Professional Documents
Culture Documents
Strategy Review,
Evaluation, and
Control
Why
evaluate?
STRATEGY
EVALUATION
-objectives are essential to
ensure that stated being
achieved
-an appraisal of how well and
organization has performed.
-complex & sensitive
undertaking
overemphasis can be costly &
counterproductive
consistency
feasibility
consonance
advantage
Consistency
(Three Guidelines)
If managerial problems continue despite
changes in personnel and if they tend to be
issue-based rather than people-based, then
strategies may be inconsistent.
If success for one organizational department
means, or is interpreted to mean, failure for
another department, then strategies may be
inconsistent.
If policy problems and issues continue to be
brought to the top for resolution, then
strategies may be inconsistent.
Consonance
refers to the need for strategists to
examine sets of trends, as well as
individual trends, in evaluating
strategies.
A strategy must represent an
adaptive response to the external
environment and to the critical
changes occurring within it.
Feasibility
can the strategy be attempted
within the physical, human, and
financial resources of the enterprise?
The financial resources of a business
are the easiest to quantify and are
normally the first limitation against
which strategy is evaluated
Advantage
A strategy must provide for the
creation and/or maintenance of a
competitive advantage in a selected
area of activity.
Competitive advantages normally are
the result of superiority in one of
three areas: (1) resources, (2) skills,
or (3) position.
1. Examine the
underlying
bases of a firms
strategy.
2. Compare
expected to
actual results.
3. Identify
corrective
actions to
ensure that
performance
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1.Increase in the
environments
complexity
2.Increasing difficulty in
predicting the future with
accuracy
3.The increasing number
of variables
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The
rapid
rate
of
d
is
The
Process of
Evaluating
Strategies
Reviewing Bases of
Strategy
IFE
Matri
x
EFE
Matri
x
IFE
Matr
-should focus on changes in
ix
the organizations
management, marketing,
finance accounting,
production operations, R&D,
EFE
Matr
-should indicate how
ix
Review Effectiveness of
1. Competitors
reaction to
Strategy
strategy
2. Competitors change in
strategy
3. Competitors changes in
strengths & weaknesses
4. Reasons for competitors
strategic change
Review
Effectiveness of
5. Reasons for competitors
Strategy
successful strategies
6. Competitors present
market positions &
profitability
7. Potential for competitor
retaliation
8. Potential for cooperation
with competitors
MONITOR STRENGHTS,
WEAKNESSES;
OPPORTUNITIES AND
Are strengths still
THREATS
strengths?
Have we added
additional strengths?
Are weaknesses still
weaknesses?
Have we developed other
weaknesses?
Monitor
SWOT
MEASURING
ORGANIZATIONAL
PERFORMANCE
This activity includes :
Comparing expected to
actual results
Investigating deviations
from plan
Evaluating individual
performance
Examining progress
toward stated objectives
Quantitative
Criteria for
Strategy
Financial
Evaluation
Ratios
Compare performance
over different periods
Compare performance to
competitors
Compare performance to
industry averages
Key Financial
Ratios
Return on investment
(ROI)
Return on equity (ROE)
Profit margin
Market share
Debt to equity
Earnings per share
Sales growth
Asset growth
Qualitative
Criteria for
Strategy
Evaluation
Internal consistency of
strategy
Consistency with
environment
Appropriateness in view of
resources
Acceptable degree of risk
Appropriate time frame
TAKING
CORRECTIVE
ACTIONS
the
final
strategyevaluation
activity
that
requires making changes to
reposition
a
form
competitively for the future
TRATEGY EVALUATION
ASSESSMENT MATRIX
-summarizes
strategy
evaluation
activities in terms of key
questions that should be
addressed
,
alternative
answers to those questions
and appropriate actions for
E
C
N
BALA
D
A
C
E
R
SCO
-process
RDthat allows firm to
CHARACTERISTICS OF AN
EFFECTIVE EVALUATION
SYSTEM
1.Strategy-evaluation
must be
economical.
2.Strategy-evaluation activities
should also be meaningful.
3.Strategy-evaluation activities
should provide timely
information.
4.Strategy evaluation should be
designed to provide a true
picture of what is happening.
5.Strategy-evaluation process
CONTINGENCY
PLANNING
-alternative plans that
can be put into effect if
certain key events do not
occur as expected .
AUDITING
Financial audits determine
correspondence between
assertions based on strategic
plan & established criteria.
Environmental audits ensure
sound and safe practices
21st Century
Challenges in
Strategic
Management
Process is more an art
than science
Should strategies be visible
or hidden from
stakeholders?
Should process be more topdown or bottom-up?
THANK
YOU!