ARBA MINCH UNIVERSITY

SA
WLA
COLLAGE OF COMERCE AND BUSINESS ADMINSTRATION

DEPARTMENT OF; MANAGEMENT

COURCE TITLE; STRATAGIC MANAGEMENT

GROUP ASSIGNMENT

GROUP MEMBERS NAME: ID:

1. Abraham Arsibo 002/2012

2. Legese Tusse 012/2012
3. Bahiru Erdaw ___________
4. Dawit Egedo ___________
5. Belayneh Sapena 083/2012
6. Abaynesh Murte 001/2012
7. Wudeinsh Yaykob ___________

Submition Date: Jan; 13/2016 E.C

Submitted to: - Gedeno G.

Sawla Ethiopia
Table of Contents
1. Show the diagrammatic representation of strategic management process and discus it clearly.....1
1.1. Strategic management process has following four steps:.......................................................1
1.1.1. Environmental Scanning-...............................................................................................1
1.1.2. Strategy Formulation-....................................................................................................1
1.1.3. Strategy Implementation................................................................................................1
1.1.4. Strategy Evaluation-.......................................................................................................1
2.1. The process of Strategy Evaluation consists of following steps-...........................................3
2.1.1. Fixing benchmark of performance.................................................................................3
2.1.2. Measurement of performance........................................................................................3
2.1.3. Analysing Variance........................................................................................................3
2.1.4. Taking Corrective Action...............................................................................................3
3. Why Strategy evaluation is becoming difficult?............................................................................4
4. What are the criteria that could be used to evaluate a strategy?.....................................................4
4.1. The six evaluation criteria explained.....................................................................................5
4.1.1. Relevance:-....................................................................................................................5
4.1.2. Coherence:.....................................................................................................................5
4.1.3. Effectiveness:.................................................................................................................5
4.1.4. Efficiency:.....................................................................................................................5
4.1.5. Impact:...........................................................................................................................5
4.1.6. Sustainability:................................................................................................................5
5. What is the Importance of Strategic Evaluation?...........................................................................5
5.1. Deciding the Destination........................................................................................................5
5.2. Benchmarking your Performance..........................................................................................6
5.3. Succeeding or Falling Short?.................................................................................................6
5.4. Steering a Better Course........................................................................................................6
6. Who are the Participants in Strategic Evaluation and Control?......................................................6
6.1. Role of Board of Directors.....................................................................................................7
6.2. Role of Chief Executive.........................................................................................................7
6.3. Role of Other Managers.........................................................................................................7
6.4. Role of Organisational Systems in Evaluation.......................................................................8
6.4.1. Information System........................................................................................................8
6.4.2. Planning System............................................................................................................8
6.4.3. Motivation System.........................................................................................................8
6.4.4. Development System.....................................................................................................9
i
7. What are the Characteristics of an Effective Evaluation System?..................................................9
8. Discus the stages of strategic control?.........................................................................................10
8.1. The Strategic Control Process..............................................................................................10
8.2. Determining What to Control..............................................................................................10
8.2.1. Setting Standards.........................................................................................................11
8.2.2. Measuring Performance...............................................................................................11
8.2.3. Comparing Performance..............................................................................................11
8.2.4. Analysing Deviations...................................................................................................11
8.2.5. Corrective Action.........................................................................................................11
9. What are the Barriers in Strategic Evaluation and Control?.........................................................11
9.1. Limits of control..............................................................................................................12
9.2. Difficulties in measurement.............................................................................................12
9.3. Resistance........................................................................................................................12
9.4. Short-termism..................................................................................................................12
9.5. Relying on efficiency Vs effectiveness............................................................................12
10. Discus the Strategic Evaluation and Control Process...............................................................12
10.1. Determine What to Review..............................................................................................13
10.2. Identify Aspects to be measured......................................................................................13
10.3. Set the Standard to be gauged..........................................................................................13
10.4. Assess the Performance and Compare the Performance..................................................14
10.5. Identify Gaps and Take Corrective Action.......................................................................14
References...........................................................................................................................................14

ii
1. Show the diagrammatic representation of strategic management process
and discus it clearly

The strategic management process means defining the organization’s strategy. It is also
defined as the process by which managers make a choice of a set of strategies for the
organization that will enable it to achieve better performance.

