Strategic Choice in Strategic Management STATES Identifying different possible strategies that the entity might adopt and making a choice of the preferred strategies i.e 2nd element of Strategic Management by Johnson, Scholes and Whittington.
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Elements of Strategic Management
Johnson, Scholes and Whittington STATE that Strategic Management consists of three elements:
Strategic Choice in Strategic Management
‘Strategic Choice‘ INVOLVES identifying different possible strategies that the entity might adopt and making a choice of the preferred strategies from the different alternatives that are available.
1. Types of Strategic Choices
There are three aspects to Identifying alternative strategies and making ‘Strategic Choices‘:
- Corporate Level and International;
- Business Level Strategies; AND
- Development Directions and Methods.
1.1 Corporate Level and International
Strategic Choices at ‘Corporate Level’ are the decisions that have to be made about what the entity should be doing. For companies, this means making decisions about which products or services it should be selling and what markets it should be selling them in.
There could also be an ‘International’ aspect to ‘Strategic Choices’ at this level. A company needs to decide whether it will operate internationally and if so in what countries.
1.2 Business Level Strategies
Strategic Choices must also be made at the ‘Business Strategy Level’. For companies, a major strategic choice is between a ‘Strategy of Cost Leadership‘ and a ‘Strategy of Differentiation‘.
If a Co. adopts the Strategy of Differentiation, it has to decide how it intends to make its products or services different from those of its competitors, so that the company will have a competitive advantage over rival companies and can succeed with its chosen strategy.
1.3 Development Directions and Methods
A Choice must be made about the direction or directions in which the business should be directed.
- If a Co. decides on a Strategy of Growth and making the business bigger, DECISIONS have to be made about how the company will grow. Will it have a ‘Strategy of Internal Growth‘ and developing the business gradually using the company’s own internal resources? Or will it seek to grow by making ‘Acquisitions‘ of other companies? Or will it seek to grow by making ‘Strategic Alliances‘ with other companies, so that all the companies in the alliance help each other to grow their businesses?
- Senior Management must also make strategic choices about its products and markets.
Chartered Accountant (Institute of Chartered Accountants of Pakistan)
Bachelor of Accounting Honours (Asia e University, Malaysia)