Strategic option

Strategic option is one of several solutions of specific task or objectives of the organization.

Preferred or accepted by the enterprise community strategic option should be the basis for planning professionals to develop a strategy. Such a strategy consist of long-term goals and objectives and plans leading to the achievement of this objectives. It also contains a package of measures to ensure their achievement, allowing risk reduction and increase the chances of success.

Strategic management and the design of strategy requires to make informed and rational decisions. These decisions require management to study carefully the situation and the creation of several possible strategic options for implementation. Each of the strategic options should be carefully analyzed in order to evaluate and select one of them.

Fig.1. Strategic options

Assessment of strategic options

Each strategic option should be evaluated in terms of:

• The feasibility of the strategy - a necessary condition, which should be meet by the strategic option,
• Compliance with the company's mission and strategic goals
• Convergence with other strategies,
• Flexibility in the changing environment,
• Acceptability by stakeholders,
• Ensure of a competitive advantage,
• Temporality.

Evaluation of strategic options against the above criteria allows managers to choose the optimal variant in the specific circumstances and to develop a strategy setting out the way that the company wants to follow and constantly improve it.

This assessment allows managers to answer questions about specific capabilities of the company, the expected changes, the resources needed to perform the tasks and their allocation, and the company's position in the future.

Well-chosen strategic option should be the answer to the future prospects of the organization.

Examples of Strategic option

• Increasing Market Share: One of the most common strategic options for businesses is to increase their market share. This can be achieved by launching new products, expanding into new markets, and engaging in aggressive marketing campaigns.
• Mergers & Acquisitions: Mergers and acquisitions are another common strategic option for businesses. This involves combining two or more businesses in order to gain economies of scale and market power.
• Cost Reduction: Reducing costs is another strategic option for businesses. This involves finding ways to make operations more efficient, reducing expenses, and cutting back on labor costs.
• Innovation: Innovation is a strategic option that involves introducing new products and services or finding ways to improve existing ones. This can help businesses stay ahead of their competition and attract new customers.
• Outsourcing: Outsourcing is a strategic option that involves hiring third party providers to perform certain tasks or provide services. This can help businesses save money and resources while still providing high quality products and services.
• Diversification: Diversification is a strategic option that involves expanding into new markets and industries. This can help businesses reduce their risk and increase their revenue streams.

Advantages of Strategic option

A strategic option is a chosen course of action that is intended to help an organization achieve its objectives. An organization may opt to pursue a strategic option if it sees potential benefits that outweigh the risks. The following are some of the advantages of pursuing a strategic option:

• It allows an organization to anticipate and capitalize on opportunities. A strategic option gives an organization the ability to plan ahead to take advantage of opportunities as they arise, as well as to prepare for potential risks.
• It allows for creativity and innovation. Strategic options enable an organization to take risks and to explore new methods and approaches to address challenges and to pursue goals.
• It can help an organization stay competitive. Pursuing a strategic option can help an organization stay ahead of the competition and remain competitive in an increasingly competitive market.
• It can help an organization improve efficiency and reduce costs. By pursuing a strategic option, an organization can develop better processes, use resources more effectively, and reduce waste.

Limitations of Strategic option

• Strategic options may not be feasible due to resource constraints or lack of funding.
• Strategic options may also be limited by the existing organizational culture, which can make it difficult or impossible to implement certain changes.
• Strategic options may be hindered by political or legal considerations, such as the need to comply with certain regulations or laws.
• Strategic options may be limited by the amount of knowledge and information available to the decision makers.
• Strategic options may be limited by the time frame for implementation.
• Strategic options may be limited by the organization's ability to absorb the cost of implementation.
• Strategic options may be limited by the organization's capabilities and competencies.
• Strategic options may be limited by the competitive environment, as certain strategies may not be viable in a given market.

Other approaches related to Strategic option

The following are some other approaches related to strategic option:

• Scenario Planning: It is a process of creating various scenarios about the future based on current trends and data, and then determining the best courses of action for the organization.
• SWOT Analysis: It is an analysis of the Strengths, Weaknesses, Opportunities, and Threats of an organization that can help in developing strategies.
• Benchmarking: It is a tool used to measure the performance of an organization against its competitors, and it helps in finding out areas of improvement.
• Risk Management: It is the process of identifying and assessing risks in order to make informed decisions and prevent unforeseeable losses.
• Innovation: It is the process of coming up with new ideas and solutions that can help an organization to stay ahead of its competitors.

In summary, strategic option is an important approach for an organization when making decisions. However, there are other approaches that can also be used, such as scenario planning, SWOT analysis, benchmarking, risk management and innovation. All of these approaches can help an organization to develop strategies that are suitable for its current and future goals.

Strategic option — recommended articles

Strategic decision — Benefits of strategic management — Business capabilities — Significance of strategy — Importance of strategic management — Strategic decision making — Tactical decision — ASTRA analysis — Strategy

References

• Combe, I. A., Rudd, J. M., Leeflang, P. S., & Greenley, G. E. (2012). Antecedents to strategic flexibility: Management cognition, firm resources and strategic options. European Journal of Marketing, 46(10), 1320-1339.
• Dess, G. G., Lumpkin, G. T., & Eisner, A. B. (2010). Strategic management: Text and cases.
• Galbreath, J. (2006). Corporate social responsibility strategy: strategic options, global considerations. Corporate Governance: The international journal of business in society, 6(2), 175-187.