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Overview of StrategicEvaluation-

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Strategic Evaluation Strategic evaluation operates at two levels:

• Strategic level - wherein we are concerned morewith the consistency of strategy with the

environment.

• Operational level  – wherein the effort is directed at

assessing how well the organisation is pursuing a

given strategy.

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Purpose of Strategic Evaluation

The purpose of strategic evaluation is to

evaluate the effectiveness of strategy inachieving organizational objectives.

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Definition

Strategic evaluation could be defined as the process

of determining the effectiveness of a given strategyin achieving the organizational objectives and

taking corrective action wherever reuired.

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Nature of Strategic Evaluation !ature of the strategic evaluation and process is to

test the effectiveness of strategy.

"uring the two proceedings phases of the strategicmanagement process# the strategists formulate thestrategy to achieve a set of objectives and thenimplement the strategy.

There has to be a way of finding out whether thestrategy being implemented will guide the organisationtowards its intended objectives.

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Importance of Strategic

Evaluation Strategic evaluation helps to keep a check on the

validity of a strategic choice.

$n ongoing process of evaluation would# in fact#

provide feedback on the continued relevance of the

strategic choice made during the formulation phase.

This is due to the efficacy of strategic evaluation todetermine the effectiveness of strategy.

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"uring the course of strategy implementation managers

are reuired to take scores of decisions.

Strategic evaluation can help to assess whether the

decisions match the intended strategy reuirements.

%n the absence of such evaluation# managers would notknow e&plicitly how to e&ercise such discretion.

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Strategic evaluation# through its process of control#feedback# rewards# and review# helps in a successfulculmination of the strategic management process.

The process of strategic evaluation provides aconsiderable amount of information and e&perience tostrategists that can be useful in new strategic planning.

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Participants in Strategic Evaluation Shareholders  Board of Directors 

Chief executives  Profit-centre heads  Financial controllers Company secretaries

External and Internal  $uditors  udit and Executive Committees Corporate Planning Staff or Department   !iddle-level managers 

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Process of Strategic

E aluation

1) 'i&ing benchmark of performance:

(hile fi&ing the benchmark# strategists encounter

uestions such as - what benchmarks to set# how to

set them and how to e&press them.

%n order to determine the benchmark performance to

be set# it is essential to discover the special

reuirements for performing the main task.

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2) )easurement of performance:The standard performance is a bench mark withwhich the actual performance is to be compared.

The reporting and communication system helpin measuring the performance.

For measuring the performance, nancialstatements like - balance sheet, prot and lossaccount must be prepared on an annual basis.

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) !naly"ing #ariance$

%hile measuring the actual performance andcomparing it with standard performance theremay be &ariances which must be analy"ed.

 

The strategists must mention the degree oftolerance limits between which the &ariancebetween actual and standard performance maybe accepted.

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') Taking (orrecti&e !ction$

nce the de&iation in performance is identied,

it is essential to plan for a correcti&e action.

*f the performance is consistently less than thedesired performance, the strategists must carry

a detailed analysis of the factors responsible forsuch performance.

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Techniques of Strategic

E aluation

1) *ap $nalysis:

The gap analysis is one strategic e&aluationtechni+ue used to measure the gap betweenthe organi"ations current position and itsdesired position.

The gap analysis is used to e&aluate a &ariety ofaspects of business, from prot and productionto marketing, research and de&elopment andmanagement information systems.

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+, S(T $nalysis:

The %T analysis is another common strategice&aluation techni+ue used as a part of thestrategic management process. The %Tanalysis e&aluates the organi"ations strengths,weaknesses, opportunities and threats.

trengths and weaknesses are internal factors,while opportunities and threats are eternalfactors.

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, /0ST $nalysis:

!nother common strategic e&aluation techni+ueis the /0T analysis, which identies thepolitical, economic, social and technological factors that may impact the organi"ations abilityto achie&e its obecti&es.

/olitical factors might include such aspects asimpending legislation regarding wages andbenets, nancial regulations, etc.

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1, 2enchmarking:

enchmarking is a strategic e&aluation

techni+ue thats often used to e&aluate howclose the organi"ation has come to its nalobecti&es, as well as how far it has left to go.

rgani"ations may benchmark themsel&esagainst other organi"ations within the sameindustry, or they may benchmark themsel&esagainst their own prior situation.

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