Unit 5 CSM: Strategic Evaluation and Comtrol

The chapter comprises of Overview of Strategic Evaluation; Strategic Control; Techniques of Strategic Evaluation and Control. Evaluation of Strategic Alternatives - Product Portfolio Models, BCG Matrix, GE Matrix, Gap Analysis; Strategic Control System.
Strategic evaluation and control is the final phase in the process of strategic management. Its basic purpose is to ensure that the strategy is achieving the goals and objectives set for the strategy. It compares performance with the desired results and provides the feedback necessary for management to take corrective action.
According to Fred R. David, strategy evaluation includes three basic activities
(1) examining the underlying bases of a firm’s strategy,
(2) comparing expected results with actual results, and
(3) taking corrective action to ensure that performance conforms to plans. Sometime, the best formulated strategies become obsolete (outdated) as a firm’s external and internal environments change.
Strategic control is a type of “steering control”. We have to track the strategy as it is being implemented, detect any problems or changes in the predictions made, and make necessary adjustments. This is especially important because the implementation process itself takes a long time before we can achieve the results.
Strategic control is like an alarm long before the calamity can happen.
Operational control is the process of ensuring that specific tasks are carried out effectively and efficiently. The operational control aims at evaluating the performance of the organization. Most of the control system in organization are operational in nature. Some examples of operational control are : Budgetary control, Quality control, Inventory control, Production Control, Cost control etc.
Portfolio Model is a technique used to analyse organisations in relation to their environments
Portfolio (set, collection, assortment, range, group)
A business Portfolio may be any collection of brands/products, markets, branches /divisions, income generating assets, etc.
PA is usually applied to firms with multiple SBUs (more than one product/services, customer categories, markets , divisions)
Helps managers in taking decisions regarding which SBUs to allocate more or less resources to at a given strategic point in time
After portfolio analysis firm makes an informed strategic choice e.g.
To have a balanced portfolio (minimize risk and maximize return) of all portfolios
To actively deploy a retrenchment strategy

1. Corporate Strategic Management
Unit-V: Strategic Evaluation and Control
OverviewofStrategicEvaluation;StrategicControl;
TechniquesofStrategicEvaluationandControl.Evaluationof
StrategicAlternatives-ProductPortfolioModels,BCGStrategicAlternatives-ProductPortfolioModels,BCG
Matrix,GEMatrix,GapAnalysis;StrategicControlSystem.
Prepared by:
Mr. DayanandaH. Huded
M.ComJRF, NET, KSET
Teaching Assistant,
Rani Channamma University, P. G. Centre, Jamkhandi

2. Overview of Strategic Evaluation
•Strategicevaluationandcontrolisthefinalphaseintheprocessofstrategic
management.Itsbasicpurposeistoensurethatthestrategyisachieving
thegoalsandobjectivessetforthestrategy.Itcomparesperformancewith
thedesiredresultsandprovidesthefeedbacknecessaryformanagementto
takecorrectiveaction.
•AccordingtoFredR.David,strategyevaluationincludesthreebasic
activities
–(1)examiningtheunderlyingbasesofafirm’sstrategy,
–(2)comparingexpectedresultswithactualresults,and
–(3)takingcorrectiveactiontoensurethatperformanceconformsto
plans.Sometime,thebestformulatedstrategiesbecomeobsolete
(outdated)asafirm’sexternalandinternalenvironmentschange.
•Strategicevaluationgenerallyoperatesattwolevels–strategicand
operationallevel.Atthestrategiclevel,managerstrytoexaminethe
consistencyofstrategywithenvironment.Attheoperationallevel,the
focusisonfindinghowagivenstrategyiseffectivelypursuedbythe
organisation.

