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Management - Vikhanskiy OS

2.2. Choice of strategy

The company's strategy is selected by management based on an analysis of the key factors characterizing the state of the firm, taking into account the results of the product portfolio analysis, as well as the nature and essence of the strategies being implemented.

The key factors that should be taken into account when choosing a strategy are the following.

Strengths of the industry and strengths of a firm can often play a decisive role in choosing a growth strategy for a firm. Leading, strong firms should strive to maximize the opportunities generated by their leading position, and to strengthen this position. At the same time, it is important to look for opportunities to deploy a business in new industries for the company, which have great growth opportunities. Leading firms, depending on the state of the industry, must choose different growth strategies. So, for example, if the industry is on the decline, then we should rely on diversification strategies, if the industry is booming, then the choice of the growth strategy should fall on the strategy of concentrated growth or on the strategy of integrated growth.

Weak firms must behave differently. They should choose those strategies that can lead to an increase in their strength. If there are no such strategies, they should leave this branch. For example, if attempts to intensify in a fast-growing industry with the help of concentrated growth strategies do not lead to the desired state, the firm should implement one of the reduction strategies.

A. Thompson and A. Strickland [5] proposed the following matrix of strategy choice depending on the dynamics of the market growth for products (equivalent to the growth of the industry) and the competitive position of the firm (Figure 5.1).

The goals of the company give uniqueness and originality to the choice of strategy for each particular company. In order to reflect what the firm seeks. If, for example, the goals do not imply intensive growth of a firm, then the corresponding growth strategies can not be chosen, even though there are all the prerequisites for this, both in the market, in the industry, and in the firm's potential.

Slow market growth

Note: Strategies are written in the order of preference

Fig. 5 1. Matrix of Thompson and Strickland

The interests and attitude of top management play a very big role in the choice of the company's development strategy. Management may like to take risks, but may, on the contrary, try to avoid risks by any means. And this attitude can be decisive in choosing a development strategy. Personal sympathy or dislikes on the part of managers can also greatly influence the choice of strategy.

Financial resources of the firm also have a significant influence on the choice of strategy. Any changes in the firm's behavior, such as entering new markets, developing a new product and moving into a new industry, require a lot of money.

Qualification of employees, as well as financial resources, is a strong limiting factor in the choice of the company's development strategy. Not having sufficient information about the qualification potential, management can not make the right choice of the firm's strategy.

The firm 's commitment to previous strategies creates a certain inertia in the development of the firm. It is impossible to completely abandon all previous obligations in connection with the transition to new strategies. Therefore, when choosing new strategies, it is necessary to take into account the fact that for some time the obligations of the previous years will act, which will accordingly restrain or correct the possibilities for implementing new strategies.

The degree of dependence on the external environment has a significant influence on the choice of the firm's strategy. There are situations where the firm is so dependent on the suppliers or buyers of its products that it is not free to make a choice of strategy based on the possibilities of fuller use of its potential. Strong external dependence can also be caused by the legal regulation of the firm's behavior, for example, by antimonopoly legislation, social restrictions, dependence on the natural environment, dependence on political factors, etc.

The time factor must be taken into account in all cases of strategy choice. This is due to the fact that both the opportunities and threats for the firm, and the planned changes always have certain time limits. At the same time, it is important to take into account both the calendar time and the time interval of the implementation of specific actions to implement the strategy. The firm can not implement the strategy at any time and any calendar time, but only at those moments and at the time when there is an opportunity to implement the strategy.

The evaluation of the selected strategy is mainly carried out in the form of an analysis of the correctness and adequacy of accounting for the selection of the strategy of the main factors that determine the feasibility of implementing the strategy. The entire procedure for evaluating the chosen strategy is ultimately subordinated to one: will the chosen strategy lead to the firm achieving its goals. And this is the main criterion for evaluating the chosen strategy. If the strategy corresponds to the objectives of the firm, then its further evaluation is carried out in the following areas.

Correspondence of the selected strategy to the state and requirements of the environment. It checks whether the strategy is aligned with the requirements of the main actors of the environment, the extent to which market dynamics factors and the dynamics of the life cycle of the product are taken into account, whether the implementation of the strategy leads to the emergence of new competitive advantages, etc.

Correspondence of the chosen strategy with the potential and capabilities of the firm. In this case, it is estimated whether the chosen strategy is linked to other strategies, whether the strategy corresponds to the capabilities of the staff, whether the existing structure allows the successful implementation of the strategy, whether the strategy implementation program is time-honored, etc.

The acceptability of the risk inherent in the strategy. The risk assessment is carried out in three directions: realistic assumptions underlying the choice of strategy; What negative consequences for the firm can lead to the failure of the strategy; Whether the possible positive result justifies the risk of losses from failure in the implementation of the strategy.