Strategic Choices Framework – The Three Key Questions

🏗️ The Three Levels of Strategy

Before understanding the three key questions of the strategic choices framework, you need to know the three levels of strategy. Each level is important:

🏢 Corporate Strategy

The highest level. Decisions about what the company does overall — which markets, which products, which countries.
Stratégie d'entreprise (stratégie corporative)

⚔️ Competitive Strategy

The middle level. Decisions about how the company competes in each specific activity — how to beat the competition.
Stratégie concurrentielle (stratégie par domaine d'activité)

⚙️ Functional Strategy

The operational level. Decisions about how each function (marketing, HR, finance…) supports the levels above.
Stratégie fonctionnelle

💡 Key concept: SBU (Strategic Business Unit)

A Strategic Business Unit (SBU) — in French Domaine d'Activité Stratégique (DAS) — is a specific area of business where the company competes with its own set of competitors, customers, and environment.

A company can have one SBU (one activity only) or many SBUs (several different activities).

Example: Amazon has many SBUs — online retail, cloud computing (AWS), video streaming (Prime Video), etc.

❓ The Three Key Questions of the Strategic Choices Framework

The strategic framework of a company is built by answering three fundamental questions. These questions cover the first two levels of strategy (Corporate and Competitive):

What is the scope of activities of the company? Quel est le périmètre d'activité de l'entreprise ?

This question is answered at the Corporate Strategy level. It concerns three important decisions:

Which activities? — What products or services does the company offer? Does it focus on one SBU or operate in several different SBUs?
Quelles activités ? Un seul DAS ou plusieurs DAS ?
Which geographic area? — Does the company operate locally, nationally, or internationally?
Quelle aire géographique ?
Which market segments? — Which groups of customers does the company serve? A segment is a group of customers with similar needs.
Quels segments de marché ?

Scope Portfolio Diversification Specialisation

📌 Remember: The scope of activities can expand (add new SBUs), stay stable (keep the same SBUs), or reduce (abandon some SBUs) over time.

What competitive arguments will the company use in each SBU? Quels arguments concurrentiels pour chaque DAS ?

This question is answered at the Competitive Strategy level. It focuses on how the company will beat or resist competition in each specific SBU.

This question is necessary because:

Different SBUs have different environments (different competitors, customers, markets).
The company may need different resources and skills for each SBU.
The right competitive strategy for one SBU may not work in another SBU.

Porter's generic strategies:

⬇️ Cost leadership — Offer similar products at a lower cost than competitors. (Leadership en coûts)
✨ Differentiation — Offer unique products that customers are willing to pay more for. (Différentiation)
🎯 Focus / Niche — Target a specific market segment only. (Focalisation)

Competitive advantage Porter Generic strategies

How will the company develop its strategic initiatives? Comment l'entreprise va développer ses initiatives stratégiques ?

This question asks: where will the resources come from to implement the strategy? There are three main development modes:

🏠 Internal development — The company uses and develops its own resources alone. It is slow but avoids cultural problems.
Développement interne
🤝 Mergers & Acquisitions (M&A) — The company buys another company or merges with it to get new resources quickly. It can create cultural conflicts.
Fusions et acquisitions
🔗 Strategic alliances — Two or more companies cooperate and share resources, while each company keeps its independence. It is flexible but requires trust.
Alliances stratégiques

Development modes Resources Alliance Acquisition

🔗 How the Three Questions Connect

💡 The Framework in One Picture

The three questions are not independent — they work together as a system:

Q1 (Scope) defines where the company will compete. → This forces the company to ask Q2.
Q2 (Competitive arguments) defines how the company will compete in each activity. → This forces the company to ask Q3.
Q3 (Development mode) defines with what means the company will build its strategy. → It supports the answers to Q1 and Q2.

Example: If a company decides to enter a new market (Q1 = expand scope), it must decide how to compete there (Q2 = which strategy?) and whether it will develop alone, acquire a local company, or form an alliance (Q3 = which mode?).

🏢 MOROCCAN COMPANY EXAMPLE: Disway

Disway – Applying the Three Questions

Disway is a Moroccan company originally specialised in IT (information technology) distribution.

❓ Q1 — What is the scope of activities?

Original scope: Distribution of IT products in Morocco.
New scope (expansion): Disway created a new SBU called Solarway, focused on photovoltaic (solar) energy solutions — a completely new product.
New geographic markets: Solarway targets Morocco, Tunisia, and Sub-Saharan Africa.
New market segments: Private households, industrial companies, and agricultural businesses.

❓ Q2 — What competitive arguments?

Disway partners with world leaders in solar energy (Jinko Solar, SMA, Eaton) to offer high-quality, credible products — a differentiation strategy.
The company uses an indirect distribution model (through resellers) to cover different markets efficiently.

❓ Q3 — How to develop?

Disway chose strategic alliances with international partners to access new resources and expertise that it could not develop internally.
This mode was faster than internal development and gave Disway immediate credibility in a new sector.

📌 Summary: The Three Key Questions

Q1 — Scope: Which activities? Which geographic areas? Which market segments? → Corporate Strategy level.
Q2 — Competitive arguments: How to beat competitors in each SBU? Cost leadership, differentiation, or focus? → Competitive Strategy level.
Q3 — Development mode: Internal development, mergers & acquisitions, or strategic alliances? → Determines the source of resources.

📚 VOCABULARY BOX

English	Français
Strategic framework / strategic choices	Cadre des choix stratégiques
Corporate strategy	Stratégie d'entreprise (stratégie corporative)
Competitive strategy	Stratégie concurrentielle
Functional strategy	Stratégie fonctionnelle
Strategic Business Unit (SBU)	Domaine d'Activité Stratégique (DAS)
Scope of activities	Périmètre d'activité
Portfolio of activities	Portefeuille d'activités
Market segment	Segment de marché
Segmentation	Segmentation
Targeting	Ciblage
Specialisation	Spécialisation
Diversification	Diversification
Competitive advantage	Avantage concurrentiel
Cost leadership	Leadership en coûts
Differentiation	Différentiation
Focus / Niche strategy	Focalisation / Stratégie de niche
Generic strategies (Porter)	Stratégies génériques (Porter)
Development mode	Mode de développement
Internal development	Développement interne
Merger	Fusion
Acquisition	Acquisition
Strategic alliance	Alliance stratégique
Resources and capabilities	Ressources et capacités
Key success factors	Facteurs clés de succès
Expand / Extension	Extension (du périmètre)
Stability	Stabilité
Reduction / Withdrawal	Réduction / Abandon
Geographic area	Aire géographique