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Evaluating Strategic Options: Suitability, Acceptability, Feasibility

Updated 11 October 2026 · Fact-checked

SAF is the Johnson and Scholes framework for judging strategic options. Suitability asks if an option fits the organisation's position and objectives. Acceptability asks if stakeholders accept its return, risk and wider effects. Feasibility asks if the organisation has the money, skills and resources to deliver it. A good option passes all three.

Understand Evaluating Strategic Options: Suitability, Acceptability, Feasibility

A strategy is a choice between options. Before you recommend one, you must test it. The Johnson and Scholes SAF framework gives three tests: suitability, acceptability and feasibility. In SBL, you use it to judge options such as entering a new market, acquiring a rival or launching a new product.

Suitability asks whether the option makes strategic sense. Does it fit the organisation's mission and objectives? Does it exploit strengths and opportunities and avoid weaknesses and threats? Does it build or protect competitive advantage? Use your earlier analysis here, such as PESTEL, Five Forces, SWOT and core competences. Ansoff and Porter's generic strategies also help you test fit.

Acceptability asks whether the people who matter will accept the option. This covers return, risk and stakeholder reaction. Return means financial return (for example NPV, ROI, effect on earnings and shareholder value) and non-financial benefits. Risk means how likely it is that the outcome differs from the forecast, and whether this is within the risk appetite. Stakeholders include shareholders, lenders, employees, customers, regulators and the community. Use Mendelow's matrix to decide whose view counts most.

Feasibility asks whether the organisation can actually do it. Think of finance (can it be funded, and at what cost?), people and skills, technology, physical resources, time, supply chains, regulation and the ability to manage the change. A strategy can be suitable and acceptable and still fail because the firm cannot deliver it.

The three tests interact. An option may look good on one and poor on another. Your job in the exam is to weigh them, reach a view and recommend. You also state what must happen for the option to work, such as extra funding or a partner.

Key rules to remember

SAF framework: Good option = Suitable + Acceptable + Feasible; All three tests must be considered. An option that fails one needs a fix or should be rejected.
Net present value: NPV = Σ [cash flow in year t ÷ (1 + r)^t] − initial investment; Use the cost of capital as r. Accept if NPV is positive. A positive NPV adds to shareholder value.
Return on investment: ROI = annual profit ÷ capital invested × 100%; Use the same definition of profit and capital for every option you compare.
Payback period: Payback = years until cumulative cash inflows equal the initial outlay; Shows how quickly money is recovered, a liquidity and risk measure. It ignores cash flows after payback.
Gearing (debt-based): Gearing = debt ÷ (debt + equity) × 100%; Used for feasibility and acceptability of debt funding. Lenders may have covenant limits.

How to solve Evaluating Strategic Options: Suitability, Acceptability, Feasibility questions

Use this method for any question asking you to evaluate, assess or compare strategic options.

1Read the requirement. Note whether it asks you to evaluate one option, compare several or recommend one.
2List the options clearly. If the scenario gives none, suggest realistic ones from the facts.
3Test suitability: link each option to objectives, the environment and the firm's strengths and weaknesses. Use named models only where they help.
4Test acceptability: assess return, risk and stakeholder reaction. Use numbers from the scenario and say who gains or loses.
5Test feasibility: check funding, skills, resources, timing and ability to manage the change. Quote scenario facts.
6Weigh the results. Say which test matters most in this case and why.
7Give a clear recommendation, with conditions or next steps, and note any information you would still want.
8Write for the stated audience in the right format, to earn professional skills marks.

Quickest way: SAF grid in the margin

When to use it: Use when time is short or when you must compare three or four options quickly.

Draw a small grid: options down the side, S, A and F across the top.
Fill each cell with one or two scenario facts, not general theory.
Mark each cell as strong, medium or weak.
Pick the option with no weak cell, or the one whose weakness can be fixed.
Write your answer by option, using the grid as your plan: fact, point, so-what.

