chapter-8-strategy review-and-control.ppt

Strategic evaluation and control which is final phase of strategic management.

1. CHAPTER -8
STRATEGY REVIEW, EVALUATION,
AND CONTROL
STRATEGIC MANAGEMENT

Dr.R.VENKATESHWAR RAO
Professor- Management

2. Ch 9-2Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
– Strategies become obsolete
– Internal environments are dynamic
– External environments are dynamic
Strategy Review, Evaluation,
and Control

3. Ch 9-3Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

Vital to the organization’s well-being

Alert management to potential/actual problems
in a timely fashion

Erroneous/mistaken strategic decisions can
have severe negative impact on organizations
Strategy Review, Evaluation,
and Control
Strategy Evaluation

4. Ch 9-4Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
1.Examine the underlying bases of a firm’s
strategy.
2.Compare expected to actual results.
3.Identify corrective actions to ensure that
performance conforms to plans.
Strategy Review, Evaluation,
and Control
Three Basic Activities

5. Ch 9-5Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

Complex & sensitive undertaking

Overemphasis can be costly &
counterproductive
Strategy Review, Evaluation,
and Control
Strategy Evaluation

6. Ch 9-6Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Have assets increased?
Increase in profitability?
Increase in sales?
Increase in productivity?
Profit margins, ROI, and EPS ratios
increased?
Appraisal of Strategic Performance

7. Ch 9-7Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Creation or maintenance of competitive
advantage
Advantage

8. Ch 9-8Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
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

9. Ch 9-9Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
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

10. Ch 9-10Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Initiate managerial questioning
Trigger review of objectives & values
Stimulate creativity in generating
alternatives
Strategy Evaluation Should –

11. Ch 9-11Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control

Develop revised EFE Matrix
Develop revised IFE Matrix
Review of Underlying Bases of Strategy –

12. Ch 9-12Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
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
Review Effectiveness of Strategy –

13. Ch 9-13Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
5.Reasons for competitors’ successful
strategies
6.Competitors’ present market positions &
profitability
7.Potential for competitor retaliation
8.Potential for cooperation with competitors
Review Effectiveness of Strategy –

14. Ch 9-14Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Are strengths still strengths?
Have we added additional strengths?
Are weaknesses still weaknesses?
Have we developed other weaknesses?
Monitor Strengths & Weaknesses;
Opportunities & Threats

15. Ch 9-15Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control

Are opportunities still opportunities?
Other opportunities develop?
Are threats still threats?
Other threats emerged?
Are we vulnerable to hostile takeover?
Monitor Strengths & Weaknesses;
Opportunities & Threats

16. Ch 9-16Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

17. Ch 9-17Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

18. Ch 9-18Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Compare expected to actual results
Investigate deviations from plan
Evaluate individual performance

Progress toward stated objectives
Measuring Organizational Performance

19. Ch 9-19Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
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

20. Ch 9-20Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Return on investment (ROI)
Return on equity (ROE)
Profit margin

Market share
Key Financial Ratios

21. Ch 9-21Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control

Internal consistency of strategy

Consistency with environment
Appropriateness in view of resources
Qualitative Evaluation of Strategy

22. Ch 9-22Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control

Acceptable degree of risk

Appropriate time frame
Workability of the strategy
Qualitative Evaluation of Strategy

23. Ch 9-23Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
– Evaluate strategies from 4 perspectives:
1. Financial performance
2. Customer knowledge
3. Internal business processes
4. Learning & growth
Balanced Scorecard

24. Ch 9-24Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall

25. Ch 9-25Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control

Economical

Meaningful
Generates useful information
Timely information
Provides accurate picture of events
Characteristics of Strategy Evaluation

26. Ch 9-26Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy-Evaluation Assessment Matrix
Continue course Yes No No
Corrective actions No Yes No
Corrective actions Yes Yes No
Corrective actions No No Yes
Corrective actions Yes No Yes
Corrective actions No Yes Yes
Corrective actions Yes Yes Yes
Corrective actions No No No
Result
Has the firm
progressed
satisfactorily toward
achieving its stated
objectives?
Have major
changes
occurred in
the firm’s
external
strategic
position?
Have major
changes
occurred in
the firm’s
internal
strategic
position?

27. Ch 9-27Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Alternative plans that can be put into effect if
certain key events do not occur as expected
Contingency Planning

28. Ch 9-28Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Strategy Review, Evaluation,
and Control
Process is more an “art” than “science”
Should strategies be visible or hidden from
stakeholders?
Should process be more top-down or
bottom-up?
21
st
Century Challenges in
Strategic Management

29. Ch 9-29Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Review
Why has strategy evaluation become so
important in business today?
Answer: Strategy evaluation is critically important
today because internal and external factors often
change quickly and dramatically. Key factors need
to be monitored during strategy-evaluation
activities. For example, technology is shortening
the product life cycle in nearly all industries. The
low value of the dollar is opening up many foreign
markets to American exports and is fostering
foreign acquisition of U.S. assets and companies.

30. Ch 9-30Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Review
As owner of a local, independent supermarket,
explain how you would evaluate the firm’s
strategy.
Answer: For small businesses such as a local
supermarket, strategy evaluation is less formal
than in large organizations. However, both
qualitative and quantitative criteria should be used
to evaluate the small supermarket’s strategies,
because large supermarket stores that offer one-
stop shopping for virtually everything are
proliferating across the country.

31. Ch 9-31Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Review
Under what conditions are corrective
actions not required in the strategy-
evaluation process?
Answer: The only time corrective actions
would not be required in strategy evaluation
is when major changes have not occurred
in the firm’s internal or external strategic
position and the firm is progressing
satisfactorily towards achieving its stated
objectives.

32. Ch 9-32Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Review
Identify the types of organizations that
may need to evaluate strategy more
frequently than others. Justify your
choices.
Answer: Organizations that compete in
more turbulent industries may need to
evaluate strategies more often than others.
Several examples of turbulent industries are
the computer industry, the communications
industry, and the aerospace industry.

33. THE END
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