3. Nature of Strategic Evaluation and Control
•Strategicevaluationandcontrolisdefinedastheprocessofdetermining
theeffectivenessofagivenstrategyinachievingtheorganisational
objectivesandtakingcorrectiveactionswhereverrequired.
•AccordingtoPearceandRobinson,strategiccontrolisconcernedwith
trackingastrategyasitisbeingimplemented,detectingproblemsorchangesin
itsunderlyingpremises,andmakingnecessaryadjustments.
•Strategiccontrolinanorganisationissimilartowhatthe“steering
control”isinaship.Steeringkeepsaship,forinstance,stableonitscontrol”isinaship.Steeringkeepsaship,forinstance,stableonits
course.
•Similarly,strategiccontrolsystemssensetowhatextentthestrategies
aresuccessfulinattaininggoalsandobjectives,andthisinformationis
fedtothedecision-makersfortakingcorrectiveactionintime.
•Strategicmanagerscansteertheorganisationbyinstitutingminor
modificationsorresorttomoredrasticchangessuchasalteringthe
strategicdirectionaltogether.Strategiccontrolsystemsthusoffera
frameworkfortracking,evaluatingorreorientingthefunctioningofthe
firm’sstrategy.

4. Characteristics of Effective Evaluation and Control System
•1.Simple:Strategyevaluationmustbesimple,nottoocomprehensiveand
nottoorestrictive.Complexsystemsoftenconfusepeopleand
accomplishlittle.Thetestofaneffectiveevaluationsystemisits
simplicitynotitscomplexity.
•2.Economical:Strategyevaluationactivitiesmustbeeconomical.Too
manycontrolscandomoreharmthangood.
•3.Meaningful:Strategyevaluationactivitiesshouldbemeaningful.They
shouldspecificallyrelatetoafirm’sobjectives.Theyshouldprovideshouldspecificallyrelatetoafirm’sobjectives.Theyshouldprovide
managerswithusefulinformationabouttasksoverwhichtheyhave
controlandinfluence.
•4.Timely:Strategyevaluationactivitiesshouldprovidetimely
information.Forexample,whenafirmhasdiversifiedintoanew
businessbyacquiringanotherfirm,evaluativeinformationmaybe
neededatfrequentintervals.Timedimensionofcontrolmust
coincidewiththetimespanoftheeventbeingmeasured.

5. •5.Truthful:Strategyevaluationshouldbedesignedtoprovideatrue
pictureofwhatishappening.Informationshouldfacilitateactionand
shouldbedirectedtothoseindividualswhoneedtotakeactionbasedon
it.
•6.Selective:Thecontrolsystemsshouldfocusonselectivecriterialike
keyimportantfactorswhicharecriticaltoperformance.Insignificant
deviationsneednotbefocused.
•7.Flexible:Theymustbeflexibletotakecareofchanging
circumstances.
•8.Suitable:Controlsystemsshouldbesuitabletotheneedsofthe
organisation.Theymustconformtothenatureandneedsofthejoband
areatobecontrolled.
•9.Acceptable:Controlswillnotworkunlesstheyareacceptableto
thosewhoapplythem.
•10.FosterUnderstandingandTrust:Controlsystemsshouldnot
dominatedecisions.Rathertheyshouldfostermutualunderstanding,
trustandcommonsense.Nodepartmentshouldfailtocooperatewith
anotherinevaluatingandcontrolofstrategies.

6. Strategic Control and Operational Control
•Strategiccontrolisatypeof“steeringcontrol”.Wehavetotrackthestrategy
asitisbeingimplemented,detectanyproblemsorchangesinthe
predictionsmade,andmakenecessaryadjustments.Thisisespecially
importantbecausetheimplementationprocessitselftakesalongtime
beforewecanachievetheresults.
•Strategiccontrolislikeanalarmlongbeforethecalamitycanhappen.
•Operationalcontrolistheprocessofensuringthatspecifictasksare
carriedouteffectivelyandefficiently.Theoperationalcontrolaimsatcarriedouteffectivelyandefficiently.Theoperationalcontrolaimsat
evaluatingtheperformanceoftheorganization.Mostofthecontrol
systeminorganizationareoperationalinnature.Someexamplesof
operationalcontrolare:Budgetarycontrol,Qualitycontrol,Inventory
control,ProductionControl,Costcontroletc.

