What Are Strategic Alternatives in a Business Plan

Indeed, strategic alternatives are blueprints to set the direction for the prosperity of business resources and the achievement of goals. For years now in the Business Valley, the implementation of the traditional approach to launching a startup is outdated. Well, it is the hard way too, as more than 75% of startups are failing to wake us for a more iterative way that is learning from our failures. So what are strategic alternatives in a business plan that bring some great chances for success?

Creating a comprehensive business plan involves understanding strategic alternatives. So, a business plan writer often underscores such alternatives to offer multiple pathways for an organization to achieve its goals. Detecting and assessing strategic alternatives in a business Plan can significantly impact your business’s future success.

How do you develop strategic alternatives?

Identification Of The Strategic Issue

To incorporate a business plan, the first step is to find the strategic issue that your business needs to address. This could be an opportunity, a challenge, a problem, or a goal that calls for a strategic decision. It should be a specific issue that is relevant to the business’s vision, mission, & values. For instance, a clear strategic issue is about how to increase customer loyalty, enter a new market, reduce costs, innovate the product, or bring advancement to the service.

Understanding Strategic Alternatives

A company can pursue various options or pathways to achieve its objectives the chosen options are called Strategic alternatives in a business plan. Further, these alternatives are settled during the process of strategic planning to help determine the best direction for allocation of the resources. These strategic alternative evaluations require a thorough analysis of the company’s strengths, weaknesses, opportunities, and threats (SWOT analysis).

Generate Possible Alternatives

The second step for solving or addressing strategic issues is to generate possible alternatives. This process involves brainstorming, researching, benchmarking, and consulting with stakeholders. Well, it is a divergent process that requires creativity and mindfulness. This stage requires no filter or judgment in generating alternatives, as the only aim is to bring as many as possible outcomes. Make sure all the alternatives are consistent, realistic, and aligned with the strengths, weaknesses, opportunities, and threats (SWOT) of the businesses. Let’s say, some possible alternatives for entering a new market could be organic growth or maybe franchising, acquisition, or joint venture.

Common Types of Strategic Alternatives

1. Expansion

Expansion is about growing the operations of the company into new markets or customer segments. For example, to increase market presence, a business plan might focus on opening new locations in different geographic regions.

2. Product Development

Adding new products or services to the existing portfolio is termed product development. Let’s say an Investor Business Plan could best suit the development of innovative products to attract venture capital.

3. Mergers and Acquisitions

Merger and acquisition happen when a company combines with or purchases another company to enhance joint capabilities or market share. Perhaps an e2 visa business plan writing project might include acquiring a local business to quickly establish a market presence in a new country.

4. Divestiture

Divestiture is the selling of those extra parts of the company that are not brought into line with the core business. By way of illustration, a sba business plan may advise selling a non-profitable division of the business to focus on more lucrative areas.

5. Partnerships

Partnerships are formed for strategic alliances with other companies to influence mutual strengths. Hence a Strategic Business Plan could recommend partnerships with technology corporations to integrate innovations in the organization.

6. Cost Reduction

Implementing measures to reduce operational costs and improve efficiency. Therefore, a good business plan must include strategies for reshuffling operations to save costs and improve profit margins.

The Alternatives Evaluation

The next step is the evaluation of the alternatives based on their risks and rewards to fit with the business’s criteria and later on objectives. This critical process involves analyzing, equating, and ranking the alternatives. By this method, we can narrow down the alternatives to a few feasible and effective options by eliminating the impractical, or incompatible ones. The criteria of evaluation should be measurable and relevant according to the priorities. Such as some evaluation criteria for a new market entrance could be market competition, size, growth potential, entry barriers, and profitability.

Evaluating such alternatives implicates assessing how each option supports the company’s overall strategy. The best one effective tool for alternative evaluation is the TOWS Matrix. It helps in developing strategies that get the most out of opportunities and strengths while alleviating weaknesses and threats.

Framework of TOWS Matrix

– Strengths + Opportunities (SO) Strategies:
This strategy leverages internal strengths to capitalize on external opportunities and advantages.

– Weaknesses + Opportunities (WO) Strategies:
This analysis addresses internal weaknesses by employing external opportunities.

– Strengths + Threats (ST) Strategies:
This can be achieved by using internal strengths to thwart external threats.

– Weaknesses + Threats (WT) Strategies:
This one is all about minimizing internal weaknesses and avoiding external threats.

Practical Application

For instance, an emerging manufacturing company can develop a Franchise Business Plan that might use the TOWS Matrix as follows:

– Strengths:
Produce high-quality products for a strong brand reputation.

– Weaknesses:
It has a limited distribution network and the cost of goods manufactured is also peak.

– Opportunities:
It can benefit from growing demand in incipient markets and potential partnerships with local firms.

– Threats:
These are about increasing competition and potential trade barriers.

Based on this analysis, a company can pursue an expansion strategy by entering new geographic markets where there is high demand and potential for partnerships to navigate local regulations.

Select The Best Alternative

The final step is to select the best alternative among the unused rest options. This is a conclusive process that ensures the best match of business criteria and objectives, and that has the chance to succeed. Remember that your selection must be based on logic and evidence, and should be justified clearly. You should discuss and describe the selected alternative to the stakeholders, and further you should explain by an actionable plan. For instance, you can franchise your best alternative for entering a new market, if it doesn’t cause any loss but causes profit.

FAQs

Q1: What Are Strategic Alternatives in a Business Plan?
A1: Strategic alternatives in a business plan are the different pathways that guide decision-making and resource allocation to maximize success. These alternatives help businesses adapt to market conditions, competition, and internal capabilities.

Q2: Why are strategic alternatives important in a business plan?
A2: Strategic alternatives provide numerous options to adapt to changing market conditions, profit from opportunities, and alleviate risks.

Q3: What are some common types of strategic alternatives?
A3: Common ones are; Expansion, Product Development, Mergers and Acquisitions, Divestiture, Partnerships, and Cost Reduction.

Q4: How do businesses evaluate strategic alternatives?
A4: Businesses evaluate strategic alternatives by using several key methods; SWOT Analysis, TOWS Matrix, Cost-Benefit Analysis, Feasibility Study, Scenario Planning, Risk Assessment, and Financial Projections.

Q5: What is the role of a SWOT analysis in identifying strategic alternatives?
A5: A SWOT analysis provides a structured framework to assess the internal and external factors that can impact a business. By analyzing Strengths, Weaknesses, Opportunities, and Threats, businesses can facilitate viable and strategic alternatives for growth and improvement.