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Suitability, Acceptability, Feasibility (SAF) Framework to Score Strategic Options

The acronym SAF (Suitability, Acceptability, Feasibility) summarises 3 criteria to identify optimal strategic options and to evaluate possible new strategic initiatives. “Suitability” assesses whether a strategy addresses key strategic challenges an organisation faces, “acceptability” determines whether a strategy meets stakeholder expectations, “feasibility” examines its practicality. In the book “Exploring Strategy: Text and Cases,” 12th edition, by Whittington, R., Regner, P., Angwin, D., Johnson, G., and Scholes, K., published in 2020 by Pearson in Harlow, the concept of SAFE is introduced, where “E” (evaluation) is about synthesizing the results of SAF’s assessments to determine the most optimal strategy, since SAF alone may suggest various strategies.

Suitability

Suitability analysis assesses whether the proposed strategy exploits the key opportunities and avoids threats, as identified through a TOWS analysis, that an organization faces. Since strategy is about setting priorities, it’s crucial to identify only the key strategic issues.

Suitability is about assessing how well a strategy aligns with the internal and external environments, using evaluation matrices such as TOWS analysis to underpin this assessment and provide robust data to justify the recommended choice.

Suitability of “Retrenchment” Strategy Option

Fundamental strategic choicesWhy this option might be suitable for you in terms of:
Macro, industry and sector
environments
Resources and capabilities
RetrenchWithdraw from declining markets.
Maintain market share.
Identify and focus on established
strengths.
Table. Examples of suitability. Exploring Strategy: Text and Cases. p.379

What is “Retrenchment” Strategy?

  • Core Focus: Reducing scope and scale to stabilize operations, often in response to significant challenges or poor performance.
  • Key Actions: Downsizing operations, divesting business units, cost cutting, and efficiency improvements.
  • Risk Level: Can be high due to potential negative impacts on morale and brand reputation, but it’s often necessary to prevent further losses.
  • Change in Offering or Market: Often involves shrinking the business, exiting markets, or discontinuing products.

To provide an excellent justification for the suitability of the Retrench” strategy, one could elaborate on the following points:

  1. Market Conditions: Describe the specific declining market conditions that make retrenchment suitable. This includes analyzing market trends, customer behaviors, and industry shifts that indicate a decline, making continued investment unsustainable.
  2. Strategic Focus: Justify why maintaining market share is essential in the remaining market segments, explaining how this aligns with the company’s core competencies and strategic focus areas.
  3. Leveraging Strengths: Clarify what the company’s established strengths are (such as brand reputation, customer loyalty, or proprietary technology) and how focusing on these strengths makes retrenchment a suitable strategy.
  4. Resource Reallocation: Discuss how resources from declining markets can be better used by focusing on areas where the company has these established strengths, ensuring a more efficient and effective use of resources.

An example of justification for the suitability of the “Retrench” strategy for a custom software development company.

PRQSoft, a custom software development company, has historically operated across multiple market segments, including retail, and healthcare. However, the rapid evolution of technology and changes in regulatory compliance have led to a decline in the retail software segment. Retail clients are increasingly opting for off-the-shelf solutions that require less customization and are more cost-effective, leading to a consistent decrease in demand for custom retail software solutions.

Faced with this downturn, PRQSoft has decided to implement a retrenchment strategy. This decision was made after a careful analysis of the company’s market presence and realizing that the healthcare segment still show robust demand for custom software solutions, due to the specialized requirements and regulatory nuances in this sector.

The company has chosen to withdraw from the retail software market to prevent the dilution of its resources in an area with shrinking returns. Instead, PRQSoft is refocusing its efforts on the healthcare software segment where the company has established a strong reputation for quality and compliance, and where customer loyalty is high.

By doing so, PRQSoft is not only looking to maintain its market share in this more profitable segment but is also aiming to reallocate its skilled developers, project managers, and salesforce to capitalize on the opportunities within this industry. The company’s deep expertise in creating HIPAA-compliant software for healthcare clients is an example of the unique value proposition that PRQSoft brings to this market.

The example is used to demonstrate why a retrenchment strategy is suitable:

  1. Recognition of Declining Segment: The company acknowledges the decline in the retail software segment due to factors like technological evolution and regulatory changes. This awareness is crucial for any retrenchment strategy.
  2. Focus on Strengths: PRQSoft identifies that its strength lies in the healthcare segment, where it has established a reputation for quality and compliance. This is a strategic move to concentrate on areas where the company can maintain or grow its market share.
  3. Resource Reallocation: The strategy involves withdrawing from the less profitable retail market and reallocating resources, including skilled personnel, to the healthcare sector. This is a classic move in retrenchment strategies, optimizing resource utilization for better returns.
  4. Market Demand and Specialization: The company’s decision is also based on the understanding that the healthcare segment has robust demand for custom software solutions, largely due to specialized requirements and regulatory nuances, which aligns with their expertise.
  5. Sustaining Profitability and Growth: By focusing on the healthcare segment, PRQSoft aims to sustain its profitability and growth, a primary objective of any retrenchment strategy.

