Strategy Management - Introduction to Strategy Selection (Video #61)

Summary

In this video, the process of **Strategy Selection** is explored as part of the strategy formulation phase. The planning team must evaluate current strategies, identify new alternatives, and prioritize them to align with long-term objectives and external/internal conditions. The video covers key frameworks like Porter's Generic Strategies, the BCG Matrix, and others to guide decision-making. Ultimately, the goal is to generate and evaluate a manageable set of strategic alternatives for the company to pursue, setting the stage for future strategy evaluation and implementation.

Takeaways

• 😀 Strategy selection is the sixth step in the strategy formulation process and aims to identify and choose the best actions to achieve strategic goals.
• 😀 The planning team must evaluate the company's current strategies by considering internal and external factors and the company's long-term vision.
• 😀 Five key questions guide the evaluation of current strategies: alignment with strategic intent, relevance to external and internal factors, resource capabilities, and past performance.
• 😀 If current strategies do not meet the criteria, they should be deprioritized or discontinued, and necessary changes should be identified.
• 😀 A second group of strategies comes from the SWAT analysis, focusing on leveraging strengths, addressing weaknesses, and mitigating threats.
• 😀 Generic strategies such as cost leadership, differentiation, and focus provide foundational approaches for competing in the market and allocating resources.
• 😀 The Ansoff Matrix identifies strategic alternatives like market penetration, product development, and diversification, which guide companies in expanding their businesses.
• 😀 Strategic frameworks like the BCG Matrix, McKenzie GE Matrix, IE Matrix, and SPACE Matrix help assess business units and products and determine the best strategies for each.
• 😀 These frameworks categorize business units or products by factors like market growth, competitive strength, and industry attractiveness, helping to prioritize strategic actions.
• 😀 The strategy selection process concludes with a ranking of strategic alternatives based on attractiveness, ensuring a manageable set of the most viable strategies is developed.

Q & A

What is the main focus of the video on strategy selection?

The video focuses on Step Six of the strategy formulation process, which is strategy selection. This step involves identifying and evaluating strategic alternatives that align with the company’s mission, vision, and long-term goals.

What are the three main processes in strategy management?

The three main processes in strategy management are strategy formulation, strategy implementation, and strategy control.

How does strategy selection relate to the previous steps in the strategy formulation process?

Strategy selection follows five earlier steps that establish the company’s mission, vision, values, strategic intent, internal and external analysis, and SWOT analysis. These steps set the foundation for selecting strategic alternatives that will help achieve the organization’s long-term objectives.

What are the five key questions used to evaluate current strategies?

The five key questions are: 1) Are the strategies aligned with the strategic intent? 2) Are they pertinent considering external threats and opportunities, and internal strengths and weaknesses? 3) Will these strategies help achieve long-term goals? 4) Does the company have the necessary resources and capabilities to execute them? 5) Considering past performance, can the company successfully execute these strategies in the future?

What are the potential groups of strategies considered in strategy selection?

The three groups of strategies are: 1) Strategies currently being implemented by the company. 2) Strategies identified in the SWOT analysis (leveraging strengths, addressing weaknesses, capitalizing on opportunities, and mitigating threats). 3) Strategies required to achieve the long-term vision and objectives as defined by senior management.

What are some examples of generic strategies companies can use during strategy selection?

Examples of generic strategies include Porter's strategies (cost leadership, differentiation, cost focus, and focus), Ansoff’s matrix (market penetration, market development, product development, and diversification), integration strategies (forward, backward, and horizontal integration), and cooperative strategies (strategic alliances, acquisitions).

How do strategic frameworks assist in strategy selection?

Strategic frameworks like Porter's Five Forces, Ansoff's Matrix, the BCG Matrix, the McKenzie GE Matrix, and the IE Matrix help analyze market conditions, competitive strength, internal resources, and external factors to identify the most appropriate strategies for the company.

What role do the BCG and McKenzie GE Matrices play in strategy selection?

The BCG Matrix categorizes a company’s products or business units into four categories (Stars, Cash Cows, Question Marks, and Dogs) based on market growth and market share. The McKenzie GE Matrix helps analyze business units based on industry attractiveness and competitive strength, suggesting strategies for investment or divestment.

What does the IE Matrix suggest about strategy selection?

The IE Matrix evaluates internal and external factors to suggest appropriate strategies such as aggressive, competitive, defensive, or conservative approaches, depending on the company’s internal strengths and weaknesses and external opportunities and threats.

What is the final goal of strategy selection?

The goal of strategy selection is to evaluate and rank strategic alternatives to determine the most feasible and attractive strategies. This step helps create a manageable set of prioritized strategies that align with the company’s objectives, setting the stage for further evaluation and implementation.