Strategic Decision-Making: Crafting Options for Optimum Success - Essay Sample

Introduction

Deciding on strategic options requires careful consideration as they take advantage of the facts, trends, opportunities and threats in the external environment. The probability of success in a firm increases with the carefully crafted strategic options that help in dealing with the uncertainty and the complexity involved in making choices. Vital tools in the process include the SWOT analysis, decision-making matrix and cost-benefit analysis. This paper focuses on discussing the process of deciding on strategic options.

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Process of Deciding on the Competitive Scope

In achieving success, the organization needs to leverage strategic advantages. A firm needs to come up with a strategy that allows leveraging competitiveness in the market. In developing a competitive strategy, an organization should first consider whether the target market is broad or narrow (Gamble, Peteraf, & Thompson, 2014). The firm should also decide whether it seeks to lower the costs or lead to differentiation. The organization then analyzes the factors that lead to the company's strategy while describing the objectives and what needs to be accomplished by the decision.

Additionally, the company should look at the competitive strategy options that include the two types of competitive advantages possessed by the organization; that is low cost or differentiation. An extensive differentiation strategy seeks to make the products for the company more appealing to people than the competitor's products. A focused low-cost strategy aims to produce goods at a lower price and selling them at a lower cost than the competitors to attract more consumers (Omsa, Abdullah, & Jamali, 2017). A focused differentiation focuses on a narrow market and seeks to provide goods and services that meet the consumer's preferences and tastes to shift more buyers from the competitors. Moreover, the best cost provider strategy aims to provide more value for the consumer's money while satisfying the buyer's prospects. The next step is identifying the scope of the objectives to include the other strategies.

Strategic Thinking in Deciding on the Competitive Scope

According to Porter's generic strategies, a firm has two types of competitive advantages; that is low cost or differentiation. The factors that distinguish a firm from another are the broad target and the narrow target and whether the firm a firm wants to achieve low cost or differentiation (Rothaermel, 2016). The advantages combined with the activities that need to be accomplished lead to cost-leadership, cost-focus and differentiation. The factors lead to the achievement of the low-cost provider strategy that seeks to achieve low costs in production than the other firms. Determining the scope helps the firm gain competitiveness in the market. It should utilize the activities to determine the level of its market penetration.

Geographic Scope

The geographic scope involves the number of locations served. It is influenced by the technology, preferences, government and the company's strategies. A firm may choose to compete in a geographically focused market that involves a single market or in many markets. The organization adds value to the dispersed units by choosing the markets to provide services to, the location and the coordination of the services through active management (David & David, 2016). There are vertical and horizontal scopes of the market. The horizontal scope includes the range of services that the organization services its products in a central market. The organization aims at achieving new business developments or mergers. In achieving competitiveness in the geographic scope, the firm needs to attract a broad range of customers by looking to expand to global markets.

Production and Distribution Scope

The scope includes all the activities of the firm, such as the production and service operations. The primary focus of the scope is the distribution channels of the goods and services produced. The firm needs to select the prospect markets to enter, pursue the opportunities, establish the priorities for investment, and implement the actions proposed to be successful in the distribution (Gamble, Peteraf & Thompson, 2014). The objectives set are vital for the firm as they help the firm in developing a competitive strategy that expands its distribution to diverse markets. However, the economic scope should be put into consideration to avoid incurring losses. The organization then develops decision models to aid in the implementation of the strategy.

Decision Models

The decision-making models aid in the successful implementation of the strategies. Krogerus & Tschappeler (2017) propose a gap in the market model. The approach helps in identifying the gaps in the market to aid in entering the other markets. It also determines whether the organization has the ability to fill the gaps (Krogerus & Tschappeler, 2012). The SWOT analysis is important in identifying the strengths of the business to fill the gaps identified.

Conclusion

Organizational success depends on its competitive strategy. The firm should therefore consider the scope of competitive advantage. In determining a competitive strategy, a firm should integrate porter's generic strategies. The organization should then identify its scope that includes geographic and distribution. In implementing, the firm should come up with a decision model to help in identifying the gap and improve competitiveness.

Annotated Bibliography

Omsa, S., Abdullah, I. H., & Jamali, H. (2017). Five Competitive Forces Model and the Implementation of Porter's Generic Strategies to Gain Firm Performances.

This article describes the process of the implementation of Porter's strategies to gain competitiveness. The authors describe and analyze how the strategies affect firm performance. They assert that the buyers affect the differentiation strategy; suppliers affect cost leadership. Rivals also affect focus and differentiation strategy. They, therefore, suggest that the firm should consider all the factors of the strategies to gain success. The assertions are also supported by Krogerus and Tschapeller (2017). The article provides the required quality of information.

Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education.

The article describes how firms gain competitive advantage through strategic management. The authors suggest that strategic decision making involves the integration of strategic thinking like the geographic scope and decision models to ensure a firm gains a competitive advantage. It combines theories to show how strategic decisions are reached. The book provides the required quality of information.

References

David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and cases. Pearson-Prentice Hall.

Gamble, J. E., Peteraf, M. A., & Thompson, A. A. (2014). Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.

Krogerus, M., & Tschappeler, R. (2012). The decision book: 50 models for strategic thinking. WW Norton & Company.

Omsa, S., Abdullah, I. H., & Jamali, H. (2017). Five Competitive Forces Model and the Implementation of Porter's Generic Strategies to Gain Firm Performances.

Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education.