Discuss whether DLR's use of strategic choice techniques can eliminate risk when taking strategic decisions.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2018). The mark or mark type is shown in brackets.

1. [Examiner note] Strategic analysis techniques such as SWOT/PEST/BostonMatrix/Porter's Five Forces are not strategic choice techniques. If a candidate only discusses these then NO MARKS.
2. [Examiner note] L1 EVAL max if no reference to risk
3. [Knowledge] Strategic choice is a key element of the strategic decision making process. It is concerned with the identification of different strategic options and deciding between them.
4. [Knowledge] K1 for simple identification of one or more SC techniques
5. [Knowledge] There are a number of logical techniques available to assist managers in making strategic choices. Understanding of:
6. [Knowledge] Force Field Analysis: This identifies restraining and driving forces for a strategic decision.
7. [Knowledge] Decision trees: This is a diagram that sets out the options connected with a decision and the outcomes and economic returns that may result. The primary limitation concerns the accuracy of data used. Probabilities of events occurring may be based on past data.
8. [Knowledge] Ansoff matrix – growth strategies categorised according to market / product
9. [Knowledge] Investment appraisal techniques: ARR/NPV/IRR/Payback
10. [Application] Simply quoting the ARR figure or the EMV is insufficient for APP
11. [Application] ARR for the new IT system is 20% suggesting a return of $1 m per annum.
12. [Application] ARR of 20% implies investment is worthwhile
13. [Application] 'Supported by FFA' indicates that driving forces outweigh restraining forces
14. [Application] Expected monetary value of $10 m likely to be a driving force
15. [Application] Supported by FFA despite the cost of $25 m
16. [Application] Possible driving / restraining forces suggested by case e.g. interest rates expected to increase by 1%, increasingly competitive market, ageing
17. [Application] On her appointment, Iona identified inadequate controls on investment as being one of the key problems at DLR.
18. [Application] Changing attitudes towards social media and the use of new technologies by 'millennials' will be a significant driving force for introducing new technology
19. [Analysis] Strategic choice techniques attempt to apply a more scientific approach to decision making. This can improve the quality of decisions and ensure that more factors are considered.
20. [Analysis] Force Field Analysis can be useful for a business to consider how to overcome the restraining forces. In this case the analysis will encourage consideration of relevant factors that will influence the outcome of a decision.
21. [Evaluation] For all of these techniques issues of estimation are very important.
22. [Evaluation] Strategic choice techniques are fallible.
23. [Evaluation] Strategic choice techniques depend on preceding strategic analysis having been completed. A good PEST analysis helps identify potential risks and guides the strategic direction of the business
24. [Evaluation] Risk cannot be eliminated but use of techniques can reduce risk
25. [Evaluation] In conclusion they aid the decision making process but cannot replace either the consideration of risk or the impact of non-numerical, qualitative factors on a decision.