Week 7 Evaluating Strategic Options

Question 1

What is the SAF criteria?

Answer 1

Systematic criteria and techniques that evaluate strategic options. 3 parts.

Suitability - key opps and constraints
Acceptability - meet sholder expectaqtions (risk, return, reactions)
Feasibility - has or can get strategic capabilities

Question 2

Define Suitability

RSL CD

Answer 2

Extent addresses orgs key opportunities and constraints.

Rationale of strategy.

5 tools
Ranking
Scenario screening
Life cycle analysis
Capability screening
Decision tree

Question 3

Suitability screen technique - Ranking

Answer 3

Strategies assessed against key factors and ranked on score

Comparison, debate.

Question 4

Suitability screen technique - scenario screening

Answer 4

suitability considered by testing strategy against scenario.

Contingencies, hypothesis testing, encourages flexibility

Question 5

Suitability screen technique - CA screening

Answer 5

Ranks strategy on how the underlying capabilities contribute to Competitive advantage. 3 stages:

Question 6

Suitability screen technique - Decision Trees

Answer 6

Strategic options are ‘eliminated’ at each branch allowing preferred options to emerge.

Question 7

Suitability screen technique - Life cycle analysis.

Answer 7

Assumes a competitive position, assesses strategy position against industry life cycle.

Challenges options.

• Life cycle = Developing Growth Shake out Mature Decline
• Position = Dominant Strong Favorable Tenable Weak

Question 8

Define Acceptability

Answer 8

Examines expected performance of strategy against stakeholder expectations. ‘3 Rs’ – risk, return, stakeholder reactions.

Question 9

Within Acceptability - what are the features of risk?

PSFB

Answer 9

Extent outcome of strategy can be predicted. Tools:

• Position analysis
• Sensitivity analysis – comparison, underlying assumptions change
• Financial ratios – how key financial ratio’s change upon strategy
• Break even analysis – where business will recover fixed and variable costs

Question 10

Within Acceptability - what are the features of return?

FSCR

Answer 10

The financial benefits stakeholders expect to receive from a strategy.

eg: financial analysis - acceptability of returns using fin indicators
shareholder value analysis - of applying capital
cost benefit analysis - $$ on tangible & intangibles measure holistic view
real option analysis - cost/benefit clarified through impelmentation

Question 11

Within Acceptability - what are the features of reactions of stakeholders?

Answer 11

Likely reactions of stakeholders and impacts as a result of the introduction of strategy.

Question 12

Define Feasability and list the 3 types of Feasability

FPI

Answer 12

Concerned with whether an organisation has or can obtain the capabilities to deliver a strategy.

Financial - likelihood raising funds

People - Competencies / systems

Integration - likelihood obtaining resources in and out of org

Question 13

• What are the four qualifications for evaluation criteria?

SCII

Answer 13

SAFe no substitute for good management judgement

Consistency – parts of strategy must work together

Implementation may reveal factors prompting reassessment.

In practice - evaluation of strategy not always the norm