Strategic Choice: Factors Affecting & Process of Strategic Choice


Meaning of Strategic Choice

Strategic choice simply refers to the strategy chosen out of available alternatives for attaining organizational objectives. It is termed as the most appropriate one that is selected after analysis of various facts by experts. Strategic choice is the outcome of systematic examination of distinct alternatives where different experts make their own calculations and finally selects a strategy by bargain. A SWOT analysis is conducted by experts for better identification of firm strength and weakness that assist them in making appropriate choice regarding strategy selection. It defines the future strategies of business for deriving the desired results. Strategic choice is the path that is chosen by organization for carrying out its activities in future towards achievement of targets. Process of making strategic choice comprises of 4 steps: – Focusing on strategic alternative, analyzing strategic alternatives, evaluation of strategic alternatives and making a strategic choice.

Factors Affecting Strategic Choice

  • Environmental constraints.
  • Attitude of management towards risk.
  • Restrictions related to time such as time pressure and decision timing.
  • Reaction of competitors.
  • Restrictions related to information.
  • Values and preferences.
  • Past strategies impact.
  • Relationship between management power and internal organization.

Process of Strategic Choice

Focusing on strategic alternatives

This stage is concerned with narrowing down the options of numerous alternatives available to most feasible strategies. GAP analysis is used by managers for determining this manageable no. of feasible strategies. 

They visualize the future state of business for identifying the suitable alternatives. Even one or more business dimensions are related to available alternatives for choosing most strategic ones.

Strategic alternatives at corporate level are Stability, Expansion, Combination and Retrenchment. Whereas at business level they are Cost leadership and Focused Business strategy.

Analyzing the strategic alternatives

Here the chosen alternatives are analyzed on the basis of certain factors termed as selection factors. These factors provide a criterion for doing evaluation of these alternatives. Such factors are: – 

  • Objective factors which are based on analytical methods and are hard facts for facilitating a strategic choice.
  • Subjective factors that are based on one’s personal perception and descriptive factors.

Evaluation of strategic alternatives

Proper evaluation of each and every factor is done for identifying its capability that support organization in attaining its targets. Analysis performed earlier on basis on objective and subjective factors are brought together in this step. Proper evaluation from different aspects of distinct alternatives is performed to arrive at the most appropriate one.

Making a strategic choice

Finally, the strategic choice is made after doing an evaluation that gives a clear idea about which one is most appropriate under existing conditions. One or more strategies are selected and a blueprint describing conditions for operation of these strategies is created. In order to deal with unforeseen scenarios, contingency strategies are also formulated.