BU481 Lecture Notes - Lecture 13: Sensitivity Analysis
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BU-481 Lecture 11
Strategy Selection and Evaluation
Evaluating Strategic Alternatives
• 2 Methods:
o From Day’s article “Evaluating Strategic Alternatives”
o What, Why, How, Risks, Time Framework
Method 1: Article: Evaluating Strategic Alternatives
• 5 Evaluation Criteria Tests (Day Framework)
o How attractive is the market opportunity?
o How sustainable are the competitive advantages?
o What are the prospects for successful implementation?
o Are the risks acceptable?
o Will the financial forecast results be achieved and increase shareholder value?
Test 1: How attractive is market opportunity?
• Profitability of industry (external analysis)
o Intensity of existing competition
• Events/trends in macroeconomic environment
• Market size and growth
• Cyclicality of market demand
• Degree of market fragmentation
• Ease of channel access
• Barriers to entry
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