Process of strategic choice & role and subjective factor .

1. P R O C E S S O F
S T R A T E G I C
C H O I C E
&
R O L E O F
S U B J E C T I V E
F A C T O R S
L U C K N O W U N I V E R S I T Y { M B A . I . B }
R I S H A B H S R I VA S TAVA 1

2. CONTENT
• Introduction
• Strategic Choice- A Definition
• Process of Strategic Choice
• Subjective Factors in Strategic Choice
• Contingency Strategies
• Strategic Plan
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3. INTRODUCTION
• Organizations continually face the challenge of
exercising choice among alternatives. Strategic
choice is an inalienable part of the decision
making process.
• The process of strategic choice is essentially a
decision making process.
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4. STRATEGIC CHOICE IS CENTRAL TO
STRATEGY MAKING
• An effective strategic choice process positions an organization for making sustainable
strategic decisions.
• At the heart of effective strategic planning lies the ability to surface the truly important
issues and to make good choices, in the process of deciding how to address these
issues.
• I define strategic planning as a systematic, formally documented process for
deciding the handful of key decisions that an organisation, viewed as a corporate
whole, must get right in order to thrive over the next few years. The process involves
choosing strategically and results in the production of a corporate strategic plan.
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5. WHAT IS THE STRATEGIC CHOICE?
• Strategic choice is a part of the strategic process and involves elements
like the identification and evaluation of alternatives which then leads to
a choice. Once you have conducted the external and internal analyses the
different alternatives available to you should be clear.
• The process of strategy is cyclical* in nature. The elements within it interact
among themselves. The process has to be adjusted for multiple SBU* firms
because there it is conducted at corporate level as well as SBU levels as
these firms insert SBU strategy between corporate strategy and functional
strategy. Initially, the process of strategy was discussed in terms of four
phases which are:
• Identification phase
• Development phase
• Implementation phase
• Monitoring phase
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6. STRATEGIC CHOICE
“The decision to select from among the grand
strategies considered, the strategy which will
best meet the enterprise’s objective. The
decision involves focusing on a few alternatives
considering the selection factors, evaluating the
alternatives against these criteria and making
the actual choice.”
- Prof. Azhar Kazmi.
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7. PROCESS OF STRATEGIC CHOICE
Choosing from the strategic alternative
Evaluating the strategic alternative
Analyzing the strategic alternative
Focusing on strategic alternative
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8. FOCUSING ON STRATEGIC ALTERNATIVES
Focusing on alternative could be done by visualizing the future state
and working backwards. This done through gap analysis.
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9. GAP ANALYSIS
GAP ANALYSIS = Projected Performance – Desired Performance
Gap Analysis For
Focusing on
Strategic
Alternatives Performance
Present
performance
Desired
performance
Performance gap
TIME
T1 T2
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10. STRATEGIC ALTERNATIVE
At the corporate level:
1. Expansion Strategy
2. Stability Strategy
3. Retrenchment Strategy
4. Combination Strategy
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11. • Expansion Strategy
If the performance GAP is large due to expected environmental
opportunity, Expansion Strategy would be seem to be a feasible
alternative.
• Stability Strategy
If the “Performance Gap” is narrow then Stability Strategy would be seem
to be a feasible alternative.
• Retrenchment Strategy
If the performance GAP is large due to Past and expected bad
performance then Retrenchment Strategy would be seem to be a feasible
alternative.
• Combination Strategy
In the complex scenario, where the multiple reason for the performance11

12. STRATEGIC ALTERNATIVES
At the business level:
• Organization need to think alternative ways of competing.
• Choice is essentially between positioning the business as being
low-cost, differentiated or focused.
• It needs to understand the conditions of the industry’s risk and
benefit of each competitive positioning before making a choice.
• By reverting business definition
(3 dimensions)
–Customer group
–Customer functions and
–Alternative technologies.
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13. •Analyzing the strategies Alternatives
An analysis has to rely on certain factors. These factors are termed as
selection factors.
• The Objective Factors- Based on analytical techniques and hard facts
or data.
• The Subjective Factors- Based on one’s personal judgment, collective
or descriptive factors.
• Evaluating the strategic Alternatives
Evaluation of strategic alternatives basically involves bringing together the
analysis done on the basis of the objective and subjective factors.
To observe what is important, both the factors have to be consider
together.
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14. CHOOSING FROM AMONG THE
STRATEGIC ALTERNATIVE
This is the final step of making the strategic choice.
One or more strategies have to be chosen for
implementation. Also a blue print has to be made that
will describe the strategy and the condition under
which they operates.
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15. SUBJECTIVE FACTORS IN STRATEGIC
CHOICE
Subjective factors are essentially intuitive and descriptive in nature. Here no “cut and
dried” analytical models can be used.
It consider many of the issues that can not probably should not be dealt within the
application of analytical models.
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16. SUBJECTIVE FACTORS IN STRATEGIC
CHOICE
• Consideration for Government Policies.
• Perception of critical success factors (CSFs) and distinctive
competencies.
• Commitment to past strategic actions.
• Strategist’s decision styles and attitude to risk.
• Internal Political Considerations.
• Timing and Competitor Considerations.
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17. • Consideration for Government Policies
Strategies within organizations are aware of the crucial role the
Government plays in setting down politics and priorities. In fact
Government policies are the deciding factor which impact on the future
prospects of companies.
• Perception of critical success factors and distinctive competencies
For consider several strategic alternatives, strategist could be guided by
the distinctive competencies that the organization possesses and the
CSFs that ensure success in any industry.
• Commitment to past strategic actions
Past strategic action shows that they move in an incremental fashion. By
this strategist are more likely to start from where the organization is, and
work up in the way that had been adopted by it to reach where it was. 17

