David sm13 PPT 09

Chapter 9
Strategy Review, Evaluation, and Control
Strategic Management:
Concepts & Cases
13th Edition
Fred David
Copyright 2011 Pearson
Ch 9 -1
Ch 9 -2
Strategy Evaluation
Organizations are most vulnerable when

they are at the peak of their success.
R. T. Lenz
Ch 9 -3
Strategy Review, Evaluation,

and Control
Strategies become obsolete

Internal environments are dynamic
External environments are dynamic
Ch 9 -4

and Control
Strategy Evaluation
Vital to the organizations well-being

Alert management to potential/actual problems
in a timely fashion
Erroneous strategic decisions can have severe
negative impact on organizations
Ch 9 -5

and Control
Three Basic Activities
1.
2.
3.
Examine the underlying bases of a firms

strategy
Compare expected to actual results
Take corrective actions to ensure that
performance conforms to plans
Ch 9 -6

and Control
Strategy Evaluation
Complex & sensitive undertaking
Overemphasis can be expensive &

counterproductive
Ch 9 -7

and Control
Appraisal of Strategic Performance
Increase in assets?
Increase in profitability?
Increase in sales?
Increase in productivity?
Increases in profit margins, ROI, and EPS
ratios?
Ch 9 -8

and Control
Consistency
Rumelts
4 Criteria
Consonance
Feasibility
Advantage
Ch 9 -9

and Control
Consistency
Strategy should not present inconsistent

goals and policies
Ch 9 -10

and Control
Consistency
Rumelts
4 Criteria
Consonance
Feasibility
Advantage
Ch 9 -11

and Control
Consonance
Need for strategists to examine sets of

trends, as well as individual trends
Ch 9 -12

and Control
Consistency
Rumelts
4 Criteria
Consonance
Feasibility
Advantage
Ch 9 -13

and Control
Feasibility
Neither overtax resources nor create

unsolvable subproblems
Ch 9 -14

and Control
Consistency
Rumelts
4 Criteria
Consonance
Feasibility
Advantage
Ch 9 -15

and Control
Advantage
Creation or maintenance of competitive

advantage
Ch 9 -16

and Control
Difficulties in Strategy Evaluation
1.
2.
3.
Increase in environments complexity

Difficulty predicting future with accuracy
Increasing number of variables
Ch 9 -17

and Control
Difficulties in Strategy Evaluation
4.
5.
6.
Rate of obsolescence of plans

Domestic and global events
Decreasing time span for planning certainty
Ch 9 -18

and Control
Strategy Evaluation Should
Initiate managerial questioning of

expectations and assumptions
Trigger a review of objectives & values
Stimulate creativity in generating
alternatives and formulating criteria for
evaluation
Ch 9 -19

and Control
Review of Underlying Bases of Strategy
Develop revised IFE Matrix
Develop revised EFE Matrix
Ch 9 -20

and Control
Review Effectiveness of Strategy
1.
2.
3.
4.
Competitors reaction to strategy

Competitors change in strategy
Competitors changes in strengths &
weaknesses
Reasons for competitors strategic change
Ch 9 -21

and Control
Review Effectiveness of Strategy
5.
6.
7.
8.
Reasons for competitors successful

strategies
Competitors satisfaction with present
market positions & profitability
Potential for competitor retaliation
Potential for cooperation with competitors
Ch 9 -22

and Control
Monitor Strengths & Weaknesses;
Opportunities & Threats
Are strengths still strengths?

Have we added additional strengths?
Are weaknesses still weaknesses?
Have we developed other weaknesses?
Ch 9 -23

and Control
Monitor Strengths & Weaknesses;
Opportunities & Threats
Are opportunities still opportunities?

Other opportunities develop?
Are threats still threats?
Other threats emerged?
Are we vulnerable to hostile takeover?
Ch 9 -24
Ch 9 -25
Ch 9 -26

and Control
Measuring Organizational Performance
Compare expected to actual results

Investigate deviations from plan
Evaluate individual performance
Examine progress toward stated objectives
Ch 9 -27

and Control
Quantitative Criteria for Strategy Evaluation
Financial Ratios
Compare performance over different periods

Compare performance to competitors
Compare performance to industry averages
Ch 9 -28

Key Financial Ratios
Return on
investment (ROI)
Return on equity
(ROE)
Profit margin
Market share
Debt to equity
Earnings per
share (EPS)
Sales growth
Asset growth
Ch 9 -29

and Control
Qualitative Evaluation of Strategy
Human Resource Factors

Marketing
Finance/Accounting
R&D
Management Information Systems
Ch 9 -30
Ch 9 -31

and Control
Balanced Scorecard
Evaluate strategies from 4 perspectives:

1. Financial performance
2. Customer knowledge
3. Internal business processes
4. Learning & growth
Ch 9 -32
Ch 9 -33

and Control
Characteristics of an Effective Evaluation System
Economical
Meaningful
Generates useful information
Timely information
Provides accurate picture of events
Ch 9 -34

and Control
Contingency Planning
Alternative plans that can be put into effect if
certain key events do not occur as expected
Ch 9 -35

Auditing
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
Ch 9 -36

21st Century Challenges in
Strategic Management
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?
Ch 9 -37
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.
Ch 9 -38

David sm13 PPT 09

Uploaded by

Copyright:

Available Formats

David sm13 PPT 09

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

David sm13 PPT 09

Uploaded by

Copyright:

Available Formats

Chapter 9

Strategy Review, Evaluation, and Control

Copyright 2011 Pearson

Copyright 2011 Pearson

Organizations are most vulnerable when

Copyright 2011 Pearson

Strategy Review, Evaluation,

Strategies become obsolete

Copyright 2011 Pearson

Strategy Review, Evaluation,

Vital to the organizations well-being

Copyright 2011 Pearson

Strategy Review, Evaluation,

Examine the underlying bases of a firms

Copyright 2011 Pearson

Strategy Review, Evaluation,

Complex & sensitive undertaking

Overemphasis can be expensive &

Copyright 2011 Pearson

Strategy Review, Evaluation,

Strategy Review, Evaluation,

Strategy Review, Evaluation,

Strategy should not present inconsistent

Copyright 2011 Pearson

Strategy Review, Evaluation,

Strategy Review, Evaluation,

Need for strategists to examine sets of

Copyright 2011 Pearson

Strategy Review, Evaluation,

Strategy Review, Evaluation,

Neither overtax resources nor create

Copyright 2011 Pearson

Strategy Review, Evaluation,

Strategy Review, Evaluation,

Creation or maintenance of competitive

Copyright 2011 Pearson

Strategy Review, Evaluation,

Increase in environments complexity

Copyright 2011 Pearson

Strategy Review, Evaluation,

Rate of obsolescence of plans

Copyright 2011 Pearson

Strategy Review, Evaluation,

Initiate managerial questioning of

Strategy Review, Evaluation,

Develop revised IFE Matrix

Develop revised EFE Matrix

Copyright 2011 Pearson

Strategy Review, Evaluation,

Competitors reaction to strategy

Copyright 2011 Pearson

Strategy Review, Evaluation,

Reasons for competitors successful

Strategy Review, Evaluation,

Are strengths still strengths?

Copyright 2011 Pearson

Strategy Review, Evaluation,

Are opportunities still opportunities?

Copyright 2011 Pearson