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Formulating strategic alternatives Essay

This position has been found true in case of many companies Organizations need a set of threshold resources to perform in any market and there is a continuous need to improve such resources to stay in business. This becomes inevitable because of the competitors and sometimes the new entrants.. Critical success factors for a firm may also be determined by its relative position with respect to its competitors. In some instances, industry is dominated by a few large players and their actions lead to determining the critical success factors for the industry which smaller players have to ensure for their success.

For example, for the pathological laboratory centers earlier the CSF was authentic, hygienic and scientific testing facilities until few big players added service features like door to door sample collection or home delivery of reports. Very soon approachability and ease became the additional CSFs for the players. SWOT A SWOT analysis summarizes the key issues from the external environment and the internal capabilities of an organization those which become critical for strategy development.

The aim through this is to identify the extent to which the strengths and weaknesses are relevant to and capable of dealing with changes in the business environment.

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It also reflects whether there are opportunities to exploit further the competencies of the organization. A comprehensive internal analysis of an organization’s strengths and weaknesses must however utilize all three types of comparison standards. For instance, an organization can study industry norms to assess where it stands in terms of number of complaints generated regarding defects during guarantee period of a product.

Then it could benchmark the organization that is best at controlling the defects. Based on the benchmarking results it could implement major new programmes and track improvements in these programmes over time using, historical comparisons. A firm following strategy maintains its current business and product portfolios; maintains the existing level of effort; and is satisfied with incremental growth. It focuses on fine-tuning its business operations and improving functional efficiencies through better deployment of resources.

Read also about Threshold Capabilities

In other words, a firm is said to follow consolidation strategy if it decides to serve the same markets with the same products; continues to pursue the same objectives with a strategic thrust on incremental improvement of functional performances; and concentrates its resources in a narrow product-market sphere for developing a meaningful competitive advantage. Adopting a strategy does not mean that a firm lacks concern for business growth. It only means that their growth targets are modest and that they wish to maintain a status quo.

Since products, markets and functions remain unchanged, strategy is basically a defensive strategy. A stability strategy is ideal in stable business environments where an organization can devote its efforts to improving its efficiency while not being threatened with external change. In some cases, organizations are constrained by regulations or the expectations of key stakeholders and hence they have no option except to follow stability strategy.

Generally large firms with a sizeable portfolio of businesses do not usually depend on the stability strategy as a main route, though they may use it under certain special circumstances. They normally use it in combination with the other generic strategies, adopting stability for some businesses while pursuing expansion for the others. However, small firms find this a very useful approach since they can reduce their risk and defend their positions by adopting this strategy.

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