Evaluate the strategic choice techniques used in Appendix 1 when APF's directors make the choice between option 1 and option 2.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2022). The mark or mark type is shown in brackets.

1. [1] (Knowledge) Strategic choice is part of strategic management and involves the process of identifying and deciding between different options.
2. [1] (Knowledge) Strategic choice techniques such as Ansoff Matrix, Decision trees, Force Field Analysis and investment appraisal.
3. [1] (Knowledge) Strategic choice techniques help evaluate the risks and rewards from different strategic options.
4. [1] (Knowledge) Investment appraisal: payback and ARR. How quickly investment is recovered and the average profitability of the investment.
5. [1] (Knowledge) Decision trees - inclusion of probability to calculate the monetary outcomes from investments and make choice based on quantitative data.
6. [1] (Knowledge) Force field analysis – considers driving and restraining factors in a decision.
7. [1] (Knowledge) Ansoff's matrix – considers risk of growth strategies with reference to product and market.
8. [1] (Knowledge) Quantitative and qualitative factors.
9. [1] (Knowledge) Reference to strategic analysis techniques when preparing for choice such as SWOT, PEST, Boston matrix, Porter's Five Forces, Core competencies and others.
10. [1] (Application) Ansoff's matrix – Option 2 – market development as existing product being sold in new market.
11. [1] (Application) Option 1 - diversification as it is a new market and new product.
12. [1] (Application) Option 1 has higher probability of success (70%) compared to Option 2 (55%). Less risk.
13. [1] (Application) Option 2 has higher EMV by 100m over 5 years (250m vs $150m) – link to shareholder returns.
14. [1] (Application) Option 2 capital cost is 50m greater (150m vs $100m) – link to gearing.
15. [1] (Application) Option 2 has higher NPV ($120m) but Option 1 has higher relative NPV as a proportion of capital cost (85% compared to 80%).
16. [1] (Application) Comment on driving and restraining forces in the force field analysis. For example, FFA questions sustainability of almond production, this could be linked to APF's marketing claims.
17. [1] (Application) Role of situational analysis within strategic management as highlighted by the 2022 Annual Report.
18. [1] (Analysis) How techniques may be used and the advantages and/or disadvantages.
19. [1] (Analysis) Force field analysis encourages managers to consider different aspects of a decision. By identifying restraining forces action can be taken to mitigate the negative effects of those forces.
20. [1] (Analysis) Awareness of relevant forces increases the chances of making a good decision and ensuring that implementation is effective.
21. [1] (Analysis) Market development is less risky than diversification in Ansoff's Matrix. This favours option 2.
22. [1] (Analysis) Better decision making by considering the quantitative aspects of the choices.
23. [1] (Analysis) Use of probabilities in decision tree therefore reducing risk for APF of option choice.
24. [1] (Analysis) NPV enables APF to choose option with highest return which may be important to shareholders.
25. [1] (Analysis) The use of techniques to analyse aspects of the options.
26. [1] (Analysis) Other techniques that might help improve decision making: Core competencies – if APF focuses on core competencies, then this may increase chances of success due to the strength the business has in certain areas.
27. [1] (Analysis) PEST analysis of markets such as country D important to identify potential issues that the firm might need to overcome.
28. [1] (Evaluation) Judgement/evaluation about usefulness of strategic choice techniques supported by e.g. Is Ansoff useful in this case as risk more influenced by factors such as potential regulation and market growth.
29. [1] (Evaluation) Subjective nature of Force Field Analysis.
30. [1] (Evaluation) Limitations of using only quantitative or qualitative techniques.
31. [1] (Evaluation) Elements that the evaluation/judgement might depend on such as: Accuracy of estimates for quantitative techniques.
32. [1] (Evaluation) Elements that the evaluation/judgement might depend on such as: Other information.
33. [1] (Evaluation) Evaluation of other factors that influence choice such as: Attitude of directors.
34. [1] (Evaluation) Evaluation of other factors that influence choice such as: Attitude to risk.
35. [1] (Evaluation) Evaluation of other factors that influence choice such as: Influence of strategic analysis.
36. [1] (Evaluation) Evaluation of other factors that influence choice such as: Corporate objectives of WTZ.
37. [1] (Evaluation) Evaluation of other factors that influence choice such as: Impact of different strategies on stakeholders.
38. [1] (Evaluation) Evaluation of other factors that influence choice such as: Long-term v short-term impacts.
39. [1] (Evaluation) Evaluation of other factors that influence choice such as: Other information that might be useful.
40. [1] (Evaluation) Evaluation of other factors that influence choice such as: Capital available.
41. [1] (Evaluation) Justification of most useful technique(s) with supporting argument.