Prioritizing Your Strategic Alternatives: Case Study - dummies

Prioritizing Your Strategic Alternatives: Case Study

By Erica Olsen

In strategic planning, making equitable trade-offs requires comparing apples to apples. Internal priorities are competing with other internal priorities, and external priorities are competing against other external priorities. The following example demonstrates how one company went about choosing their strategies.

G&G Construction, a small, local construction company, is looking at a variety of expansion options (see the figure). With limited resources and bonding capacity, the company can pursue only one opportunity at a time. The opportunities include the following:

  • Expanding into new markets by opening satellite offices

  • Buying a concrete company

  • Establishing an exclusive partnership with a civil engineering company

  • Expanding service line to include custom homes and remodels

Company executives compare the opportunities. First, they write the letter of the most important option, and then they score their difference in importance. For example, looking at the figure, when comparing expanding into a new market (A) with buying a concrete company (B), the executives chose A over B. Then they decided that expanding into a new market was two times more important than buying a concrete company, so they wrote “A, 2” in that cell. They went through the same process for each comparison then added the A, B, C, and D values and converted each into a percentage as follows:

  • A = 6 (46 percent)

  • B = 0 (0 percent)

  • C = 3 (23 percent)

  • D = 4 (31 percent)

Expanding into a new market (A) is the most important opportunity, followed by expanding the current service line (D). Buying a concrete company (B) is the least important and may come up when the other opportunities have been realized.