7. Differences between Strategic Control and Operational Control
AttributeStrategic control Operational Control
Aim Proactive continuous questioning of
the basic direction of strategy. Its aim
is find out whether or not strategy is
being implemented properly.
Allocation and use of orgnisational
Resources
Basic
Question
“Are we moving in the right direction?”“How are we performing?”
Main
concern
The main concern of strategic control
is pushing the company in the correct
future direction.
The operational control is concerned
with the actions as it is based on plans,
standards and procedures.future direction. standards and procedures.
Focus Externalenvironment Internalorgnisation
Time
period
The strategic control considers long-
term impact of strategy on the
organization.
The operational control is only for short
period say maximum for 1 year.
Exercise
of control
Exclusively by top management, may
be through lower-level Support
Mainly by executives of middlelevel
management on the direction of top
management
Technique
s used
Environmental scanning,
information gathering,
questioning and review
Budgets, schedules and MBO

8. Importance of Strategic Evaluation and Control
•1.Facilitatescoordination:Strategicevaluationandcontrolfacilitates
coordinationamongthevariousdepartmentsoftheorganization.
Whenever,thereareanydeviationstheactivitiesoftheconcerned
departmentsarecoordinatedsoastotakecollectiveandcorrective
measures.Thecollectiveseffortsonthepartofconcerneddepartments
enabletocorrectthedeviationsandtoaccomplishtheobjective.
•2.Facilitatesoptimumuseofresources:Evaluationandcontrol•2.Facilitatesoptimumuseofresources:Evaluationandcontrol
enablesoptimumuseofresources–physical,financialandhuman
resources.Theresourcesareproperlyallocatedandutilizedwhichin
turngenerateshigherproductivityandefficiency.
•3.Guidetooperations:Evaluationandcontrolguidestheactionsof
theindividualsanddepartmentsintheorganization.Activitiesare
undertakenintherightdirectionandassuchtheorganizationwouldnot
beabletoaccomplishitsobjectives.

9. •4.Checkonvalidityofstrategicchoice:Evaluationandcontrolhelps
themanagementtokeepacheckonthevalidityofthestrategicchoice.
Theprocessofevaluationandcontrolwouldprovidesfeedbackonthe
relevanceofthestrategicchoicemadeduringtheformulationstage.
Thisisduetotheefficacyofthestrategicevaluationtodeterminethe
effectivenessofthestrategy.
•5.Facilitatesperformanceappraisal:Evaluationandcontrolfacilitates
employees‟appraisal.Theactualperformanceismeasuredinthelight
ofthestrategicplanning.Themanagersmeasuretheperformanceandofthestrategicplanning.Themanagersmeasuretheperformanceand
providenecessaryfeedbacktotheemployees.Thisfacilitatesthemto
improvetheirperformance.
•6.Motivatesemployees:Employeesareawarethattheirperformanceis
reviewedperiodically.Therefore,theyputintheirbestpossibleeffortsto
improvetheirperformance.Theemployeesaremotivatedasthose
employeeswhoshowbetterperformancearenormallyrewarded.

10. •7.Fixesresponsibility:Evaluationandcontrolfixesresponsibilityon
themanagers.Itisthedutyofthemanagerstocorrectthedeviations,
whentheactualperformanceisnottakingplaceasperthetargets.
Managerscannotignoretheirresponsibilityforevaluationandcontrol.
•8.Createsinputsforfuturestrategicplanning:Strategicevaluation
andcontrolprovidesagoodamountofinformationandexperienceto
managers,whichcanbeutilizedinfuturestrategicplanning.Therefore,
futurestrategicplanningcanbebetterthanbefore.

