Content

- Introduction
- Process of strategic choice
- Strategic alternatives
- Factors affecting strategic choice
- Case: assessing the role of strategic choice on
organizational performance.
- Conclusion

Introduction
Organizations continually face the challenge of exercising choice among alternatives.
Strategic choice is an integral part of the decision making process. In other words, the process of
strategic choice is essentially a decision making process. It refers to the decision which determines the
future strategy of a firm. It addresses the question “Where shall we go”. It is always important to
evaluate the existing alternatives before choosing the best. The decision to select from among the grand
staff strategies. Considered the strategy which will best meet the enterprise’s objectives. The decision
involves focusing on a few alternatives and considering the selection factors.
Strategic choices are the specific steps a company intends to take to deploy these resources. i.e
resources available to company in respect of financial, human, productive capacity and distribution
channels. It include determining what products and services to sell, where to sell them, how to sell them
and what target market to sell them. A strategic choice might be to focus on selling at trade shows
rather than using advertising to reach potential customers.

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 A SWOT analysis is conducted to examine the strengths and weaknesses of the firm and opportunities
that can be exploited are also determined. Based on the analysis, the firm selects a path among various
other alternatives that will successfully achieve the firm`s objectives.

Strategic choice is therefore, the decision to select from among the grand strategies considered, the
strategy which will best meet the enterprise objectives. The decision involves the following four steps –

i. FOCUSING ON FEW ALTERNATIVES,

ii. CONSIDERING THE SELECTION FACTORS,

iii. EVALUATING THE ALTERNATIVES AGAINST THESE CRITERIA, AND,

iv. MAKING THE ACTUAL CHOICE.

Process of Strategic choice

1. Focusing on alternatives – This process involves identification of all alternatives because the strategies to
examine what the organization wants to achieve and what it has really achieved. The aim of this step is to
narrow down the choice to a manageable
number of feasible strategies. It can be done by visualizing a future state and working backwards
from it. Managers generally use GAP analysis for this purpose.

GAP Analysis = Projected performance – Desired Performance

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By reverting to business definition it helps the managers to think in a structured manner along any one or more
dimensions of the business.

Strategic Alternatives
- At Corporate level, strategic alternatives are -Expansion strategy, Stability strategy, Retrenchment
strategy, Combination strategy.
Expansion strategy: If the performance GAP is large due to expected environmental opportunity, Expansion
Strategy would be seem to be a feasible alternative.

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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 seemed to be a feasible alternative.

Combination strategy: In the complex scenario, where the multiple reason for the performance GAP then
Combination Strategy would be seem to be a feasible alternative

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-At Business level, organization needs to understand the conditions of the industry’s risk and benefit of each
competitive positioning before making a choice. It need to think alternative ways of competing. The strategic
alternatives are essentially between positioning the business as being low-cost, differentiated or focused.

2. Analyzing the strategic alternatives- The alternatives have to be subjected to a thorough

analysis which rely on certain factors known as selection factors. These selection factors determine
the criteria on the basis of which the evaluation will take place.
They are:
Objective factors: – These are based on analytical techniques and are hard facts used to facilitate
Strategic choice,which entails the following:
a. Environment factors (b) Organization factors
i. Volatility of Environment (i) Organizations mission
ii. Input supply from Environment (ii) Strategic intent
iii. Powerful Stakeholders (iii) Business definition
(iv) Strengths and Weaknesses
Subjective factors:– These are based on one`s personal judgment, collective or descriptive factors among
which are.
i. Strategies adopted in the previous period
ii. Personal preferences of decision – makers
iii. Management’s attitude toward risk
iv. Pressure from Stakeholders
v. Pressure from Corporate structure

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 vi. Needs and desires of key managers

2. Evaluation of strategies – Each factor is evaluated for its capability to help the organization to achieve
its objectives. This step involves bringing together analysis carried out on the basis of subjective and
objective factors. Successive iterative steps of analyzing different alternatives lie at the heart of such
evaluation. The following should be considered under the evaluation strategies.
i. Suitability
ii. Feasibility
iii. Availability

4. Making a strategic choice– A strategic choice must lead to a clear assessment of alternative which is the
most suitable alternative under the existing conditions. A blueprint has to be made that will describe the
strategies and conditions under which it operates. Contingency strategies must be also devised.

Factors affecting strategic choice

Subjective factors are essentially intuitive and descriptive in nature. Here no “cut and dried” analytical models can be
used. It considers many of the issues that cannot probably be dealt with in the application of
Analytical models.

Competition is seen as the main factor that influences strategic choices. However, other factors influence choices made by
organizations.
Environmental constraints:
Consideration for government policies, perception of critical success factors and distinctive competencies. For
considering several strategic alternatives, strategist could be guided by the distinctive competencies that the
organization possesses and the Critical success factors that ensure success in any industry.

Internal organizations and management power relationships: it refers to Inter-relationship and power
Structure and balance. The political behavior in an organization is perfectly naturally legitimate. Politics and
power are neither good nor bad. They are natural.

Management`s attitude towards risk: The decision style adopted by strategist, particularly by CEO and their attitude
to risk is a determining subjective factor in strategic choice.
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Impact of past strategy: 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..
Time constraints- time pressure, frame horizon, timing of decision: Often time pressure to achieve some
milestone within an organization has its impact on the strategic choice an organization make in its decision-
making process.
Competitors reaction: When competitors respond to environmental and market forces, this influence the
strategic choice of an organization to compete against competitor reaction.

