GOVT.

COLLEGE UNIVERSITY LAHORE(GCUL)

B.COM SEMESTER 8(|SECTION B)
STRATEGIC MANAGEMENT (MGT-4201)
SYNOPSES CHAPTER 9“STRATEGY REVIEW, EVALUATION AND CONTROL”

A STRATEGY EVALUATION FRAMEWORK

REVIEWING BASES OF STRATEGY:
 Various external and internal factors can prevent firms from achieving long-term
and annual objectives.
Externally,
Competitor’s actions
Changes in technology
Demographic changes
Governmental actions
Internally,
Ineffective strategies selection
Poor implementation of strategies
Too optimistic objectives
 Review bases of strategy by:
_ developing a revised IFE Matrix (changes in the organizations’ management,
marketing, finance, production R & D & MIS’s strengths & weaknesses)
_ developing a revised EFE Matrix (how effective firm’s strategies have been in
response to key opportunities & threats.)
MEASURING ORGANIZATIONAL PERFORMANCE:
1. this includes comparing expected results to actual results:
_Investigating deviation from plans
_ Evaluating individual performance &
_ Examining progress being made toward attainment of specific goals (both
Long-term & Annual objectives)
2. 2 criteria are used to evaluate strategies:
Quantitative: significant financial ratios e.g.: ROI, ROE, EPS, DEBT/EQUITY
RARIO, PROFIT MARGIN.
Qualitative: e.g. high Absenteeism/turn over ratios, poor production
quality/quantity rates, low employee moral & motivation.
3. Criteria for evaluating strategies should be measurable & easily verifiable.
4. Criteria that predict results are more important than those that reveal what already
has happened. E.g. rather than simply stating that sales declined 20% below the
expected figure in the last quarter, strategist must forecast that sales are likely to
fall short of expectation by 20% in the next quarter.
TAKING CORRECTIVE ACTIONS:
This requires making changes to reposition a firm competitively. E.g.
_ changing an organizational structure
_ replacing key individuals
_ selling a division
_ revising business mission
_ revising business objectives
_ devising new policies
_ issuing stock to raise capital
_ introducing additional sales personnel
_introducing new performance incentives
_revised resource allocation.
Strategy evaluation can lead to changes in strategy formulation, change in strategy
implementation both formulation & implementation changes or no changes at all.
The corrective actions place an organization in a strong competitive position by
capitalizing upon internal strengths & external opportunities and by avoiding, reducing or
mitigating external threats and improving internal weaknesses.

BALANCE SCORE CARD

(AN APPROACH TO STRATEGY EVALUATION)
The balance score card approach evaluates the firms’ strategies from 4 prospectives:
financial performance, customer knowledge, internal business processes, learning &
growth based on key quantitative as well as qualitative measures.
It aims to balance:
_ Long-term & short-term concerns.
_ Financial & non financial concerns
_ Internal & external concerns.
It seeks answer to the following questions:
How well is the firm improving its
_Operational efficiency?
_ Technology & innovation?
_Product Quality?

6 key issues are examined in balanced score cards:

1. customers
2. managers & employees
3. operations & processes
4. Business ethics/ natural environment
5. community & social Responsibility
6. Financial.