CHAPTER 13

STRATEGY EVALUATION AND CONTROL: BUSINESS AND FUNCTIONAL LEVEL

Business level strategy evaluation

-objective in business level: gain competitive advantage
- evaluated based on how effective and efficient it is implementing the : competitive and cooperative strategy
- or revisit the basis in formulating the strategy including various tools used: SWOT analysis, BGC growth share matrix

The evaluation report must include:

 Present strategic position of a company in an industry
 Probable position of competitors in an industry
 Gap analysis between opportunities and competencies
 Possible market needs served by the company and the competitors
 Possible actions needed to address any deficiency

Functional level strategy evaluation

- objective in functional level: maximize resource productivity

Approaches on evaluation on functional level strategy

1. Responsibility center approach
Revenue center – measured based on the amount of revenue it contributes to the company, the cost
involves in generating revenue is disregarded
Profit center – realizes revenue through sale of product or delivery of service, also incurs cost and expenses
Cost center – incurs only costs and expenses, does not realize revenue
Investment center – evaluated based on given amount of ROI by company
2. Benchmarking approach
 Tool for evaluating company performance against its best competitors in the industry
 Choose the area, activity, product, or process to be evaluated
 Determine the basis of measurement
 Select industry leaders
 Gather information from reliable resources
 Compare the performance of the company with competitors
 Determine the gap
 Develop a program to close the performance gap
 Implement the program
3. Management audit approach
 Conducted by internal audit staff of a company under supervision of BOD’s audit committee
Financial audit – whether FS are fairly presented
Operation audit – effectiveness and efficiency of operational activities
HR audit – to determine shortcomings and lapses in implementation of HR functions and take remedial
actions
Marketing audit – evaluates the external and internal marketing environments and the appropriateness
of current marketing strategy