11. Strategic Evaluation and Control Process

13. •1.Determinewhattomeasure:Topmanagersaswellasoperational
managersneedtospecifywhatimplementationprocessesandresults
willbemonitoredandevaluated.Theprocessesandresultsmustbe
capableofbeingmeasuredinareasonablyobjectiveandconsistent
manner.Thefocusshouldbeonthemostsignificantelementsina
process–theonesthataccountforthehighestproportionofexpenseor
thegreatestnumberofproblems.
•2.SettingofStandards:Thestrategistsneedtoestablishperformance
targets,standardsandtolerancelimitsfortheobjectives,strategy,and
implementationplans.Thestandardscanbeestablishedintermsofimplementationplans.Thestandardscanbeestablishedintermsof
quantity,quality,costandtime.Standardneedtobedefiniteandthey
mustbeacceptabletoemployees.Onecannotjustfixhightargetsand
lowtargetsorstandardstobeavoided.
•3.Measuringactualperformance:Thenextstepistomeasurethe
actualperformance.Forthispurpose,themanagermayaskfor
performancereportsfromtheemployees.Theactualperformancecanbe
measuredbothinquantitativetermsaswellasqualitativeterms.The
actualperformancealsoneedtobemeasuredintermsoftimeandthe
costfactor.

14. •4.ComparingactualperformancewithStandards: Theactual
performanceneedtobecomparedwiththestandards.Theremustbe
objectivecomparisonoftheactualperformanceagainstthe
predeterminedtargetsorstandards.Suchcomparisonisrequiredtofind
outdeviations,ifany.
•5.FindingoutDeviations:Aftercomparison,themanagersmaynotice
thedeviations.Forinstanceiftheactualsalesareonly9000unitsas
comparetostandardstargetsof10,000unitsofsales,thendeviations
aretotheextentof1000unitsofsales.Ifactualperformanceresults
arewithinthedesiredtolerancerange,themeasurementprocessstops
here.here.
•6.Analyzingdeviations:Thedeviationsmaybereportedtothehigher
authorities.Thehigherauthoritiesanalyzethecauseofdeviations.For
thispurpose,thehigherauthoritiesmayholdnecessarydiscussionwith
thefunctionalstaff.Thecausesofdeviationsshouldbeidentified.
•7.TakingcorrectiveActions:Ifactualresultsfalloutsidethedesired
tolerancerange,correctiveactionmustbetakentocorrectthedeviation.
Sometimestheremaybeneedforre-settinggoalsorobjectivesorre-
framingplans,policiesandstandards.Thecorrectivestepsmustbetaken
attherighttimesoastoaccomplishtheobjectives.

15. Techniques of Strategic Control
•A. Evaluation techniques for Strategic Control
Strategiccontroltakesintoaccountthechangingassumptionsthat
determinethestrategybycontinuouslyevaluatingthestrategyduring
theprocessofimplementationanditalsotakestherequiredcorrective
actionasandwhenneeded.Thusstrategiccontrolislikeanalarmlong
beforethecalamitycanhappen.
•1.ManagementInformationsystems:Appropriateinformationsystemsact
asaneffectivecontrolsystem.Managementwillcometoknowthelatestasaneffectivecontrolsystem.Managementwillcometoknowthelatest
performanceinkeyareasandtakeappropriatecorrectivemeasures.

16. •2.Benchmarking:Itisacomparativemethodwhereafirmfindsthebestpractices
inanareaandthenattemptstobringitsownperformanceinthatareaininanareaandthenattemptstobringitsownperformanceinthatareain
linewiththebestpractice.Bestpracticesarethebenchmarksthatshouldbe
adoptedbyafirmasthestandardstoexerciseoperationalcontrol.Through
thismethod,performancecanbeevaluatedcontinuallytillitreachesthe
bestpracticelevel.Inordertoexcel,afirmshallhavetoexceedthe
benchmarks.Inthismanner,benchmarkingoffersfirmsatangiblemethod
toevaluateperformance.
•3.StrategicSurveillance:Strategicsurveillanceisdonetooverseethe
organizationasawhole.Itseeswhetheranyeventeitherwithinoroutside
thecompanythreatensthestrategiescourseofactioninanyway.