Information constraints: Not having enough information on the environments and the competitor.

- Case: assessing the role of strategic choice on organizational performance.

This paper investigates effects of strategic choice on organizational performance for Romanian family-owned
Small and Medium sized Enterprises (SMEs) written by Sebastian Ion Ceptureanu et. al. Using adapted
Jacquemin–Berry entropy index for both product and international diversification and using a regression model,
the study discusses family involvement as a moderating factor for organizational performance assessment. They
discovered that there are multiple interactions between strategic choice and organizational performance while
family involvement fails to have a significant role in moderating these interactions.

According to the researched work, the role of strategic choice in terms of diversification [1] on organizational
performance has been extensively researched in the literature [2–5]. However, despite being the subject of many
empirical studies, it requires additional empirical tests [6] due to the diversity of results [7] and lack of
consensus [6–8]. Their paper focuses on Small and Medium sized Enterprises (SMEs) and their increasingly
more international strategies [9], seeking to use concepts from various scientific disciplines such as
econophysics and finance [10–13], in a similar way with other authors [14,15], to assess organizational
performance [16] in connection with diversification as a strategic choice employed by entrepreneurs.
The conclusion in their work was that their study found out a linear relationship between product
diversification and performance, in line with similar studies [6,7]. In their opinion, since many SMEs operating
in this specific industry have specific assets, this is a rather natural conclusion. Diversification may allow the
entrepreneur to exploit these resources that would otherwise prove less effective. Regarding the effect of

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international diversification on organizational performance, the study confirms the theoretical assumption
discovering an inverted U-shaped relationship. The result is consistent with most management literature on the
topic [7,55] and suggests that early efforts to diversify internationally are often positive as they can produce
economies of scale. An interesting conclusion to their work is that family involvement has a significant negative
moderating effect on organizational performance, contradicting with results of other studies on the topic
[17,94]. In their opinion, reluctance to diversify for family-owned SMEs is motivated by the desire to reduce
uncertainties and risks associated with diversification and willingness to protect the socio-emotional benefits of
family members. Other scholars argue that this leads family-owned SMEs to minimize HR investments, which
is an essential asset for successful diversification [7]
LIMITATION OF STRATEGIC CHOICE

1. Dynamism of the environment:- One of the major criticisms of Strategic choice is that the choice of
today may not be relevant for future Operations. It is submitted that the future may not unfold as
anticipated therefore the choice made may become unuseful due to external factors.
2. Delay Expectation:- Arising from long term benefit of strategic choice, the expectation of the business
owner may be delayed which may cause some crisis within the organization. Strategic choice may not
be able to address the immediate needs of an organization arising from its long term nature.
3. Rigidity Of Strategic Choice:- Strategic choice decision may not give an organization the benefit of
tapping the opportunities that may be available within a short time is sometime frustrating. Also if the
decision or choice made is too formal it may hinder innovation and creativity on the part of the
personnels.
4. Problem Of Change and Adaptation: Another limitation of Strategic choice is being averse to change
and adaptation because a well executed alignment and integration of the strategy may be difficult to
adjust. Adapting to change may negate the defined structure in respect of set agenda and approaches
known to the organization.
- Conclusion
Strategy provides a vision of the future, it confirms the purpose and values of an organization, sets objectives, clarifies threats
and opportunities. The success or failure of a business depends on strategic choice made by the owner because it sets a
framework and clear boundaries neither , which decision can be made. The cumulative effect of these decisions can have a
significant impact ( Positive or Negative) on the success of the organization.

A strategy can be defined as the means by which the organisation can achieve its objectives. To do this it must
deal with the ‘how to do’ side of things. As with objectives, strategies can be developed across all

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organizational levels. In some diversified companies it is common for enterprise and corporate levels to be
collapsed into one; in single businesses, the first three (enterprise, corporate, business) are collapsed into one.
At the corporate level, there are four generic types of strategies: grow/develop; stabilize; turnaround and
harvest. Even though these generic corporate strategies have a number of ideally suited specific strategies, this
does not mean that they cannot be used in other combinations. If other combinations can help the organization
outperform competitors, then they should be used. Worthy to note that the type or mix of strategies should be
contingent upon the predicament facing the organization, and how well the strategy can be implemented. At the
business level there are three generic types of strategies: cost leadership; differentiation and (cost,
differentiation) focus. Good strategies are developed when we make use of whatever knowledge is available in
the literature and when we really know and understand our business and the environment in which it competes.
Then, we can apply strategic thinking principles to come up with creative and innovative ways of outperforming
competitors. The key to strategy selection and evaluation is to ensure that the strategy is the best means of
achieving objectives and that there is a clear match between the strategy type(s) and the organization’s
competitive position in the market place. Strategy evaluation normally involves screening alternatives. Then,
using appropriate evaluation tools, we can evaluate the alternatives that have passed the test, in order to
determine the best alternatives.

Competition is seen as the main factor that influences strategic choices. However, other factors
like organization structure, leadership, culture, pressure from donors, slow economic growth, increased
diversification and technological advances influence choices made by organizations.

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