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Chapter-6: Strategy Evaluation and Control
Chapter-6: Strategy Evaluation and Control
Chapter-6: Strategy Evaluation and Control
STRATEGY EVALUATION
AND CONTROL
Introduction
1) Consistency
2) Consonance=fit or harmony
3) Feasibility
4) Advantage
Consistency
A strategy should not present inconsistent
goals and policies
• If managerial problems continue despite changes in
personnel and are issue based, then strategies may be
inconsistent.
Differences? Yes
NO
III.
II. Measure Firm Performance Take
Corrective
Yes Actions
Differences?
NO
22
I. Review Bases of Strategy
23
I. Review Bases of Strategy
24
II. Measure Performance
25
II. Measure Performance
Quantitative Analysis
Return on investment/ROI
Return on equity/ROE
Profit margin/PM
Market share
Debt to equity
Earnings per share/EPS
Sales growth
Asset growth
26
II. Measure Performance
Qualitative Analysis
Is the strategy internally consistent?
Is the strategy consistent with the environment?
Is the strategy appropriate in view of available
resources?
Does the strategy involve an acceptable degree
of risk?
Does the strategy have an appropriate time
framework?
Is the strategy workable?
27
III. Take Corrective Action
28
Strategy-Evaluation Assessment Matrix
Have major Have major
changes changes
occurred in occurred in Has the firm
the firm’s the firm’s progressed
internal external satisfactorily toward
strategic strategic achieving its stated
position? position? objectives? Result
No No No Corrective actions
Yes Yes Yes Corrective actions
Yes Yes No Corrective actions
Yes No Yes Corrective actions
Yes No No Corrective actions
No Yes Yes Corrective actions
No Yes No Corrective actions
No No Yes Continue course29
Corrective Actions Possibly Needed to Correct
Unfavorable Variances
1. Alter the firm’s structure.
2. Replace one or more key individuals.
3. Divest a division.
4. Alter the firm’s vision or mission.
5. Revise objectives.
6. Alter strategies.
7. Devise new policies.
8. Install new performance incentives.
9. Raise capital with stock or debt.
10. Add or terminate salespersons, employees, or managers.
11. Allocate resources differently.
12. Outsource (or rein in) business functions.
Strategy Review
Characteristics of an effective system
31
Strategy Review
33
Strategy Review
Contingency Planning
34
Strategy Review
Contingency Planning
06.09.21 37
The End of the
Course from my
side!
I Thank You All!