18. • Strategist’s decision styles and attitude to risk
The decision style adopted by strategist, particularly by CEO and their
attitude to risk is a determining subjective factors in strategic choice.
• Internal Political Considerations
When strategy formulation is viewed as a political process, strategist are
viewed as a coalition of interest. A dominant CEO is able to affect
strategic choice a decisively.
• Timing and Competitor Considerations
1. When to exercise a strategic choice?
2. When a particular strategic choice is to be made?
3. For what time period is a strategic choice to be made?
4. What are the competitor action?
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19. FORMAT FOR A STRATEGIC PLAN
1. INTRODUCTION
1.1 Background and organizational profile
2. MISSION STATEMENT
2.1 Vision
2.2 Mission
2.3 Values
3. ASSESSING THE SITUATION
3.1 Introduction
3.2 Review of Past Performance
3.3 Strengths, Weaknesses, Opportunities and Threats Analysis
3.4 Critical Issues
4. STRATEGIES, GOALS AND OBJECTIVES
4.1 Approaches to be taken (Strategies)
4.2 General and specific results (Goals and Objectives)
5. IMPLEMENTATION STRATEGY
5.1 Implementation of the strategies
5.2 Action Planning (activities, budget & financing etc.] 19

20. STEP ONE - GETTING READY
• An organization that determines it is indeed ready to begin strategic planning must
perform five tasks to pave the way for an organized process:
– Identify specific issues or choices that the planning process should
address.
– Clarify roles (who does what in the process).
– Create a Planning Committee.
– Develop an organizational profile.
– Identify the information that must be collected to help make sound
decisions.STEP TWO - ARTICULATING MISSION & VISIONIt is like an introductory paragraph. a mission statement must communicate the
essence of an organization to the reader. It describes an organization in terms of its:
Purpose - why the organization exists, and what it seeks to accomplish.
Business - the main method or activity through which the organization
tries it fulfil this purpose.
Values - the principles or beliefs that guide an organization's members as
they pursue the organization's purpose.a 20

21. STEP THREE - ASSESSING THE SITUATION
Once an organization has committed to why it exists and what it
does, it must take a clear-eyed look at:
- Its current situation.
- Part of strategic planning, thinking, and management is an
awareness of resources and
- An eye to the future environment, so that an organization can
successfully respond to changes in the environment.
- Situation assessment (means obtaining current information about
the organization's strengths, weaknesses, and performance
information) that will highlight the critical issues that the
organization faces and that its strategic plan must address.
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22. STEP FOUR - DEVELOPING STRATEGIES,
GOALS, & OBJECTIVES
Once an organization's mission has been affirmed and its critical
issues identified, it is time to figure out what to do about them.
The broad approaches to be taken and the general and specific
results to be sought (the goals and objectives). This strategies
may come from individual inspiration, group discussion, formal
decision-making techniques, and so on.
STEP FIVE - COMPLETING THE WRITTEN PLAN
The mission has been articulated, the critical issues identified,
and the goals and strategies agreed upon. This step essentially
involves putting all that down on paper!
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23. DICTIONARY
• Inalienable: you are emphasizing that they have a right to it which can not be changed or taken
away.
• Internal Political Consideration :Here it means, Inter-relationship and power structure and
balance.The political behavioral in organisation is perfectly naturally legitimate… politics and power
are neither good nor bad. They are natural.
• Critical success factor (CSF):This is the term for an element that is necessary for an organization
or project to achieve its mission. CSF are those few things that must go well to ensure success for
a manager or an organization, and, therefore, they represent those managerial or enterprise area,
that must be given special and continual attention to bring about high performance. CSFs include
issues vital to an organization's current operating activities and to its future success.“
• Distinctive competence :of a firm refers to a set of activities or capabilities that a company is able
to perform better than its competitors and which gives it an advantage over them. Distinctive
competence can lie in different area such as technology, marketing activities, or management
capability.
• Decision making process: it consists of or is defined as
– Setting objectives
– Generating alternatives.
– Choosing one or more alternatives.
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24. • INTUITIVE :It feels that it is true although it have no evidence or proof of it;or having or, perceived by
intuition.
• Strategic plan (also called a corporate, group or perspective plan), is a document which provides
information regarding the differences elements of strategic management and the manner in which an
organization and its strategist propose to put the strategies into action. Basic steps in a strategic planning
process are as follows:
• Contingency strategies :This strategy is formulate in advance to deal with uncertainties that are a natural
part of business. There are few approach to help companies to develop and implement this strategy i.e.
model of contingency planning process:
1. Identifying contingency events;
2. Establishing the trigger points and;
3. Developing strategies and tactics.
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25. REFERENCES
• Strategic Management and Business Policy-
-Prof. Azhar Kazmi
• Strategic management (IGNOU Books)
• www.wikipedia.com
• www.google.com
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26. T H A N K Y O U
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