Strategy Selection Criteria
According to David Aaker, strategic alternatives should be accepted to the degree that they meet the following six criteria:
- They are responsive to the external environment.
- They involve a sustainable competitive advantage.
- The are consistent with other strategies in the organization.
- They provide adequate flexibility for the business and the organization.
- They are organizationally feasible.
Tests Of A Winning Strategy
Three tests can be used to evaluate the merits of one strategy over another and to gauge how good a strategy is:
- The Goodness of Fit Test
- A good strategy is well matched to the company's situation - both internal and external factors and its own capabilities and aspirations.
- The Competitive Advantage Test
- A good strategy leads to sustainable competitive advantage. The bigger the competitive edge that a strategy helps build, the more powerful and effective it is.
- The Performance Test
- A good strategy boosts company performance. Two kinds of performance improvements are the most telling: gains in profitability and gains in the company's long-term business strength and competitive position.