Other than what the textbook suggests, are there any other ways to develop strategic alternatives.
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The process of looking for strategic alternatives starts when the management or investors decide that a company needs radical restructuring to become more competitive and profitable. Common strategic alternatives include concentration, diversification, stability, and turnaround. Specifically, businesses may focus on increasing market share by performing market penetration, expand into new markets, develop new products according to customer demands, and create customer value (Boykin, 2018). However, the management and investors may resort even to such measures as sale or liquidation to avoid financial losses.
In order to develop effective strategic alternatives, a company should start with performing a SWOT analysis to identify existing threats and opportunities in specific markets. This process involves the evaluation of internal and external factors influencing business operations, including the resources, strengths, weaknesses, liabilities, and capabilities of the company, existing competition and potential opportunities, customer demands and expectations, and the interests of all stakeholders (Developing Your Strategy, n. d.). When a SWOT analysis is complete, a company can focus on identifying strategic alternatives by applying problem-solving skills to the situation and brainstorming available opportunities according to the organization’s vision and mission statements. Lastly, it is necessary to evaluate all available options using such methods as risk analysis, impact analysis, failure modes and effects analysis, cost-benefit analysis, break-even analysis, and decision trees (Developing Your Strategy, n. d.). Upon the completion of the evaluation, a company can choose the most effective strategic alternatives by checking them for consistency with the organizational culture and values.
Strategic alternatives can be developed by investigating outsourcing opportunities. Fortunately, the intensifying globalization of the modern business environment allows companies to look for cheaper manufacturing and human resources in developing countries. Therefore, they can develop strategic alternatives by decreasing operating expenses through outsourcing. The markets of developing countries present significant opportunities for business expansion because they are usually dominated by a large number of small local businesses. Therefore, companies can also consider entering such markets as a valid strategic alternative to dealing with extreme competition in developed countries.