Strategic management is a continuous process that appraises the business and industries in
which the organization is involved; appraises its competitors; and fixes goals to meet the
entire present and future competitor’s and then reassesses each strategy.

1.1. Strategic management process has following four steps:

1.1.1. Environmental Scanning- Environmental scanning refers to a process of

collecting, scrutinizing and providing information for strategic purposes.

It helps in analysing the internal and external factors influencing an organization.

After executing the environmental analysis process, management should evaluate it on a

continuous basis and strive to improve it.

1.1.2. Strategy Formulation- Strategy formulation is the process of deciding best course
of action for accomplishing organizational objectives and hence achieving
organizational purpose.

After conducting environment scanning, managers formulate corporate, business and

functional strategies.

1.1.3. Strategy Implementation- Strategy implementation implies making the strategy

work as intended or putting the organization’s chosen strategy into action.

Strategy implementation includes designing the organization’s structure, distributing

resources, developing decision making process, and managing human resources.

1.1.4. Strategy Evaluation- Strategy evaluation is the final step of strategy management
process.

The key strategy evaluation activities are: appraising internal and external factors that are
the root of present strategies, measuring performance, and taking remedial/corrective actions.

1
Evaluation makes sure that the organizational strategy as well as its implementation meets the
organizational objectives.

These components are steps that are carried, in chronological order, when creating a new
strategic management plan.

Present businesses that have already created a strategic management plan will revert to these
steps as per the situation’s requirement, so as to make essential changes.

Components of Strategic Management Process

Strategic management is an on-going process. Therefore, it must be realized that each

component interacts with the other components and that this interaction often happens in
chorus.

2. Strategy evaluation and control includes three basic activities, discus those
activities?

Strategy Evaluation is as significant as strategy formulation because it throws light on the

efficiency and effectiveness of the comprehensive plans in achieving the desired results.

The managers can also assess the appropriateness of the current strategy in todays dynamic
world with socio-economic, political and technological innovations. Strategic Evaluation is
the final phase of strategic management.

The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc., through control of performance.

Strategic Evaluation is significant because of various factors such as - developing inputs for
new strategic planning, the urge for feedback, appraisal and reward, development of the
strategic management process, judging the validity of strategic choice etc.

2
2.1. The process of Strategy Evaluation consists of following steps-

2.1.1. Fixing benchmark of performance:- While fixing the benchmark, strategists

encounter questions such as - what benchmarks to set, how to set them and how to
express them.

In order to determine the benchmark performance to be set, it is essential to discover

the special requirements for performing the main task.

The performance indicator that best identify and express the special requirements
might then be determined to be used for evaluation.

2.1.2. Measurement of performance - The standard performance is a bench mark with

which the actual performance is to be compared. The reporting and communication
system help in measuring the performance.

If appropriate means are available for measuring the performance and if the standards
are set in the right manner, strategy evaluation becomes easier. But various factors
such as manager’s contribution are difficult to measure.

2.1.3. Analysing Variance - While measuring the actual performance and comparing it
with standard performance there may be variances which must be analyzed.

The strategists must mention the degree of tolerance limits between which the
variance between actual and standard performance may be accepted.

The positive deviation indicates a better performance but it is quite unusual exceeding
the target always. The negative deviation is an issue of concern because it indicates a
shortfall in performance.

2.1.4. Taking Corrective Action - Once the deviation in performance is identified, it is

essential to plan for a corrective action.

If the performance is consistently less than the desired performance, the strategists
must carry a detailed analysis of the factors responsible for such performance.

If the strategists discover that the organizational potential does not match with the
performance requirements, then the standards must be lowered.

3
3. Why Strategy evaluation is becoming difficult?

