TEST OF A WINNING STRATEGY
TEST OF A WINNING STRATEGY
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
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. 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.
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