Suitability of the “Penetrate Market” Strategy Option

Fundamental strategic choices Why this option might be suitable for you in terms of:
Macro, industry and sector
environments
Resources and capabilities
Penetrate marketGain market share for advantage.Exploit superior resources and
capabilities.
Table. Examples of suitability. Exploring Strategy: Text and Cases. p.379

What is the”Penetrate market” Strategy?

  • Core Focus: Increase the market share of existing products in existing markets.
  • Key Actions: Intensifying marketing efforts, increasing promotional activities, and potentially adjusting prices to boost sales volume.
  • Risk Level: Low, as it exploits the existing business model and market knowledge.
  • Change in Offering or Market: None. It aims to maximize potential within the current market.

To provide an excellent justification for the suitability of the “Penetrate market” strategy, one could elaborate on the following points:

  1. Market Share for Advantage: Clarify why gaining market share is particularly suitable for the company in its current macro environment. This would involve identifying how the company’s position within its industry and sector enables it to gain an advantage through increased market penetration. For instance, if the company operates in a growing market or if there’s a shift in consumer preferences that aligns with the company’s offerings, these conditions would make market penetration a suitable strategy.
  2. Exploit Superior Resources and Capabilities: Detail how the company’s specific resources and capabilities make market penetration a suitable strategic choice. This could be due to the company having innovative technology, a skilled sales force, a strong brand, or unique product features that competitors lack. The company’s resources and capabilities should match the demands of the market in a way that allows for successful market penetration.

An example of justification for the suitability of the “Penetrate market” strategy for a custom software development company.

The healthcare sector is experiencing a surge in the adoption of digital technologies, particularly digital analytics for data-driven decision-making. Healthcare continues to be a highly regulated industry, with an increasing focus on compliance (e.g., HIPAA in the U.S.), which demands customized software solutions. There’s a rapid evolution in healthcare technology, which necessitates ongoing development and customization, areas where PRQSoft has a competitive advantage.

PRQSoft’s established expertise in Microsoft technologies is particularly suited to developing analytics solutions in healthcare, a sector that highly values data security and integrity. The company’s portfolio of case studies in healthcare demonstrates a track record of delivering custom software solutions that meet the complex needs of healthcare providers. PRQSoft’s team of skilled developers, project managers, and salesforce are well-versed in the healthcare domain, enabling the company to effectively address and meet the sector’s specific requirements.

By focusing on these aspects, PRQSoft can present a compelling case for the suitability of a market penetration strategy. The company can exploit its superior resources and capabilities to gain market share and secure a competitive advantage in the healthcare software market.

The example is used to demonstrate why a market penetration strategy is suitable:

  1. Surge in Adoption of Digital Technologies in Healthcare: This indicates a growing market where PRQSoft can increase its share.
  2. Requirement for Customized Software Solutions: PRQSoft’s expertise in custom solutions aligns with the market’s needs, making market penetration a viable strategy.
  3. Expertise in Microsoft Technologies and Data Security: These are critical in the healthcare sector, and PRQSoft’s established capabilities in these areas make it well-positioned to expand its market share.
  4. Track Record in Healthcare Sector: PRQSoft’s history of delivering in this sector demonstrates its ability to meet market demands, a key factor in successful market penetration.
  5. Skilled Team in Healthcare Domain: This further emphasizes PRQSoft’s readiness to meet the specific needs of this sector, supporting its strategy for market penetration.

Suitability of “Products/Services Development” Strategy Option

Fundamental strategic choices Why this option might be suitable for you in terms of:
Macro, industry and sector
environments
Resources and capabilities
Offer new products and servicesExploit knowledge of customer needsExploit R&D
Table. Examples of suitability. Exploring Strategy: Text and Cases. p.379

What is the “Offer new products and services” Strategy?

  • Core Focus: Create and offer new products or services to existing markets.
  • Key Actions: Innovation, research and development, updating or extending product lines to cater to existing customers’ evolving needs.
  • Risk Level: Moderate to high, depending on the degree of new product development and its deviation from existing offerings.
  • Change in Offering or Market: Introduction of new products or services to the existing market.

An example of justification for the suitability of the “Products/Services Development” strategy for a custom software development company.

PRQSoft has been developing custom software solutions for the healthcare industry for over a decade. Throughout this period, they have built a strong rapport with healthcare providers, gaining invaluable insights into the sector’s unique needs, especially concerning data analysis and patient privacy.

