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Factors Shaping the Choice of Strategy
Societal, Political, Regulatory, and Citizenship Considerations
All organizations operate within the broader community of society. What an enterprise can and cannot do strategywise is always constrained by what is legal, by what complies with government policies and regulatory requirements, by what is considered ethical, and by what is in accord with societal expectations and the standards of good community citizenship.

Competitive Conditions and Overall Industry Attractiveness
An industry's competitive conditions and overall attractiveness are big strategy-determining factors. A company's strategy has to be tailored to the nature and mix of competitive factors in play : price, product quality, performance features, service, warranties, and so on. When competitive conditions intensify significantly, a company must respond with strategic actions to protect its position.

The Company's Market Opportunities and External Threats
The particular business opportunities open to a company and the threatening external developments that it faces are key influences on strategy. Both point to the need for strategic action. A company's strategy needs to be deliberately aimed at capturing its best growth opportunities, especially the ones that hold the most promise for building sustainable competitive advantage and enhancing profitability. Likewise, strategy should provide a defense against external threats to the company's well-being and future performance.

Company Resource Strengths, Competencies, and Competitive Capabilities
One of the most pivotal strategy-shaping internal considerations is whether a company has or can acquire the resources, competencies, and capabilities needed to execute a strategy proficiently. These are the factors that can enable an enterprise to capitalize on a particular opportunity, give the firm a competitive edge in the marketplace, and become a cornerstone of the enterprise's strategy.

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The Personal Ambitions, Business Philosophies, and Ethical Beliefs of Managers
Managers do not dispassionately assess what strategic course to steer. Their choices are typically influenced by their own vision of how to compete and how to position the enterprise and by what image and standing they want the company to have. Both casual observation and formal studies indicate that managers' ambitions, values, business philosophies, attitudes toward risk, and ethical beliefs have important influences on strategy.

The Influence of Shared Values and Company Culture on Strategy
An organization's policies, practices, traditions, philosophical beliefs, and ways of doing things combine to create a distinctive culture. Typically, the stronger a company's culture, the more that culture is likely to shape the company's strategic actions, sometimes even dominating the choice of strategic moves. This is because culture-related values and beliefs are so embedded in management's strategic thinking and actions that they condition how the enterprise does business and responds to external events.


What are the criteria for weeding out candidate strategies? How can a manager judge which strategic option is best for the company? What are the standards for determining whether a strategy is successful or not? Three tests can be used to evaluate the merits of one strategy over another:

1. The Goodness of Fit Test : A good strategy has to be well matched to industry and competitive conditions, market opportunities and threats, and other aspects of the enterprise's external environment. At the same time, it has to be tailored to the company's resource strengths and weaknesses, competencies, and competitive capabilities.

2. 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.

3. The Performance Test : A good strategy boosts company performance. Two kinds of performance improvements are the most telling of a strategy's caliber: gains in profitability and gains in the company's competitive strength and long-term market position.

Source of Reference:
Arthur Thompson and Strickland, Strategic Management: Concepts and Cases, McGraw Hill. You can obtain this excellent book here

Indonesian version of strategy article like this can also be seen at www.StrategiManajemen.net