17. •4.Implementationcontrol:Onlystrategyimplementationgivesresult
toplans,projectsandprogrammesbeingsetup.Thestrategisthastolay
downtheresourcestobeallocatedalleverystage.Implementation
controldealswiththeevaluationwhethertheplans,projectsand
programmesoneleadingtheorganizationtowardsitspredetermined
goal.Thisisdonethroughidentificationandclosemonitoringofeach
plan.
•5.Specialalertcontrol:Incaseofemergenciesthecompanyneedsto
takequickandcorrectdecisioninordertosavethestrategyinoperation.
Specialalertcontrolcanbeexercisedthroughtheformulationof
contingencystrategiesbygivingthejobimmediatelytothecrisiscontingencystrategiesbygivingthejobimmediatelytothecrisis
managementteamswhoiscapableandexperiencedinhandlingsuch
emergenciese.g.unfortunatefloods,sharepricescrashorrealestate
pricescrashetc.
•6.Responsibilitycentres:Centralcentrescanbeestablishedtomonitor
specificfunctions,projectsordivisions.Responsibilitycentresareused
toisolateaunitsothatitcanbeevaluatedseparatelyfromtherestof
thecorporation.Eachresponsibilitycentrethereforehasitsownbudget
andisevaluatedonitsuseofbudgetedresources.

18. •Aresponsibilitycentreisheadedbythemanagerresponsibleforthe
centresperformance.Theyareofvarioustypes
–Costcentres,Revenuecentres,Expensecentres,Profitcentresand
Investmentcentres.
B. Evaluation techniques for Operational Control
•Operationalcontrolistheprocessofensuringthatspecifictasksare
carriedouteffectivelyandefficiently.Theoperationalcontrolaimsat
evaluatingtheperformanceoftheorganization.Mostofthecontrol
systeminorganizationareoperationalinnature.systeminorganizationareoperationalinnature.
•1.Networktechniques:NetworktechniquessuchasProgrammeEvaluation
andReviewTechnique(PERT),CriticalPathMethod(CPM),andtheir
variants,areusedextensivelyfortheoperationalcontrolsofscheduling
andresourceallocationinprojects.Whennetworktechniquesare
modifiedforuseasacostaccountingsystem,theybecomehighly
effectiveoperationalcontrolsforprojectcostsandperformance.

19. •2.InternalAnalysis:Theinternalanalysisdealswiththestrengthsand
weaknessofthefirm.Itinvolvesfollowingtechniques.
–Valuechainanalysis,Quantitativeanalysis,ratioanalysis,market
ranking,advertising,marketsurveys,experimentationand
observation.
3.Balancedscoreboard:Inthistechniques,thefourkeyperformance
measuresareidentified–customerperspective,internalbusiness
perspective,innovationandlearningperspectiveandthefinancial
perspective.Thistechniquesadoptsabalancedapproachtoevaluate
performanceoftheorganizationasawholeasawiderangeofperformanceoftheorganizationasawholeasawiderangeof
parametersareconsidered.
4.ManagementbyObjectives(MBO): Itinvolvessubordinate
managersinplanningandcontrollingactivities.Inthiscasethe
superiorandsubordinatemanagersjointlydecidecommongoals,and
jointlyframeplans.Thesubordinatethenimplementstheplan,and
finallytheperformanceoftheplanisjointlyreviewedbythe
superiorandsubordinatemanagers.

20. •5.MemorandumofUnderstanding(MOU): Memorandumof
Understandingisanagreementbetweenapublicenterpriseandthe
Governmentwhereclearlyspecifytheircommitmentsand
responsibilities.
•6.Budgetarycontrol:Itisusedtoindicatetheappraisalof
performancebyacomparisonoftheactualwiththebudgetand
correctiveactionforthesame.Herebudgetsareusedasaninstrument
ofcontrol.
•7.Zero-basedBudgeting:Hereannualbudgets,revaluationofplans,
projectsandprogrammesdecidewhetheranychangeinresourceprojectsandprogrammesdecidewhetheranychangeinresource
allocationisrequiredtoachievethecompany‟sgoals.

