Systematic determination of merit, worth and significance of strategic options, is essential to make rational decision in strategic management. Evaluation of strategic alternative is used to interpret and predict the significance of the strategic alternatives. So, strategic options should be carefully evaluated for making better choice of the strategic options.
Following are the evaluation criteria of strategic alternatives;
⦁ Suitability
⦁ Acceptability
⦁ Feasibility
Suitability
A suitability criterion emphasizes the strategic alternative fit with environmental factors. The best strategy for an organization to adopt is that which is most suited to its current strengths and its position. In other words, it is the extent to which a proposed strategy fits the situation as identified by a strategic analysis, and how well it would sustain, or improve, the organization's competitive advantage.
It is not enough simply to identify an attractive opportunity. If the strategy is to be successful, it must also be an opportunity for which the organization is suited, i.e. has the relevant business strengths. This is why strategy evaluation must also consider criteria by which the likely competitive position of the business can be assessed, i.e. it represents the criteria which determine how "easy" it would be to exploit the opportunity – the customer's likelihood of buying what it is you want to offer. This would involve considering such things as:
⦁ Price
⦁ Product quality
⦁ Distribution
⦁ After-sales service
⦁ Reputation
⦁ Availability.
In particular, strategic alternatives should be suitable form the following points of view;
⦁ Exploiting the opportunities and minimizing the threats,
⦁ Building opportunities and avoiding the weakness, and
⦁ Fulfilling customer expectations.
Assessing the suitability of strategic options can be a useful basis on which to screen options before more detailed analyses are undertaken. In reviewing strategies, it is important to check that strategies are consistent with the needs of the environment, the resources and values of the organization, and its mission.
Acceptability
Strategies also have to be acceptable or desirable to a variety of different stakeholders. Acceptability is therefore concerned with the expected performance outcomes, such as risk or return, if a strategy is implemented.
The strategies should be acceptable to both the customers and other stakeholders. In addition to the customers finding the product or service acceptable, it is also necessary to consider the opinions of the organization's stakeholders.
Following may the criteria for assessing the acceptability of strategic options;
⦁ Strategic Needs
⦁ The levels of expected needs
⦁ Synergy
⦁ Risk
⦁ Stakeholder needs and preferences
Feasibility
The third factor which needs to be considered is whether it is possible to implement the strategy successfully. It must be asked "have we the necessary resources to put this strategy into effect?" Feasibility is concerned with whether an organization has the resources and competences to deliver a strategy.
Workability of the strategic options is determined form the feasibility analysis. Generally resource availability is checked to determine the strategic suitability. Resources in this context mean more than just financial capability, although this, of course, is fundamental. It also requires that the quality of performance is satisfactory, which means that the necessary skills are available within the workforce. Other necessary resources may include:
⦁ Technological "know-how";
⦁ Availability of materials and machines; and
⦁ Other necessary back-up services.
Following may the criteria for assessing the feasibility;
⦁ Issues of implementation and change
⦁ Finance and other resource availability
⦁ Ability to meet key success factors
⦁ Competitive advantage
⦁ Timing