Strategy evaluation is becoming increasingly difficult with the passage of time, for many
reasons. Domestic and world economies were more stable in years past, product life cycles
were longer, product development cycles were longer, technological advancement was
slower, and change occurred less frequently, there were fewer competitors, foreign
companies were generally weak, and there were more regulated industries. Other reasons why
strategy evaluation is more difficult today include the following trends:

1. A dramatic increase in the environment’s complexity

2. The increasing difficulty of predicting the future with accuracy
3. The increasing number of variables
4. The rapid rate of obsolescence of even the best plans
5. The increase in the number of both domestic and world events affecting organizations
6. The decreasing time span for which planning can be done with any degree of certainty

4. What are the criteria that could be used to evaluate a strategy?

It is important that the definitions of the criteria are understood within a broader context, and
read in conjunction with other principles and guidance on how to conduct evaluations in ways
that will be useful and of high quality.

Principle One

The criteria should be applied thoughtfully to support high quality, useful evaluation. They
should be contextualized understood in the context of the individual evaluation, the
intervention being evaluated, and the stakeholders involved. The evaluation questions (what
you are trying to find out) and what you intend to do with the answers, should inform how the
criteria are specifically interpreted and analysed.

Principle Two

The use of the criteria depends on the purpose of the evaluation. The criteria should not be
applied mechanistically.

Instead, they should be covered according to the needs of the relevant stakeholders and the
context of the evaluation. More or less time and resources may be devoted to the evaluative
analysis for each criterion depending on the evaluation purpose. Data availability, resource

4
constraints, timing, and methodological considerations may also influence how (and whether)
a particular criterion is covered.

4.1. The six evaluation criteria explained

4.1.1. Relevance:- The extent to which the intervention objectives and design respond to
beneficiaries , global, country, and partner/institution needs, policies, and priorities,
and continue to do so if circumstances change.
4.1.2. Coherence: - The compatibility of the intervention with other interventions in a
country, sector or institution.
4.1.3. Effectiveness: - The extent to which the intervention achieved, or is expected to

achieve, its objectives, and its results, including any differential results across groups.

4.1.4. Efficiency: - The extent to which the intervention delivers, or is likely to deliver,
results in an economic and timely way.
4.1.5. Impact: - The extent to which the intervention has generated or is expected to
generate significant positive or negative, intended or unintended, higher-level effects.
4.1.6. Sustainability: - The extent to which the net benefits of the intervention continue, or
are likely to continue.

5. What is the Importance of Strategic Evaluation?

Strategic evaluation is an important tool for assessing how well your business has
performed, relative to its goals. It's an important way to reflect on achievements and
shortcomings, and is also useful for re-examining the goals themselves, which may have
been set at a different time, under different circumstances.

5.1. Deciding the Destination

Although the actual evaluation step takes place at the end of the process, after goals have
been reached or not, the process of strategic evaluation starts at the beginning of the process,
with the step of setting the goals themselves. Goals are important because they give your
company direction, and a way to measure success.

Effective goals should be tangible steps that move your company toward achieving its longer
term mission and vision, such as improving the environment, alleviating suffering or simply
making money. Unlike your company's mission and vision, its goals should be specific and
quantifiable, such as increasing sales by a certain percentage during a specific period of time.

5
5.2. Benchmarking your Performance

Your goals provide you with criteria and benchmarks, and the process of measuring your
performance involves taking a step back and assessing how effectively your company has
achieved its goals. Measuring performance is an important step in the strategic evaluation
process because it provides a snapshot of the outcomes you have achieved relative to the
milestones you created. When you've set clear and quantifiable goals at the outset, it’s easy to
see and measure how well you have performed relative to these objectives.

5.3. Succeeding or Falling Short?

Although goals are milestones, the process of reaching them isn't an all or nothing endeavour.
In addition to simply measuring your outcomes relative to your goals, it's important as part of
the strategic evaluation process to analyse how close you've come. It's unlikely that you will
achieve a present goal precisely and if you're one present short you've clearly been more
successful than if you'd only made it half-way.

Similarly, you may exceed your goal by just a fraction of a present, or you can succeed so
wildly that your goal seems irrelevant. It's important to analyse variance both quantitatively
and qualitatively. Calculate the degree of variance, and also look at why you've exceeded
your goals or have fallen short.

