Strategic alternatives are strategies of a business, which provide the directions of using the resources of the company, the companies usually formulate various strategies to achieve higher levels of profitability. When company is seeking for new directions or ways to increase the profitability, they develop strategic alternatives to maintain their profitability, actually to avoid the dissolution or bankruptcy situations. Simply, when the management of the company is in view, that they are not getting enough profitability and they are required to restructure and update the operations of the company. the feasible idea through which the company can update their operations with high innovation. The alternative must be suitable for the company in all manners, most importantly financially. The pricing strategies of the company can improve the profitability, but it is not easy to charge high prices, to alternate the prices of the products, it is necessary to add exceptional features to the product. The different features can impact the preferences and demand of the customers and they would be willing to pay higher prices for the product. The alternative is available to the company to add the new product class or range or expand the market of the products of the company. thus, they can earn higher profitability with this alternative too. Every company must have a bundle of alternatives of strategies to face the contingencies of the business world. It is also necessary to add appropriate strategies; the excess will be difficult to manage.
Major strategic alternatives for the company
There is no perfect method or way to do anything in the business. Thus, the management should consider different alternatives to access the business in an efficient manner. Through which the business can compete with their competitors and create their brand image on the basis of pricing, quality and differentiation. The major factors of business environment, which should be considered while selecting the strategic alternative bundle are as follows:
Cost leadership: the cost leader is the company, who acquires the economies of large scale by producing large quantity of their products which will benefit the company and the cost will be reduced. Thus, the company can grab large customer base by charging less prices and maintain their profitability hy selling more quantity. If the company is selling more quantity at reasonable prices will impact more in the market. So, to acquire the economies of scale at lesser cost, company have to acquire latest technology by investing more in research and development.
In the differentiation strategy, company manufacture and sells the differentiated unique products and charge premium prices from the customers. Some companies charge high prices because the production of unique products requires huge investment in research and development, but the companies can recover such cost by charging reasonable prices also. So, the strategy must be formulated wisely to earn better returns.
Cost focus: the cost focus strategy is related with the cost leadership strategy, the following is the wider concept whereas cost focus consider the particular niche or specific area only. Where they can provide their products in cost effective prices to their customers. This strategy is most appropriate for the small businesses, having limited scope and resources.
Differentiation focus: This strategy is also narrower than differentiation strategy like the cost focus strategy, differentiation focus strategy focusses on particular niche only, to attract the target customers.
Criteria to formulate the strategic alternative bundle are as follows
The strategic alternative bundle must consider and describe all the major elements of the business environment. The company must do their SWOT analysis to know about their strengths, weaknesses, opportunities and threats by which they can remove their inefficiencies.
The strategic alternative bundle must focus the changing patterns of the market, the new trends of the market, which will be based on the research conducted in the market.
The major need to implement the alternative strategic bundle is to increase the profitability of the company, thus the alternatives adopted must solve this major issue of the company.
The alternatives are also found to overcome the threats imposed to the company by acquiring and utilizing the opportunity available to the company. so, that company can prepare well before the implication of threats and opportunities are lost.
The preparation for the contingencies can be done if company knows about their internal environment, thus alternatives should be chosen according to the strengths and weaknesses of the company.
Importance of following such criteria in formulating the strategic alternative bundle
The good strategy for the company is one which can use all the strengths and overcome the weaknesses of the company to grab the opportunity available and face the threats, the efficiency of the company to formulate the best strategy by considering all these factors of internal and external environment of company will prepare the company to compete in the market and have edge over their competitors.
Conclusion: Strategic alternative bundle is the collection of alternatives available to the company. so, the appropriate number of strategies must be chosen which can solve the problems of the company, the excessive alternatives will create more difficulties for the company.
Strategic-Alternative Bundles. (2019). Retrieved from https://myassignmenthelp.com/free-samples/strategic-alternative-bundles
Examples of Strategic Alternatives. (2019). Retrieved from https://smallbusiness.chron.com/examples-strategic-alternatives-77129.html
Four Generic Strategy Alternatives for Marketing. (2019). Retrieved from https://yourbusiness.azcentral.com/four-generic-strategy-alternatives-marketing-4058.html