21. STRATEGIC ALTERNATIVES
•StrategicAlternativesBusinessenvironmentsarehighly
uncertainandexecutivesneedtobeinnovativeand
flexibletosurvive.
•Theyachievethisthroughstrategicalternativesthat
enabletheircompaniestomaintainacompetitiveedge
overrivals.overrivals.
•Somealternativestrategiesincludepricefocus,
differentiation,diversificationandadjacentbusinesses

22. Environment Alanalysis
•Environmentalanalysisisastrategictool.Itisaprocesstoidentifyall
theexternalandinternalelements,whichcanaffecttheorganization’s
performance..Theseevaluationsarelatertranslatedintothedecision-
makingprocess.Theanalysishelpsalignstrategieswiththefirm’s
environment.
•Ourmarketisfacingchangeseveryday.Manynewthingsdevelopover
timeandthewholescenariocanalterinonlyafewseconds.Thereare
somefactorsthatarebeyondyourcontrol.But,youcancontrolalotofsomefactorsthatarebeyondyourcontrol.But,youcancontrolalotof
thesethings.
•Therearemanystrategicanalysistoolsthatafirmcanuse,butsomeare
morecommon.Themostuseddetailedanalysisoftheenvironmentis
thePESTLEanalysis.
•Thisisabird’seyeviewofthebusinessconduct.Managersandstrategy
buildersusethisanalysistofindwheretheirmarketcurrently.
•PESTLEanalysisconsistsofvariousfactorsthataffectthebusiness
environment.Eachletterintheacronymsignifiesasetoffactors.These
factorscanaffecteveryindustrydirectlyorindirectly.

23. Product Portfolio Models
•PortfolioModelisatechniqueusedtoanalyseorganisationsinrelation
totheirenvironments
•Portfolio(set,collection,assortment,range,group)
•AbusinessPortfoliomaybeanycollectionofbrands/products,markets,
branches/divisions,incomegeneratingassets,etc.
•PAisusuallyappliedtofirmswithmultipleSBUs(morethanone
product/services,customercategories,markets,divisions)
•HelpsmanagersintakingdecisionsregardingwhichSBUstoallocate•HelpsmanagersintakingdecisionsregardingwhichSBUstoallocate
moreorlessresourcestoatagivenstrategicpointintime
•Afterportfolioanalysisfirmmakesaninformedstrategicchoicee.g.
–Tohaveabalancedportfolio(minimizeriskandmaximizereturn)of
allportfolios
–Toactivelydeployaretrenchmentstrategy

25. •Have been developed by large firms in developed world, mostly named
against their inventors
•Are applicable even to smaller firms with multiple SBUs.
–Examples are shown below:
•The B.C.G model (Growth/Share matrix)
•The G.E Multi-directional model (competitive strengths/Attractiveness
matrix)
•Contribution Margin Analysis (how much profit margin does that biz
portfolio contribute?)portfolio contribute?)
•Gap Analysis.

26. Boston Consulting Group (BCG) Model
•The BCG matrix was developed by the Boston Consultancy group in
1970s. It is also called the “Growth share matrix”. This is the most
popular and the simplest matrix to describe a corporation’s portfolio of
businesses or products.
•According to this technique, business or products are classified as low or
high performance depending upon their market growth rate & relative
market share.
•This is the most popular business portfolio matrix •This is the most popular business portfolio matrix
•It analyses the business portfolio in relation to market share and market
/ industry growth.
•The above 2 variables (share & growth) range from low to high
•A SBU is positioned in the model and the firms strategy is guided by the
SBU’s positioning.

27. •To understand the Boston Matrix you need to understand how market
share & market growth interrelated.
•Market share is the percentage of the total market that is being serviced
by your company measured either in the revenue terms or unit volume
terms.

28. •Market Growth Rate: Market Growth is used as a
measure of a market’s attractiveness.