5.4. Steering a Better Course

If your business falls far short of meeting its goals, the strategic evaluation process is an
opportunity to reflect on why this has occurred and to then take corrective action. If your
company has blown its goals out of the water, the strategic evaluation process is an important
opportunity for you to create a new set of goals that will reflect your progress and challenge
you in new ways.

6. Who are the Participants in Strategic Evaluation and Control?

Since strategic evaluation and control is a part of strategic management process, all those
persons who participate in strategy formulation and implementation should also participate in
strategic evaluation except those who act in advisory capacity. Board of directors, chief
executive, other managers, corporate, planning staff, and consultants participate in
strategic management process.

6
6.1. Role of Board of Directors: - Board of directors of a company, being the trustee
of share- holders’ property, is directly answerable to-4hem. Thus, board should be
directly involved in strategic evaluation and control However, since board does not
participate in day-to-day management process; it evaluates the performance of the
company concerned after certain intervals in its meetings. Therefore, the role of board of
directors is limited to evaluating and controlling those aspects of the organisational
functioning which have long-term implications. Such aspects are overall financial
performance, overall social concern and performance, and certain key management
practices having significant impact on organization’s long-term survival Generally, the
evaluation and control information used by the board is concise but comprehensive as
compared to control reports used at lower levels.
6.2. Role of Chief Executive: - The chief executive of an organisation is responsible
for overall performance. Therefore, his role is quite crucial in strategic evaluation- and
control. Though he is not involved in evaluation of routine performance which is left to
other managers, he focalizes his attention on critical variations between planned and
actual. Generally, he applies the principle of management by exception which is a system
of identification and communication of that signal which is critical and needs the
attention of a high-level manager. Depending on the size of the organisation, the chief
executive’s role varies in the context of evaluation and control on day-to-day basis. In a
smaller organisation, the chief executive may, perhaps, be interested in daily production
and cost figures, but in a large organisation, these become unimportant for him from his
control point of view. Thus, in a large organisation, the chief executive is more involved
on controlling through return on investment, value added, and other indicators which
measure performance of overall organisation.
6.3. Role of Other Managers:- Besides board of directors and chief executive, other
managers are also involved in strategic evaluation and control. These are finance
managers, SBU managers, and middle-level managers. Their role in strategic evaluation
and control is as follows:
 Finance managers are primarily concerned with finding out deviations between planned
and actual performance expressed in monetary terms. These are done through financial
analysis, budgeting, etc.
 SBU managers are responsible for overall evaluation and control of their respective
strategic business units. In fact, they are the chief executives of their own SBUs except
that they report to the chief executive of the organisation from whom they seek directions.

7
 Middle-level managers, mostly functional managers and sub- unit managers are
responsible for evaluation and control of their respective functions and sub-units. These
managers are more concerned with day-to-day operational control and prepare reports to
be used by higher-level managers. For example a production manager is more interested
in controlling production volume, production cost, product quality, etc.
6.4. Role of Organisational Systems in Evaluation: - Strategic evaluation
operates in the context of various organisational systems. An organisation develops
various systems which help in integrating various parts of the organization. The major
organisational systems are: information system, planning system, motivation system,
appraisal system, and development system. All these systems play their role in strategic
evaluation and control.
6.4.1. Information System: - Evaluation and control action is guided by adequate
information from the beginning to the end. Management information and management
control systems are closely interrelated; the information system is designed on the
basis of control system. Every manager in the organisation must have adequate
information about his performance, standards, and how he is contributing to the
achievement of organisational objectives. There must be a system of information
tailored to the specific management needs at every level, both in terms of adequacy
and timeliness.
6.4.2. Planning System:- Planning is the basis for control in the sense that it provides the
entire spectrum on which control function is based In fact, these two terms are often
used together in the designation of the department which carries production planning,
scheduling and routing. It emphasizes that there is a plan which directs the behaviour
and activities in the organisation. Control measures these behaviour and activities and
suggests measures to remove deviation, if any. Control further implies the existence
of certain goals and standards. These goals are provided by the planning process.
Control is the result of particular plans, goals, or policies. Thus, planning offers and
affects control. Not only that, the planning is also affected by control in the sense that
many of the information provided by control is used for planning and preplanning.
Thus, there is a reciprocal relation- ship between planning and control.
6.4.3. Motivation System: - Motivation system is not only related to evaluation and control
system but to the entire organisational processes. Lack of motivation on the part of
managers is a significant barrier in the process of evaluation and control. Since the
basic objective of evaluation and control is to ensure that organisational objectives are
achieved, “motivation plays a central role in this process. It energizes managers and

