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  1. Akshay
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The question of which option to choose arises, when the company makes a decision to move to SharePoint Online/Office 365. It could either be from the old SharePoint environment, network file shares or another content management system. Does not really matter. There are essentially 2 options on how to approach migration to/implementation of SharePoint, so here they are below:

OPTION 1: LIKE TO LIKE MIGRATION
Nobody likes long and extensive projects. And SharePoint migration can easily become one. So many organizations opt to move to SharePoint Online quickly. That means that if they have an existing SharePoint environment – they just plug the migration tool and move sites and content as-is. In cases, when they move from existing file shares, this means moving physical movement of files and folders online. This approach definitely gets you to the destination faster, but you lose the ability to put any thought into proper SharePoint Information Architecture.

OPTION 2: PHASED APPROACH
The alternative to above method is what I call a “Phased approach“. Essentially, that means is that you do not move everything in one big step. First, you break down your long-term vision into multiple mini-phases. Each phase consists of just a few sites. This will allow you to zoom in on the immediate scope and build proper information architecture first, based on the users’ requirements. This will also allow you to train users properly and address important user adoption obstacles, which are inevitable with SharePoint Online and Office 365. Moreover, this approach allows you to auto-correct your mistakes and pitfalls: learn lessons from the previous phase and make proper adjustments to the next one.

RECOMMENDATION
I think you guessed by now which option I am a fan of and which one I always recommend to my clients. As a SharePoint consultant, I rarely get involved with the first option – unless you tell me that your old server is about to explode. Option 1 is never a good choice. By choosing it, you pretty much set yourself and the whole organization for one big failure. Yes, this will allow your execs to cross out SharePoint migration from the pending projects list, but get used to hearing “I hate SharePoint” phrase in the company hallways.

The phased approach is always a winner and hard to argue against. Yes, it takes longer and requires patience and discipline. But, at the end, it yields a much smoother migration and increased chances for success and user adoption.

Learn more about SharePoint to Office 365 Migration Services and How to Migrate SharePoint 2010 to Office 365
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