RAVINDER S DHIMAN CHAPTER 9
Chapter 9Strategy Review, Evaluation, and Control
Strategic Management: Concepts & Cases
13th Edition
Fred David
RAVINDER S DHIMAN CHAPTER 9
RAVINDER S DHIMAN CHAPTER 9
– Strategies become obsolete
– Internal environments are dynamic
– External environments are dynamic
Strategy Review, Evaluation, and Control
RAVINDER S DHIMAN CHAPTER 9
Vital to the organization’s well-being Alert management to potential/actual problems
in a timely fashion Erroneous strategic decisions can have severe
negative impact on organizations
Strategy Review, Evaluation, and Control
Strategy Evaluation
RAVINDER S DHIMAN CHAPTER 9
1. Examine the underlying bases of a firm’s strategy
2. Compare expected to actual results3. Take corrective actions to ensure that
performance conforms to plans
Strategy Review, Evaluation, and Control
Three Basic Activities
RAVINDER S DHIMAN CHAPTER 9
Complex & sensitive undertaking
Overemphasis can be expensive & counterproductive
NO ONE LIKES TO BE EVALUATED…..
Strategy Review, Evaluation, and Control
Strategy Evaluation
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Increase in assets? Increase in profitability? Increase in sales? Increase in productivity? Increases in profit margins, ROI, and EPS
ratios?
IN SOME ORGANIZATION ONLY THEY ONLY ASK …?
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Consonance
Consistency
Feasibility
Advantage
Rumelt’s4 Criteria
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Strategy should not present inconsistent goals and policies
There should not be any conflict and interdepartmental bickering ( sir mujse nahi ho payega…)
Consistency
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Consonance
Consistency
Feasibility
Advantage
Rumelt’s4 Criteria
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Is this with harmony with the external trends ?
Consonance
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Consonance
Consistency
Feasibility
Advantage
Rumelt’s4 Criteria
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Neither overtax resources nor create unsolvable subproblems.
Is the strategy feasible to do….can we do it with physical, human and financial resources?
Is it financially feasible ?
Feasibility
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Consonance
Consistency
Feasibility
Advantage
Rumelt’s4 Criteria
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Would it give competitive advantage ? Creation or maintenance of competitive
advantage
Advantage
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
1. Increase in environment’s complexity
2. Difficulty predicting future with accuracy
3. Increasing number of variables
Difficulties in Strategy Evaluation
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
4. Rate of obsolescence of plans
5. Domestic and global events
6. Decreasing time span for planning certainty
Difficulties in Strategy Evaluation
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Develop revised IFE Matrix
Develop revised EFE Matrix
Review of Underlying Bases of Strategy –
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
1. Competitors’ reaction to strategy
2. Competitors’ change in strategy
3. Competitors’ changes in strengths & weaknesses
4. Reasons for competitors’ strategic change
Points while making revised IFE,EFE
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
5. Reasons for competitors’ successful strategies
6. Competitors’ satisfaction with present market positions & profitability
7. Potential for competitor retaliation
8. Potential for cooperation with competitors
Points while making revised IFE,EFE
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses?
Points while making revised IFE,EFE
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Are opportunities still opportunities? Other opportunities develop? Are threats still threats? Other threats emerged?
Points while making revised IFE,EFE
RAVINDER S DHIMAN CHAPTER 9
RAVINDER S DHIMAN CHAPTER 9
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Compare expected to actual results Investigate deviations from plan Evaluate individual performance Examine progress toward stated objectives
Measuring Organizational Performance
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Financial Ratios Compare performance over different periods Compare performance to competitors’ Compare performance to industry averages
Quantitative Criteria for Strategy Evaluation
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Return on investment (ROI)
Return on equity (ROE)
Profit margin Market share
Debt to equity Earnings per
share (EPS) Sales growth Asset growth
Key Financial Ratios (Quantiative criteria)
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Key Financial Ratios (Quantiative criteria)
Comparing firm performance over different time period.
To Competitors To industry averages
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Human Resource Factors Marketing Finance/Accounting R&D Management Information Systems
Qualitative Evaluation of Strategy (because quantitative is problem)
RAVINDER S DHIMAN CHAPTER 9
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Evaluate strategies from 4 perspectives:
1. Financial performance
2. Customer
3. Internal business processes
4. Learning & growth
Balanced Scorecard
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Strategy Review, Evaluation, and Control
How satisfied are the firms internal and external customers..?
How slowly you are improving on innovation, quality, technology,operation excellence ?
Balanced Scorecard review tells
RAVINDER S DHIMAN CHAPTER 9
Strategy Review, Evaluation, and Control
Economical- Meaningful Generates useful information Timely information Provides accurate picture of events
Characteristics of an Effective Evaluation System
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Strategy Review, Evaluation, and Control
Alternative plans that can be put into effect if
certain key events do not occur as expected
Contingency Planning
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Strategy Review, Evaluation, and Control
A systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users
Auditing
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Strategy Review, Evaluation, and Control
Should the process be more an “art” or a “science”?
Should strategies be visible or hidden from stakeholders?
Should process be more top-down or bottom-up?
21st Century Challenges in Strategic Management
RAVINDER S DHIMAN CHAPTER 9
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