Limitations of Traditional Strategic Choice Models
Traditional strategic choice models rely on analyzing situations using a particular framework, then making choices based on the results of that analysis. Such models might include competitive analysis, external factors, and similar factors. However, while these models can be an effective tool for decision makers, they have their limitations. If these limitations are not taken into account, organizations may find that the decisions resulting from the use of these models may be less than optimal (Hill & Jones, 2010).
Chief among the limitations of traditional strategic choice models is the assumption that the environment will remain static. When using Porter's approach or the BCG approach or any other model, the analysis assumes a static environment; that is, that competitors and external factors will remain static even after the organization implements its new strategy. In practice, the environment is constantly changing, and companies and external factors act and react both in anticipation and in reaction to other companies' actions (Alkhafaji, 2003).
There are also inherent assumptions regarding predictability which may not be as rational as decision makers expect. When forecasting the market share that a company can capture if a particular strategy is followed, for example, there may be pressure to make the forecast more (or less) optimistic depending on the bias of the person doing the forecasting. If the predicted value is not reached, other factors-failure in implementation, changes in the external environment-might well be cited rather than the unpredictability of the forecast itself (Dollak, 2008).
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