Viewing strategy as a portfolio of options rather than a portfolio of investments relies upon the central idea that:
A)Strategy needs to reconcile direction and flexibility in an uncertain environment
B)"All or nothing" strategic projects can be such costly mistakes as to be fatal to the firm
C)The advantage of an option follows from the potential to amend or stop a strategic project during the development process
D)All of the above

Question

Quizplus · Accepted Answer

Viewing strategy as a portfolio of options rather than investments acknowledges the need to balance direction and flexibility in an unpredictable environment (A). This approach favors broad, diverse portfolios of options and projects, as opposed to betting the future of the firm on one large, expensive project (B). The ability to halt, revise, or curtail strategic initiatives based on changing circumstances or new information is an attractive aspect of options, as they can limit losses and maximize upside potential (C). All of these factors contribute to the case for a portfolio of options in strategy.

Viewing Strategy as a Portfolio of Options Rather Than a Portfolio