STRATEGY EVALUATION
STRATEGY EVALUATION:
▶ Finding out what is going on is what evaluation is all about. Strategy evaluation means
collecting information about how well the strategic plan is progressing.
▶ Strategic Evaluation is defined as the process of dete
effectiveness of a given strategy in achieving the organ
and taking corrective action wherever required.
▶ Strategy evaluation is the final step of strategy management
es
e key
strategy evaluation activities are: (1)examining the underlying bases of a firm’s
strategies,
NATURE OF STRATEGY EVALUATION:
▶ Nature of the strategic evaluation and control process is to test the
effectiveness of strategy.
▶ There has to be a way of finding out whether the strateg
will guide the organisation towards its intended objectives
and control, therefore, performs the crucial task of keepi
the right track.
Through the process of strategic evaluation and c
strategists attempt to answer set of questions, as below.
Are the premises made during strategy formulation proving to be correct?
Is the strategy guiding the organization towards its intended objectives?
Are the organization and its managers doing things which ought to be done?
Is there a need to change and reformulate the strategy?
How is the organization performing?
nted
tion
on
Contd.
Are the time schedules being adhered to?
Are the resources being utilized properly?
What needs to be done to ensure that resources are utilized properly and objectives met?
Has there been an increase in profitability?
Have sales increased?
Have profit margin, ROI, EPS ratios increased?
▶ Adequate & timely information is the cornerstone of effective Strategy Evaluation.
▶ Strategy Evaluation is operated at two levels– (1) Strategic Control &
(2) Operational Control. At Strategic level we are concerned more about the
consistency of strategy with the Environment. At the Operational Level, the effort is
given towards assessing how well the organization is pursuing a given strategy.
IMPORTANCE OF STRATEGY EVALUATION:
¤ Strategy Evaluation helps to keep a check on the validity of a strategic
choice.
¤ An ongoing process of evaluation would, in fact, provide feedback on t
the
on to
strategic choice made during the formulation phase. This is due to the e
determine the effectiveness of strategy.
¤ Strategy Evaluation can help to assess whether decisions match the inten
ents.
¤ Strategy Evaluation, through its process of control, feedback, rewards and
successful culmination of the Strategic Management process.
¤ In the absence of such evaluation process, managers would not know explicitly how to exercise such
discretion.
¤ The process of Strategic Evaluation provides a considerable amount of information and experience to
strategists that can be useful in new strategic planning.
PARTICIPANTS IN STRATEGIC EVALUATION:
¤ Shareholders
¤ Board of Directors
¤ Chief Executives
¤ Profit-Centre Heads or SBU Heads
¤ Financial Controllers
¤ Company Secretaries
¤ External and Internal Auditors
¤ Audit and Executive Committees
¤ Corporate Planning Staff or Department
¤ Middle-Level Managers
BARRIERS IN EVALUATION :
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Limits of Control
Difficulties in measurements
Resistance to evaluation
Short-termism
Relying on efficiency (doing things right) versus effectiveness(doing right th
DIFFICULTIES IN EVALUATION:
Strategy Evaluation is becoming increasingly difficult due to the following reasons:
⎋ A dramatic increase in the environment’s complexity.
⎋ The increasing difficulty of predicting future with accuracy.
⎋ The increasing numbers of variables.
⎋ The rapid rate of obsolescence of even the best plans.
⎋ The increase in the number of both domestic & world events affecting the organizations.
⎋ The decreasing time span for which planning can be done with any degree of certainty.
TECHNIQUES OF STRATEGIC EVALUATION:
1) Gap Analysis:
The gap analysis is one strategic evaluation technique used to measure the gap between the
organization’s current position and its desired position.
The gap analysis is used to evaluate a variety of aspects of business, from profit and production to
marketing, research and development and management information systems.
2) SWOT Analysis:
The SWOT analysis is another common strategic evaluation technique used a
management process. The SWOT analysis evaluates the organization’s
opportunities and threats.
Strengths and weaknesses are internal factors, while opportunities and threats
This identification is essential in determining how best to focus resources to take
and opportunities and combat weaknesses and threats.
3) PEST Analysis:
Another common strategic evaluation technique is the PEST analysis, which identifies the political,
economic, social and technological factors that may impact the organization’s ability to achieve its
objectives.
Thank
you…