8
 other employees in the organisation to perform better which is the key for
organisational success.
6.4.4. Development System:- Development system is concerned with developing personnel
to perform better in their present positions and likely future positions that they are
expected to occupy. Thus, development system aims at increasing organisational
capability through people to achieve better results. These results, then, become the
basic for evaluation and control.

7. What are the Characteristics of an Effective Evaluation System?

The strategy-evaluation process must exhibit several characteristics to be effective. First,

strategy-evaluation activities must be economical; too much information can be just as bad as
too little information, and too many controls can do more harm than good. Strategy-
evaluation activities also should be meaningful; they should specifically relate to a firm’s
objectives. They should provide managers with useful information about tasks over which
they have control and influence. Strategy-evaluation activities should provide timely
information; on occasion and in some areas, managers may need information on a daily or
even continuous basis.

Strategic analysts have laid down certain basic requirements which evaluation should comply
with to be effective.

1. Strategy evaluation process or measures should be meaningful. These should specifically

relate to the objectives/targets and the plan. There should be clear focus and no
ambiguity.
2. Strategy evaluation and control process should be economical. This means that the
process should not be made unnecessarily elaborate and incurs too much cost on
evaluation itself.
3. The evaluation process should conform to a proper time dimension for control and
information retrieval or dissemination. Time dimension of control should coincide with
the time span of the activity or the implementation phase. Also, information on
developments or feedback should be timely to make evaluation and control more
appropriate.
4. Strategy evaluation system should give a true picture of what is actually happening. The
objective of evaluation is not fault finding. Sometimes, performance may be
overshadowed by external factors or the environment. For example, during a severe

9
 slump in economic/business activity, productivity and profitability may decline in spite of
best efforts by the managers to implement strategy.
5. Strategy evaluation process should not dominate or curb decisions; it should promote
mutual understanding, trust and common cause. All functional and operational areas
should cooperate with each other in evaluating and controlling strategies. Strategy
evaluation process should be simple and not too complex or restrictive.

8. Discus the stages of strategic control?

Strategic control is a method of managing the execution of a strategic plan. It’s considered
unique in the management process, as it can handle the unknown and ambiguous while
tracking a strategy’s implementation and the subsequent results. In other words, strategic
control is a way to find different methods of strategy implementation by adapting to changing
external and internal factors to achieve strategic goals.

A strategy is usually implemented over a significant period of time during which two major
questions are answered:

 Is strategy implementation taking place as planned?

 Taking the observed results into consideration, does the strategy require changes or
adjustments?

The strategic control definition shows us that it’s an evaluation exercise focused on achieving
the strategic goals set by an organization. The process is crucial in bridging gaps and adapting
to changes during the implementation period.

8.1. The Strategic Control Process

Every technique of strategic evaluation follows the same method. Here are the six steps
involved in the strategic control process:

8.2. Determining What to Control

Prioritize evaluation of elements that relate directly with the mission and vision of the
organization and which can affect the organization’s goals.

10
8.2.1. Setting Standards

Past, present and future actions must be evaluated. Setting qualitative or quantitative control
standards help in determining how managers can evaluate progress and measure goals.

8.2.2. Measuring Performance

Measuring, addressing and reviewing performance on a monthly or quarterly basis can help
determine a strategy’s progress and ensure that standards are being met.

8.2.3. Comparing Performance

Performance comparison is done to determine if an organization is falling short of the set

benchmark and if these gaps between target and actuals are normal for that industry.

8.2.4. Analysing Deviations

If there are deviations, managers have to analyse performance standards and determine why
performance was below par.

