4

Strategy Development
and the Bases of
Strategic Choice

Corporate Strategy Planning (CSP)

Strategic Development Options

Corporate Purposes and
Aspirations
Competitive advantage
Enhancing SBU Strategy

Strategic
Development
Options

Nature and Scope of Options

Before developing Strategic Options, identify
Strengths and weaknesses.
Also consider values, aspirations and prejudices.
Then ask about the opportunities exist for them.
Further choices could be;
By means of its own efforts.
By combining with others, such as joint venture or
By acquiring another company

A Model of Strategic Choice

Before developing a Strategy;
What is the basis of the Strategy?
Which direction is it going to take?
How will it be carried out?

 Basis of the strategy:

Porters Generic Strategy Model

Cost Leadership: based on being the lowest-cost producer, below
industry average price.
Walmart: everyday low prices (EDLP), shoppers saves 15% from cart

Differentiation: is where a company offers a unique product or

service
McDonald: One minutes in the line & 30 seconds at the counter , toy and meal.

Focus: is where a company concentrates on catering for a small

section of the market and so competes through being specialized.
PepsiCo since 1970s

Alternative methods for

carrying out the strategy
Internal development
Developing products internally, rather than outside agencies

Acquisition
Joint venture/alliances

Direction of the strategy

Withdrawal from the market. Resources can use elsewhere more
efficiently.
Through consolidation, putting more investment to make it more
stronger.
Taking the advantage of opportunities to increase the market
share, market penetration.
Product development according to the fashion and taste changes.
Market development. Though exports..
Market diversification to another product/market.
Backward, forward and vertical diversification.

Corporate
purposes
and
aspirations

Ownership structures
Sole Proprietorship
Partnerships
Private and public limited companies
Co-operatives
Mutual Societies
Public Corporations (SOEs)

Competitive
advantage

Bowmans Strategy Clock

Price-based strategies
No frills
Low price
Hybrid

Strategies for hypercompetitive

markets; Reducing competition
Problems with hypercompetitive;
Lowers overall profits of every company in the market
Increases uncertainty and risk
Customers tend be less brand loyal

Strategies for hypercompetitive

markets; Reducing competition
Possible strategies to reduce rivalry;
Increasing barriers to entry
Agreements / strategic alliances
Mergers / acquisitions
Building brand loyalty