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STRATEGIC DECISIONS AND FEASIBILITY ASSESSMENT

Strategic Context

Why this matters

Strategic decisions often involve significant investments and long-term commitments, making the assessment of feasibility and risk critical. Feasibility is about whether a strategic option is practical and achievable; risk assessment involves identifying potential problems that could prevent success and how to manage them. Understanding these concepts helps businesses avoid costly mistakes and improve decision quality.

Notes Outline

1

Feasibility Defined

Practicality regarding resources, market, and capabilities.
2

Risk Assessment

Identifying potential problems, likelihood, and impact.
3

Mitigation & Tools

Strategies (Avoidance, Reduction, Sharing) and analytical tools.

Types of Feasibility

Feasibility analysis examines the practicality of a proposed strategy across several dimensions.

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Technical

Can the company develop and deliver the product or service with existing or attainable technology?
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Economic

Does the expected financial return justify the investment and risks?
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Operational

Can the organization implement the strategy effectively given current processes, culture, and skills?
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Legal

Are there regulatory or compliance barriers that might prevent success?

Risk Prioritization

Risks are assessed based on two key dimensions to enable prioritization.

Risk Priority = Likelihood x Impact
Focusing on the highest probability and highest impact risks first ensures effective resource allocation in mitigation planning.

Risk Identification Methods

Common approaches used by strategic teams to uncover potential threats:

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Brainstorming & Interviews

Gathering insights from teams and experts.
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Scenario Analysis

Modeling possible outcomes under different conditions.
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Historical Data Review

Learning from past failures or successes.

Risk Mitigation: Avoidance vs Acceptance

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Avoidance & ReductionAltering the strategy to eliminate risk factors (e.g., withdrawing from risky markets) or implementing controls to minimize impact (e.g., safety checks, backup suppliers).
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Sharing & AcceptanceTransferring risk through insurance or partnerships (Sharing); or acknowledging some risks and preparing contingencies if they occur (Acceptance).

Balancing Risk and Innovation

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Strategic Risk Management: Feasibility and risk assessment do not mean avoiding all risk but managing it wisely. Entrepreneurial firms may accept higher risks in new product development to gain competitive advantage.

Importance of Stakeholder Input

Engaging stakeholders improves decision quality and buy-in.

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Why is consulting internal technical teams early so crucial for a new product launch?
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Consulting technical teams early can reveal potential obstacles in product development, preventing project delays or failures.

Cost of Ignoring Feasibility and Risk

Failing to thoroughly assess risks can lead to severe and costly consequences.

Risk Event Outcome Financial Reputation Timeline
Poor Planning Project Failures Losses Damage Delay
Misjudged Demand Market Share Loss Losses Moderate N/A
Non-Compliance Regulatory Penalties High Costs Severe Stoppage
Feasibility & Risk Assessment Deck
Term
Strategic Decision

What is a strategic decision?

Answer
Definition

A choice involving significant investment and long-term commitment affecting organizational direction.

Term
Feasibility Assessment

What does feasibility assessment evaluate?

Answer
Definition

Whether a strategic option is practical and achievable given resources, capabilities, and market conditions.

Term
Types of Feasibility

Name the five types of feasibility assessed in strategic decisions.

Answer
List

Technical, economic, operational, legal, and schedule feasibility.

Term
Risk Assessment

What is risk assessment in strategic decisions?

Answer
Definition

The identification, analysis, and management of potential negative events that could affect objectives.

Term
Risk Identification Methods

Give two common methods for risk identification.

Answer
Methods

Brainstorming and scenario analysis.

Term
Risk Prioritization

How are risks prioritized during assessment?

Answer
Process

By evaluating their likelihood and potential impact.

Term
Risk Mitigation Strategies

What are four risk mitigation strategies?

Answer
Strategies

Avoidance, reduction, sharing, and acceptance.

Term
Stakeholder Input

Why is stakeholder input important in feasibility and risk assessment?

Answer
Importance

It provides diverse insights improving decision quality and supports strategy implementation.

Term
Feasibility and Risk Tools

What tools can be used for feasibility and risk analysis?

Answer
Tools

SWOT analysis, cost-benefit analysis, risk matrices, sensitivity analysis, and decision trees.

Term
Ongoing Monitoring

Why must feasibility and risk be monitored over the strategy lifecycle?

Answer
Purpose

To detect and respond to changes or emerging risks for timely strategy adjustments.

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📊 Strategic Decision-Making Quiz

1. Which of the following is NOT a type of feasibility in strategic decisions?

Aesthetic feasibility is not commonly assessed; focus is on technical, economic, operational, legal, and schedule feasibility.

2. What is the primary purpose of risk assessment in strategic decisions?

Risk assessment helps understand and mitigate potential threats to success, not to avoid risks entirely.

3. Which risk mitigation strategy involves transferring risk to another party?

Sharing involves transferring risk through insurance or partnerships, whereas avoidance eliminates risk and reduction lowers its impact.

4. Feasibility assessments should be done only once at the start of a project. (True or False)

Feasibility and risk must be monitored continuously throughout the strategy lifecycle.

5. Which tool helps visualize the likelihood and impact of risks?

Risk matrices plot risks by likelihood and impact to prioritize focus.

📊 Results

  • Notes and Quiz
  • Business
  • AS & A Level
  • Strategy & Planning
  • AQA