Strategy Review, Evaluation &

Control

Systematic Review, Evaluation & Control –

– Strategies become obsolete

– Internal environments are dynamic
– External environments are dynamic

Ch 9-1
Fred R. David
Prentice Hall
 Strategy Evaluation

• Strategy evaluation is vital to the organization’s

well-being

• Alert management to potential or actual

problems in a timely fashion

• Erroneous strategic decisions can have severe

negative impact on organizations
Ch 9-2
Fred R. David
Prentice Hall
 Strategy Evaluation

3 Basic Activities –

1. Examining the underlying bases of a firms’

strategy
2. Comparing expected to actual results
3. Corrective actions to ensure performance
conforms to plans

Ch 9-3
Fred R. David
Prentice Hall
 Strategy Evaluation

Strategy evaluation –

– Complex and sensitive undertaking

– Overemphasis can be costly and

counterproductive

Ch 9-4
Fred R. David
Prentice Hall
 Strategy Evaluation

In many organizations, evaluation is an

appraisal of performance –

• Have assets increased?

• Increase in profitability?
• Increase in sales?
• Increase in productivity?
• Profit margins, ROI and EPS ratios increased?

Ch 9-5
Fred R. David
Prentice Hall
 Strategy Evaluation

Four Criteria (Richard Rummelt):

• Consistency
• Consonance
• Feasibility
• Advantage

Ch 9-6
Fred R. David
Prentice Hall
 Rummelt’s Criteria

Consistency

– Strategy should not present inconsistent

goals and policies.

• Conflict and interdepartmental bickering

symptomatic of managerial disorder and strategic
inconsistency

Ch 9-7
Fred R. David
Prentice Hall
 Rummelt’s Criteria

Consonance

– Need for strategies to examine sets of

trends

• Adaptive response to external environment

• Trends are results of interactions among other
trends

Ch 9-8
Fred R. David
Prentice Hall
 Rummelt’s Criteria

Feasibility

– Neither overtax resources or create

unsolvable subproblems

• Organizations must demonstrate the abilities,

competencies, skills and talents to carry out a
given strategy

Ch 9-9
Fred R. David
Prentice Hall
 Rummelt’s Criteria

Advantage

– Creation or maintenance of competitive

advantage

• Superiority in resources, skills, or position

Ch 9-10
Fred R. David
Prentice Hall
 Strategy Evaluation

Difficulty in strategy evaluation –

1. Increase in environment’s complexity

2. Difficulty predicting future with accuracy
3. Increasing number of variables

Ch 9-11
Fred R. David
Prentice Hall
 Strategy Evaluation

Difficulty in strategy evaluation –

4. Rate of obsolescence of plans

5. Domestic and global events
6. Decreasing time span for planning
certainty
Ch 9-12
Fred R. David
Prentice Hall
 Process of Strategy Evaluation

Strategy evaluation should –

– Initiative managerial questioning

– Trigger review of objectives and
values
– Stimulate creativity in generating
alternatives

Ch 9-13
Fred R. David
Prentice Hall