8.2.5. Corrective Action

If a deviation is due to internal factors such as resource shortage, then managers can act to
sort them out. But if it’s caused by external factors that are beyond one’s control, then
incorrect actions can worsen the outcome.

Traditional control concepts have to be replaced by the strategic control process, as it

recognizes the unique needs of long-term strategies.

9. What are the Barriers in Strategic Evaluation and Control?

Strategic evaluation and control can be defined as the process of determining the
effectiveness of a given strategy in achieving the organizational objectives and taking
corrective action wherever required. Actually, it is a system of monitoring, supervision, and
follow-up. The fundamental strategy evaluation and control activities are: reviewing internal
and external factors that are the bases for current strategies, measuring performance, and
taking corrective actions.

There are some reasons or barriers for which strategic evaluation and control (SEC) system
fails. These are as follows:

11
9.1. Limits of control: - It is never an easy task for ‘strategists to decide the limits of
control. Too much control may damage the ability of managers; on the other hand, too
less control may make the strategic evaluation process ineffective.
9.2. Difficulties in measurement: - The process of strategic evaluation is fraught with the
danger of difficulties in measurement. The control system may measure element which is
not intended to be evaluated.
9.3. Resistance: The evaluation process involves controlling the behaviour of individuals.
It is likely to be resisted by managers.
9.4. Short-termism: - Managers often tend to measure the immediate results. As a result,
the extended effect of strategy on performance is ignored.
9.5. Relying on efficiency Vs effectiveness: - Efficiency is “doing things right” and
effectiveness is “doing the right thing”. There is often a genuine confusion among
managers as to what constitutes effective performance.

10.Discus the Strategic Evaluation and Control Process.

Strategic evaluation and control is the process of determining the effectiveness of a given
strategy in achieving the organizational objectives and taking corrective actions whenever
required. Control can be exercised through formulation of contingency strategies and a crisis
management team.

Strategy evaluation and control are necessary for all sizes and kinds of organizations.

12
Figure: 2. the strategy evaluation process involves the steps

10.1. Determine What to Review

The first step in strategy evaluation is to determine what to review in the strategic
management process. This means that the top managers and operational managers need to
determine whether the strategy formulation or strategy implementation needs to be reviewed.
This can be done by reviewing the internal audit and external audit of the organisation. Such
organisational audits will show whether the organisation needs to review the goals or
objectives or the implementation processes. If this is not done accordingly, the organisation
may be reviewing the areas least related with the underperformance of the organisational unit
or division.

10.2. Identify Aspects to be measured

After having identified the areas to be reviewed, the managers would know what aspects to
focus on in the review process. For example, the major area of concern is the financial or
marketing functional strategy, which poses an obstacle to the organisational plans and
implementation. This can be related to the functional policies and processes that need to be
revised accordingly.

10.3. Set the Standard to be gauged

In setting the standards to be assessed, the organisation can use the industry's standards to
benchmark its standards or use the long-term set targets. This means the organisation needs to
know how its competitors are doing and to what extent the benchmark is achievable or
comparable. For example, there is no point comparing the non-computerised banking service
provider with the automated computerised banking provider.

13
10.4. Assess the Performance and Compare the Performance

Once the standards have been set, the organisation can assess the performance achieved and
compare it with the benchmark selected.

10.5. Identify Gaps and Take Corrective Action

As soon as the performance assessment has been completed and compared with the set
standards, the organisation will identify the gaps. The organisation needs to review why these
gaps occurred and how they could be rectified. Then, alternative corrective actions are
analysed and selected to rectify the gaps. This aspect is not easy and may take some time
before the corrective measures can be done. The corrective action to be taken must be
identified precisely so that it will bridge the gaps identified earlier.

References

Hitt, M. A., Ireland, D. R., & Hoskisson, R. E. (2019). Strategic Management: Concepts and
Cases: Competitiveness and Globalization (MindTap Course List) (13th ed.). Cengage
Learning.

Hill, C. W. L., & Jones, G. R. (2011). Essentials of Strategic Management (Available Titles
CourseMate) (3rd ed.). Cengage Learning.

Mastering Strategic Management. (2016, January 18). Open Textbooks for Hong Kong.

14