost containment and other pressures in the business environment have compelled organizations to take another look at staffing decisions. . scaling down of operations.

Public projects may take the form of developing new infrastructure. employment generation. potable water. hospitals. markets. gender or other forms of empowerment. health care. including schools. . training.Some Common Strategies Project Development Public and private sector organizations undertake new projects for the purpose of enhancing service delivery. road network Projects may be concerned with education.

inflated project cost. poor implementation of projects. technical and market factors. The bane of our development process is white elephant projects. project cost. etc. . outcomes and other factors that will affect feasibility have to be considered. expand existing capacity or facilities and to improve service delivery. In each case. capabilities.Some Common Strategies Project Development Private sector organizations embark on new projects to replace obsolete plants.

‡ Some products are stars. Products have a life cycle and people switch brands. they are well received in the market and yield high returns. ‡ Products and services have high failure rate. Popular and well accepted products today may be rejected tomorrow.Some Common Strategies Product and Service Development and Management ‡ Organizations success or failure is intricately linked to the performance of products and services. Others are products of the future. .

They have to stimulate demand and gain sustained market acceptance and patronage. Product development is an important decision and is driven by need and appropriate strategies. re-cycle them. They introduce new products or services to respond to market demands.Some Common Strategies ‡ ‡ ‡ ‡ Product and Service Managers have to take appropriate decisions to introduce products. expand operations and enhance profits. meet existing or potential needs. innovate products. .

‡ Managers have to identify different market segments with homogenous characteristics ‡ This is required to be able to respond to needs. expectation and characteristics of each market segment. .Some Common Strategies Market Segmentation ‡ An organization may provide services to a broad range of market or to a specific market segment.

etc. In the breweries. Some others engage on varied. integrating forward to produce distribution outlets. often related or unrelated growth strategies. integration An organization may have a few lines of activities. diversification has taken the form of expanding into bottled water. This gives focus and enables it to develop competencies in the areas.Some Common Strategies Diversification. products or services. . integrating backward to produce grains. soft drinks.

Some Common Strategies Diversification. integration The universities offer their regular courses and in addition provide primary and secondary education. go into publication and consultancy. run mature people and diploma programmes. .

.Some Common Strategies Strategic Alliances. Partnership and Mergers ‡ Two or more organizations may decide to work out a memorandum of understanding to work together to achieve a common goal. ‡ They may have a lose arrangement in which they provide services to a predetermined clientele under given conditions and terms ‡ They may come together by way of mergers to provide their services.

‡ Partnership and mergers have to be carefully managed to blend disparate values and cultures.. . ‡ Public and private sector partnerships is being canvassed as a means of providing better social services.Some Common Strategies Strategic Alliances . mergers and acquisitions.. ‡ The bank consolidation policy has set in motion strategic alliances.

funding capabilities and need for quality service delivery.Some Common Strategies Technology ‡ Every organization requires technology to provide quality service. cost consideration. . ‡ In all industries some have appropriate technology or lead in technology. ‡ Several others cannot afford the technology needed by them to perform effectively. ‡ Technology has a huge cost implication and decisions on technology should be informed by market forces.

Factors Considered In Selecting Strategies ‡ ‡ ‡ ‡ ‡ ‡ ‡ Organization's mandate Vision and values of organizational leaders Opportunities in the environment Threats and challenges facing the organization Competition Internal resource capabilities Technology .

Conclusion ‡ Organizations need strategies to direct action appropriately and to achieve objectives. many others are not ‡ Yesterday s strategies may be inappropriate to meet today s challenges. . ‡ Some strategies are effective. ‡ Strategies are as important as the processes involved in selecting them.

. implement and review strategies for goal achievement and improved service delivery.Conclusion ‡ Organizations must devote time and resources to formulate.

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