29. Why We Need BCG Matrix
•To assess
–Profile of product /business
–Cash demands of products
–The development cycle of product
–Resource allocation & divestment decisions
Main Steps of BCG MatrixMain Steps of BCG Matrix
-Identifying & dividing a company into SBU
-Assessing & comparing the prospects of each SBU according to two
criteria
-1) SBU’s relative market share
-2) Growth rate of SBU’s industry
-Classifying the SBU’s on the basis of BCG matrix
-Developing strategic objective for each SBU

30. BCG Matrix

32. Stars (High share and High growth)
•Starproductsallhaverapidgrowthanddominantmarketshare.
•Thismeansthatstarproductscanbeseenasmarketleadingproducts.
•Theseproductswillneedalotofinvestmenttoretaintheirposition,to
supportfurthergrowthaswellastomaintainitsleadovercompeting
products.
•Thisbeingsaid,starproductswillalsobegeneratingalotofincome
duetothestrengththeyhaveinthemarket.duetothestrengththeyhaveinthemarket.
•Themainproblemforproductportfoliomanagersittojudgewhether
themarketisgoingtocontinuetogroworwhetheritwillgodown.
•StarproductscanbecomeCashCowsasthemarketgrowthstartsto
declineiftheykeeptheirhighmarketshare.

33. Cash Cows (high share, low growth)
•Cash cows don’t need the same level of support as before.
•This is due to less competitive pressures with a low growth market and
they usually enjoy a dominant position that has been generated from
economies of scale.
•Cash cows are still generating a significant level of income but is not
costing the organisationmuch to maintain.
•These products can be “milked” to fund Star products.•These products can be “milked” to fund Star products.

34. Dogs (low share, low growth)
•Products classified as dogs always have a weak market share in a low
growth market.
•These products are very likely making a loss or a very low profit at best.
•These products can be a big drain on management time and resources.
•The question for managers iswhether the investment currently being
spent on keeping these products alivecould be spent on making
something that would be more profitable.something that would be more profitable.
•The answer to this question is usually yes.

35. Question mark / Problem Child (low share, high growth)
•Also sometime referred to as Question Marks, these products prove to be
tricky ones for product managers.
•These products are in a high growth market but donot seem to have a
high share of the market.
•Thereason for this could be that it'sa very new product to the market.
•If this is not the case, then some questions need to be asked.
•What is the organisationdoing wrong?•What is the organisationdoing wrong?
•What are itscompetitors doing right?
•It could be that these products just need more investment behind them
to become Stars.

36. BCG Matrix For Apple

37. BCG Matrix For Samsung

38. BCG Matrix For Nestle

39. BCG Matrix For Beverage Industry

40. GE Matrix
•Developed in 1970’s
•General Electric or GE McKinsey Matrix.
•A strategic tool for portfolio planning.
•A portfolio is a group of businesses that make up a company (SBU’s)
•No business has infinite amount of money to run effectively.
•The GE Matrix helps to determine;
–Which SBU should receive more or less investment.
––What new products or SBU’s are needed in the portfolio.
–Which products or SBU’s need to be divested.
This is a form of portfolio analysis used for classifying product lines or
strategic business units within a large company
It was developed by McKinsey for the US General Electric Company
It assesses areas of the business in terms of two criteria:
1. –The attractiveness of the industry/market concerned
2. –The strength of the business

41. •How does it differ from the BCG Matrix?
•There are similarities: –
–Two dimensions are used to create a matrix
–Each cell suggests an appropriate strategy
–In both cases we are concerned with the future strategy for a
particular area (e.g. a division) within the firm
•There are major differences;
–The GE matrix involves a wider analysis of the firm’s operations–The GE matrix involves a wider analysis of the firm’s operations
–The dimensions of the GE matrix are industry attractiveness and
business strength (rather than market share and market growth)
–There are nine cells and a wider choice of strategies
–The Boston Matrix focuses on products within the firms product
range
–The GE matrix can be extended to look at strategic business units.