Recently, PRQSoft has observed a surge in interest among its healthcare clients for predictive analytics and personalized patient care, both of which can be significantly enhanced by AI technologies. Recognizing this trend, PRQSoft’s strategic choice to offer new AI-driven analytics services is a direct response to the explicit needs communicated by their current client base. To support this strategy, PRQSoft has doubled down on its R&D capabilities.

They have recently acquired a promising AI startup that specializes in machine learning algorithms suited for big data contexts, which are prevalent in healthcare. This acquisition not only injects cutting-edge AI expertise into PRQSoft’s skillset but also serves as a catalyst for innovation, allowing the company to rapidly develop and deploy new analytics platforms.

This strategic move aligns with the macro-environmental trend toward digital transformation in healthcare and leverages PRQSoft’s strong industry position and enhanced R&D muscle to fulfill a critical and growing market need. By introducing these AI-driven services, PRQSoft can provide a highly differentiated offering that capitalizes on the existing trust and collaboration with healthcare providers. Such a proactive and tailored approach not only fortifies PRQSoft’s competitive positioning but also sets the stage for growth in a high-potential market segment.

The example is used to demonstrate why a Products/Services Development strategy is suitable:

  1. Identification of Market Need: PRQSoft recognized a surge in interest among its clients for predictive analytics and personalized patient care, indicating a clear market need. This is a fundamental step in justifying product/service development, as it ensures that the new offerings are likely to address actual customer demands.
  2. Alignment with Company’s Core Capabilities: PRQSoft has a background in developing software solutions for healthcare, which provides them with the necessary expertise to venture into AI-driven analytics. The decision to develop new products/services is directly aligned with the company’s core capabilities and existing knowledge base.
  3. Utilization of Existing Client Relationships: The strategy leverages PRQSoft’s established relationships in the healthcare industry. This existing client base provides a ready market for the new services, reducing the risk associated with new product development.
  4. Strategic Acquisition to Enhance Capabilities: The acquisition of an AI startup is a strategic move to bolster PRQSoft’s capabilities in a specific, high-potential area. This acquisition is a key part of the justification, as it directly contributes to the company’s ability to develop the proposed new services.
  5. Competitive Differentiation: The development of AI-driven analytics services allows PRQSoft to offer a differentiated product in the market. This differentiation is a crucial aspect of the justification, as it positions the company to capture a unique segment of the market.

Suitability of “Develop MarketStrategy Option

Fundamental strategic choices Why this option might be suitable for you in terms of:
Macro, industry and sector
environments
Resources and capabilities
Develop marketCurrent markets saturated.
New opportunities for: geographical
spread, entering new segments or new uses.
Exploit current products and capabilities.
Table. Examples of suitability. Exploring Strategy: Text and Cases. p.379

What is the “Develop market” Strategy?

  • Core Focus: Enter new markets with existing products or services.
  • Key Actions: Geographic or demographic expansion, targeting new customer segments, or adapting products to fit new market needs.
  • Risk Level: Moderate, due to the challenges of understanding and adapting to new markets.
  • Change in Offering or Market: No change in the product line, but targeting new markets.

Suitability of “DiversifyStrategy Option

Fundamental strategic choices Why this option might be suitable for you in terms of:
Macro, industry and sector
environments
Resources and capabilities
DiversifyCurrent markets saturated or declining.
New opportunities for expansion
beyond core businesses.
Exploit strategic capabilities in new arenas.
Table. Examples of suitability. Exploring Strategy: Text and Cases. p.379

What is the “Diversify” Strategy?

  • Core Focus: Offer new products to new markets.
  • Key Actions: Launching into entirely new lines of business, which might include developing new products or services or acquiring other companies to enter different markets.
  • Risk Level: High, as it involves simultaneous development of new products and new market knowledge.
  • Change in Offering or Market: Both the product offerings and the markets are new.

Acceptability

Acceptability is concerned with how well a proposed strategy is likely to be received by stakeholders. It considers the level of support from those affected, the risks involved, the anticipated returns, and whether the outcomes align with stakeholders’ values and expectations.

Acceptability includes a range of performance measures. These might be financial (the risks and returns for a chosen strategy, for example), but may also cover a range of marketing, innovation, learning and operational measures if these are collected using a scorecard or dashboard system. Different stakeholders will have different views on what is acceptable in terms of strategy performance, so you could also use this element of evaluation to consider whether the expectations of the different groups who have influence over the strategy are being met (or need to be met).

Feasibility

Feasibility examines the practicality of implementing a strategy. It looks at the availability of necessary resources, such as finances, personnel, and technology, as well as any existing constraints.

Feasibility covers practical matters related to resources and capabilities. Does the organisation have the finances, people and skills to deliver the strategy that is being proposed.

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