Chapter 7.

Strategy Evaluation & Control

1 Dept of strategic management 06/18/2020

 Organizations are most vulnerable when
they are at the peak of their success

-- R.T. Lenz --

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 7.1 Definition of Strategy
Evaluation
Definition:
Strategic evaluation and control could be define as
the process of determining the effectiveness of a
given strategy in achieving the organisational
objectives and taking corrective actions wherever
required.

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 Strategy evaluation
Three basic activities:
(1) Examining the underlying bases of a firm’s
strategy,
(2) Comparing expected results with actual results,
and
(3) Taking corrective actions to ensure that
performance conforms to plans

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 Criteria for strategic evaluation

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 Criteria for strategic evaluation
Consistency Strategy should not present inconsistent
goals & policies

Consonance Need for strategies to examine sets of

trends

Feasibility Neither overtax resources or create

unsolvable sub-problems

Advantage Creation or maintenance of competitive

advantage

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 7.2 The Process of Evaluating
Strategies

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 The Process of Evaluating Strategies
Determine what to top-level and operational managers need to identify the
measure implementation processes and results that will be monitored and
evaluated
Establish of Strategists must establish performance targets, standards and
standards tolenance limits for organizational objectices, strategy and
implementation plans. Standards can pertain to quality, cost and
time
Measure Measuring actual performance may involve measurements in
performance qualitative and quantitative terms and in terms of time and cost.
Managers may accordingly ask for performance reports from
their employees.
Performance Actual performance must be objectively compared against
deviations predetermined standards. Deviations, if any, must be identified.
If the actual oerformance is within the desired tolerance range,
the evaluation is stopped.
Take corrective If an organization’s actual performance falls outsite the desired
actions tolerance range, corrective action must be taken to correct
deviations. This may require resetting of goals or objectives or
revision of plans, policies and standards. Corrective steps must be
taken at the right time to achieve organizational objectives.
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 Example : MTR Foods
1 Determine what to measure: Sales of MTR products in India

Establish standards: Target to generate sales worth Rs. 1000 crore in 2015
2

Measure performance: Sales in 2015 were RS. 700 crores

3

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 Example : MTR Foods
Performance deviations: Difference of Rs. 300 crore
4
Unfavourable economic environment, inflation in food prices, lowers than
expected new consumer acquisitions, lack of presence other than offline

5 Take corrective actions:

- To remain relevant and be consumers’s preferred choice, MTR is lauching
innovations and rebranding its products.
- considering the dynamic industry environment and changing consumer
behavior, MTR has introduced 44 innovations in three years, with plans to
introduce more in line with its ongoing strategies.
- Further, many products have become commoditized in the last two years. To
distinguish itself, MTR plans to expand product lines to appeal to different
ethnic groups.
- Marketing: MTR currently runs multiple consumer-related programmes in line
with its belief that it is important for consumers to taste products in the food
business.
- MTR has a reach of 200 000 outlines and is witnessing a 30% increase in sales
from rural areas annually, with 10%-15% of its sales coming from rural areas.
- MTR’s new sales target is Rs 2000 crore by 2020
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