Strategic evaluation

Strategic Evaluation

1. Prepared By: Imtiaz Ali Roll no: 1812 BBA 6 th SEM Course: Strategic Management Abasyn University Islamabad

2. Strategic Evaluation Presentation Topic

3. Strategic Evaluation : Finding out what is going on is what evaluation is all about. Strategic Evaluation means collecting information about how well the strategic plan is progressing. Strategic Evaluation t he strategy evaluation process involves analyzing your strategic plan and assessing how well you've done against achieving the goals in your strategy. A strategy evaluation is an internal analysis tool and should be used as part of a broader strategic analysis for the organization when making decisions about your strategy. Strategy evaluation is the last phase of the strategic management process in which managers try to assure that the strategic choice is properly implemented and is meeting the objectives of the organization.

4. Nature of Strategic evaluation The strategic management process does not end when the firm decides what strategy or strategies to pursue. There must be a translation of strategic thought into strategic action. Strategy evaluation includes three basic activities: (1) examining the underlying bases of a firm’s strategy.  (2) comparing expected results with actual results. (3) taking corrective actions to ensure that performance conforms to plans. Nature of Strategic Evaluation:

5. There has to be a way of finding out whether the strategic being implemented will guide the organization towards its intended objectives. Strategic evaluation and control, therefore, performs the crucial task of keeping the organization on the right track. The business environment is dynamic and complex in nature. The business environments are: • Highly sensitive and complex in nature . • Unpredictable about the future and accuracy of business environment. • Globalization and other factors also increases the flexibility of business environment which make difficult to implement business strategies. Cont...

6. Strategic evaluation is an important tool for assessing how well your business has performed, relative to its goals. It's an important way to reflect on achievements and shortcomings, and is also useful for reexamining the goals themselves, which may have been set at a different time, under different circumstances. The importance of strategic evaluation process may be described with the following points: 1.The strategic evaluation identifies the corrective steps and actions to achieve business efficiency and effectiveness. 2. The strategic evaluation is not only focused to measure the result but also provides the right paths and directions to achieve desired organizational goals. 3. The output of strategic evaluation is feedback which provides essential inputs for the future strategic decisions or plans and polices of the organization. Importance of Strategy Evaluation:

7. 4 The strategic evaluation is also related with performance appraisal system for reward and recognitions which leads the motivation of employees and boosts the morale of the employees in the organization. 5. Strategic evaluation process is beneficial for all organizations whether small, medium, or large. Cont...

8. Process of Strategic Evaluation

9. Shareholders Board of Directors Chief Executives Profit Center Heads or SBU Heads Financial Controllers Company Secretaries External and Internal Auditors Audit and Executive Committees Corporate Planning staff or Department Middle Level Managers Participants in Strategic Evaluation

10. Limits of control:  It is never an easy task for ‘strategists to decide the limits of control. Too much control may damage the ability of managers; on the other hand, too less control may make the strategic evaluation process ineffective. Difficulties in measurement:  The process of strategic evaluation is fraught with the danger of difficulties in measurement. The control system may measure element which is not intended to be evaluated. Resistance:  The evaluation process involves controlling the behavior of individuals. It is likely to be resisted by managers. Barriers in Evaluation

11. Short-termism:  Managers often tend to measure the immediate results. As a result, the extended effect of strategy on performance is ignored. Relying on efficiency Vs effectiveness:  Efficiency is “doing things right” and effectiveness is “doing the right thing”. There is often a genuine confusion among managers as to what constitutes effective performance. Cont…

12. Strategy evaluation in modern business environment has become a difficult and complicated process because of certain factors : • Increase in environment complexity • Difficulty in predicting the future accurately • Increasing number of variables • High rate of obsolescence of even the best laid plans • Increase in domestic world events • Decreasing time span for planning certainty Difficulties in Evaluation

13. Strategy evaluation process or measures should be meaningful. These should specifically relate to the objectives/targets and the plan. There should be clear focus and no ambiguity. Strategy evaluation and control process should be economical. This means that the process should not be made unnecessarily elaborate and incurs too much cost on evaluation itself. The evaluation process should conform to a proper time dimension for control and information retrieval or dissemination. Time dimension of control should coincide with the time span of the activity or the implementation phase. Also, information on developments or feedback should be timely to make evaluation and control more appropriate. Requirements for Effective Evaluation

14. Strategy evaluation system should give a true picture of what is actually happening. The objective of evaluation is not fault finding. Sometimes, performance may be overshadowed by external factors or the environment. For example, during a severe slump in economic/business activity, productivity and profitability may decline in spite of best efforts by the managers to implement strategy. Strategy evaluation process should not dominate or curb decisions; it should promote mutual understanding, trust and common cause. All functional and operational areas should cooperate with each other in evaluating and controlling strategies. Strategy evaluation process should be simple and not too complex or restrictive. Cont…

15. Consistency:     Are the external strategies consistent with (supported by) the various internal aspects of the organization? You must examine all the various functional and internal management strategies employed by the organization and compare them with the external business strategy. Consonance:     Are the strategies in agreement with the various external trends (and sets of trends) in the environment? To answer this questions, you need to look at  all  the major trends that impact the selected strategy - both positively and negatively. Criteria for Evaluation Strategies

16. Feasibility:     Is the strategy reasonable in terms of the organization's resources? ·         Money and capital ·         Management, professional, and technical resources ·         Time span Advantage:     Does the strategy create and/or maintain a competitive advantage? ·         Resources ·         Skills ·         Position Cont…

17. Gap Analysis: New Product Launch: After a company launches a new product, they might do a gap analysis to determine why sales didn’t meet forecasts. Productivity: When a factory’s productivity is not meeting expectations, targeted customer needs, or the set of business requirements that were laid out a gap analysis can help determine what process to fix. Supply Management: If a hospital finds itself running short of supplies on a regular basis, they could perform a gap analysis to identify the reason why. Sales Performance: A manufacturer can look at the sales performance of their catalog of products to make sure they are producing the right mix, and use the result to maximize their production–possibility frontier. TECHNIQUES OF STRATEGIC EVALUATION

18. SWOT Analysis: This is one techniques of strategic evaluation to actual monitor the performance of strategic decisions. SWOT describes as organization’s strengths, weaknesses, opportunities and threats. The business environment is complex and dynamic nature and consists of internal and external environment. It is an Unpredictable about the future and accuracy of business environment. Internal Environment consists of organization’s strengths, weaknesses and on other side external environment is only being provided only opportunities and threats. Cont…

19. 3. PEST Analysis: This is one of the techniques used for the evaluation system of strategy. The business atmosphere is highly sensitive and complex in nature. PEST denotes Political, Economical, Social and Technological factors directly impact on the business. These are essential factors should be considered while framing the strategy. The success of strategic decisions is mainly depending on these factors. Political factors are considered rules and regulation, legislatures, and environmental norms etc. Cont…

20. 4. Benchmarking: It is technique of strategic evaluation to identify whether the organization is achieved the expected results or not. If it is failed to achieve the expected result, then what is the difference between actual result and expected result. The organization must set the Standard performance is benchmark for the measuring actual performance. The regular monitoring and measuring the performance of strategic plan and collection of data that indicates actual result of the given activity and set the benchmark of activity. Cont…

21. “You can’t manage what you don’t measure”. Peter Drucker. “Unless strategy evaluation is performed seriously and systemically and unless strategies are willing to act on the results energy will or will to work on exploiting today let alone to work on marking tomorrow”. Peter Drucker Conclusion

22. Thank You The End