Criteria for evaluating strategy options

Research has shown that the following criteria are generally used for evaluating strategy options:

Business Opportunity - Size the prize

The 'prize' to aim for can contain a number of elements:

• Increase in market share
• Increase in customer share
• Access to new markets or distribution channels
• Maintaining or increasing prices
• Increasing margins
• Increasing business process efficiency
• Increasing appropriability of revenues
• Increasing the economic value added
• EEtc.

Each opportunity can represent an increase of 1) revenue, 2) reduce costs or 3) both

Competitiveness - Can we win?

1. Often a strategy is developed solely by Looking at opportunities and threats
2. Another dimension is to seek a competitive advantage to build. Does it provide a small or substantial improvement to the existing advantages? Will you look at the current arena or new ones? (See also Strategic game-board)
3. The third criterion is to Look at the sustainability of the created competitive advantage

• Feasibility - Can we do it?

1. Choosing the right moment
   1. The concept of the The Tipping Point may be applied in organizational decision making in times of inertia. A good metaphor is for inducing change is the game of domino. Is the heaviest 'domino' (senior management) ready to fall over?
2. Resource requirement
   1. To what degree must core processes be changed?
3. Flexibility
   1. What opportunities remain to adjust after the projects are implemented?
4. Team
   1. The quality of the team that proposes the strategic options is crucial: are the people heavyweight or lightweight?

Leverage

Critical options to consider leverage effects are:

1. Future spin-offs which may follow from this investment
2. Potential business opportunities outside the business unit to other business with the same corporation
3. The negative spill overs within the business or across business which may follow from investment in the project.