David Sm 13 PPT - 09

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Ch 9 -1

Chapter 9Strategy Review, Evaluation, and Control

Strategic Management: Concepts & Cases

13th Edition

Fred David


Ch 9 -2


Ch 9 -3

“Organizations are most vulnerable when they are at the peak of their success.”

– R. T. Lenz

Strategy Evaluation


Ch 9 -4

– Strategies become obsolete

– Internal environments are dynamic

– External environments are dynamic

Strategy Review, Evaluation, and Control


Ch 9 -5

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 Evaluation


Ch 9 -6

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


Three Basic Activities


Ch 9 -7

Complex & sensitive undertaking

Overemphasis can be expensive & counterproductive


Strategy Evaluation


Ch 9 -8


Increase in assets? Increase in profitability? Increase in sales? Increase in productivity? Increases in profit margins, ROI, and EPS

ratios?

Appraisal of Strategic Performance


Ch 9 -9


Consonance

Consistency

Feasibility

Advantage

Rumelt’s4 Criteria


Ch 9 -10


Strategy should not present inconsistent goals and policies

Consistency


Ch 9 -11


Consonance

Consistency

Feasibility

Advantage



Ch 9 -12


Need for strategists to examine sets of trends, as well as individual trends

Consonance


Ch 9 -13


Consonance

Consistency

Feasibility

Advantage



Ch 9 -14


Neither overtax resources nor create unsolvable subproblems

Feasibility


Ch 9 -15


Consonance

Consistency

Feasibility

Advantage



Ch 9 -16


Creation or maintenance of competitive advantage

Advantage


Ch 9 -17


1. Increase in environment’s complexity

2. Difficulty predicting future with accuracy

3. Increasing number of variables

Difficulties in Strategy Evaluation


Ch 9 -18


4. Rate of obsolescence of plans

5. Domestic and global events

6. Decreasing time span for planning certainty

Difficulties in Strategy Evaluation


Ch 9 -19


Initiate managerial questioning of expectations and assumptions

Trigger a review of objectives & values Stimulate creativity in generating

alternatives and formulating criteria for evaluation

Strategy Evaluation Should –


Ch 9 -20


Develop revised IFE Matrix

Develop revised EFE Matrix

Review of Underlying Bases of Strategy –


Ch 9 -21


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 –


Ch 9 -22


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

Review Effectiveness of Strategy –


Ch 9 -23


Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses?

Monitor Strengths & Weaknesses; Opportunities & Threats


Ch 9 -24


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


Ch 9 -25


Ch 9 -26


Ch 9 -27


Compare expected to actual results Investigate deviations from plan Evaluate individual performance Examine progress toward stated objectives

Measuring Organizational Performance


Ch 9 -28


Financial Ratios Compare performance over different periods Compare performance to competitors’ Compare performance to industry averages

Quantitative Criteria for Strategy Evaluation


Ch 9 -29


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


Ch 9 -30


Human Resource Factors Marketing Finance/Accounting R&D Management Information Systems

Qualitative Evaluation of Strategy


Ch 9 -31


Ch 9 -32


Evaluate strategies from 4 perspectives:

1. Financial performance

2. Customer knowledge

3. Internal business processes

4. Learning & growth

Balanced Scorecard


Ch 9 -33


Ch 9 -34


Economical Meaningful Generates useful information Timely information Provides accurate picture of events

Characteristics of an Effective Evaluation System


Ch 9 -35


Alternative plans that can be put into effect if

certain key events do not occur as expected

Contingency Planning


Ch 9 -36


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


Ch 9 -37


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


Ch 9 -38

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

David Sm 13 PPT - 09

Documents

Transcript of David Sm 13 PPT - 09