Common mistakes in Evaluating Strategic Options: Suitability, Acceptability, Feasibility

Defining S, A and F but not applying them to the scenario.
Students learn the framework as a definition and rush to show it.
Fix: Spend one line on each test at most for the definition. Spend the rest on scenario facts and what they mean for the option.
Treating acceptability as only financial return.
Numbers feel safe and easy to mark.
Fix: Cover return, risk and stakeholders. Say which stakeholders could block or support the option.
Mixing up suitability and feasibility.
Both seem to ask whether the option 'works'.
Fix: Suitability is about strategic fit. Feasibility is about the ability to deliver. Ask: should we do it, or can we do it?
Evaluating options but not recommending one.
Students fear being wrong and stay neutral.
Fix: Always conclude. State your choice, the main reason and the main risk, with a way to reduce it.
Ignoring numbers given in the scenario.
Students focus on the narrative and skip the data.
Fix: Quote figures such as NPV, gearing or cash balance. Comment on what they mean, not just what they are.
Judging options as good or bad in isolation.
Each option is analysed separately with no comparison.
Fix: Compare options against each other and against doing nothing, then rank them.

Worked examples

Example 1

Zentra Foods, a listed food maker, has ₹40 crore cash and wants to grow. Option A is to buy a competitor. Option B is to launch a new product range itself. Shareholders want steady dividends. The board has no experience of integrating acquisitions. Evaluate Option A using SAF.

Show the solution

Suitability: buying a competitor adds market share and scale, which fits a growth objective and may give cost savings. Check that the target's products and brand fit Zentra's strategy.
Acceptability: return depends on price paid against expected synergies. A high premium could lower returns. Shareholders want steady dividends, so an acquisition that cuts cash or adds debt may worry them. Regulators may also review a merger of competitors.
Feasibility: ₹40 crore may not cover the price, so debt or a share issue may be needed. The board has no integration experience, so culture clash, system merging and loss of key staff are real risks.
Weigh: Option A is suitable, but acceptability and feasibility are weak without a good price and integration skills.

Answer: Option A is suitable but only conditionally acceptable and feasible. Recommend it only if the price is justified by realistic synergies, funding keeps dividends safe, and experienced integration support is hired. Otherwise, Option B is lower risk.

Example 2

A project costs ₹10,00,000 now and gives cash inflows of ₹6,00,000 at the end of each of years 1 and 2. The cost of capital is 10%. Comment on its acceptability using NPV and payback.

Show the solution

Discount year 1: 6,00,000 ÷ 1.10 = 5,45,455 (rounded).
Discount year 2: 6,00,000 ÷ 1.21 = 4,95,868 (rounded).
Total present value of inflows = 5,45,455 + 4,95,868 = 10,41,323.
NPV = 10,41,323 − 10,00,000 = ₹41,323 (rounded).
Payback: after year 1 the cumulative inflow is ₹6,00,000. The remaining ₹4,00,000 is recovered in year 2: 4,00,000 ÷ 6,00,000 = 0.67 years. Payback is about 1.67 years.

Answer: NPV is about +₹41,323, so the project adds value at 10% and is financially acceptable. Payback of about 1.67 years is quick, but the NPV margin is small, so a modest fall in inflows could remove it. Check risk and stakeholder views before approving.

Exam tips

Do not write SAF as a heading list with theory. Use scenario facts in every paragraph.
If the task says 'evaluate', end with a clear recommendation and conditions. Marks for judgement are part of the professional skills.
Use numbers from the pre-seen and exam material, and comment on them. A figure without comment earns little.
Link back to earlier tasks, such as the position analysis, so your evaluation looks integrated.
Match tone and format to the audience, for example a short board briefing, since communication marks are available.

Practice questions from Strategic choices

Evaluating Strategic Options: Suitability, Acceptability, Feasibility: frequently asked questions

What is the SAF framework in SBL?

SAF stands for suitability, acceptability and feasibility. It is the Johnson and Scholes set of tests for evaluating strategic options. You use it to decide which option to recommend.

Do I have to use all three SAF criteria in every answer?

Usually yes, unless the requirement limits you to one. Even then, a brief mention of the others can show balance. Spend most time on the criteria that matter most for the scenario.

How is acceptability different from feasibility?

Acceptability is about whether stakeholders will accept the return, risk and wider effects. Feasibility is about whether the organisation has the resources and skills to deliver. One asks who agrees, the other asks if it can be done.

How does shareholder value fit into evaluating options?

Shareholder value is mainly tested under acceptability through return and risk. A positive NPV at the right cost of capital suggests an option adds value. You should also consider timing, risk and other stakeholders' interests.