42. 1. Attractiveness of the Industry
•The vertical axis of the matrix is industry attractiveness
•This concerns the attractiveness to a firm of entering, or remaining, in
a particular industry
•Industry attractiveness is assessed by considering a range of factors
each of which is given a weighting to produce a composite picture
•Criteria which makes a market attractive;
Factors Which Makes Market AttractivenessFactors Which Makes Market Attractiveness
1. Market size 7. Growth rate 13. PEST factors
2. Industry profitability8. Intensity of competition 14. Profit margins
3. Differentiation 9. Industry fluctuations15Government regulation
4. Variability of demand10. Entry and exit barrier16. Volatility
5. Availability of Market
intelligence
11. Availability of Work
force
17. Global opportunities
6. Overall returns in the
industry
12. Rate of technological
change
18. Customer/supplier
relations

43. 2. Strength of the Business
•Businessunitstrength:Horizontalaxisofthematrixisthestrengthofthebusinessunit
•ThisreferstohowstrongthefirmorSBUisintermsofthemarket
•Amarketmightbeveryattractivebutthefirmlacksstrengthsintermsofsupplyingthe
market
•Aswithindustryattractivenessacompositeofindustrystrengthisbasedonweightinga
rangeoffactors
•NoticethattheBostonMatrixdimensionsareincludedintheGEmatrix-market
growthisanelementofindustryattractiveandmarketshareisanelementinbusiness
strength
Factors Assessing Internal Strengths of Business Unit
1. Production capacity 8. Production flexibility 15. Unit costs
2. R and D capabilities 9. Quality 16.Reliability
3. Company image 10. Product uniqueness 17. Cost and profitability
4. Service quality 11. Manufacturing capability18. Organisationalskills
5. Market share 12. Growth in market share19. Marketing capabilities
6. Management competence13. Skills of workforce 20. Distribution network
7. Size and quality of sales
force
14. Profit margins relative to
competitors
21. Customer loyaltyand
Brand recognition

44. GE Matrix
Business UnitStrength
Industry Attractiveness
Strong Average Weak
High Grow Grow Hold
Industry Attractiveness
High Grow Grow Hold
Medium Grow Hold Harvest
Low Hold Harvest Harvest

45. •Advantages
•Helpstoprioritizethelimitedresourcesinordertoachieve
thebestreturns.
•Managersbecomemoreawareofhowtheirproductsor
businessunitsperform.
•Identifiesthestrategicstepsthecompanyneedstomaketo
improvetheperformanceofitsbusinessportfolio.
•Disadvantages•Disadvantages
•Requiresaconsultantorahighlyexperiencedpersontodetermine
industry’sattractivenessandbusinessunitstrengthasaccurately
aspossible.
•Itiscostlytoconduct.
•Itdoesn’ttakeintoaccountthesynergiesthatcouldexistbetween
twoormorebusinessunits.

47. Gap Analysis

48. Gap Analysis Procedure

50. Strategic Control System
•Strategiccontrolisalsofocusedontheachievementoffuturegoals,
ratherthantheevaluationofpastperformance.
•Strategiccontrolisconcernedwithtrackingastrategyasitisbeing
implemented,detectingproblemsorchangesinitsunderlyingpremises,
andmakingnecessaryadjustments
•SchreyoggandSteinmann(1987):“Thecriticalevaluationofplans,•SchreyoggandSteinmann(1987):“Thecriticalevaluationofplans,
activities,andresults,therebyprovidinginformationforthefuture
action“.
•Themostimportantpurposeofstrategiccontrolistohelpachieve
organizationalgoalsthroughmonitoringandevaluatingthestrategic
managementprocess.

51. Characteristics of strategic control
•It is a continuous process
•It is a management process
•It is embedded in each level of organizational hierarchy
•It is forward looking
•It is closely linked with planning
•It is a tool for achieving organizational activities
•It is an end process

52. Ideal Control System

53. Types of Strategic Control
•1. Premise Control
•2. Implementation Control
•3. Strategic Surveillance
••4. Special Alert Control