Strategic evaluation


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Strategic evaluation

  2. 2. Strategic Evaluation Presented By: Nikhil B Vijayanagara Sri Krishnadevaraya University Bellary
  3. 3. Strategic Management Strategic management is generally considered as the process of formulating, implementing and evaluating strategies for or organisation, business policy is usually considered as an academic field of study, an area of specialisation or specially named course related to strategic management.
  4. 4. Strategic Management Process
  5. 5. Strategic Evaluation Strategic Evaluation is defined as the process of determining the effectiveness of a given strategy in achieving the organizational objectives and taking corrective action wherever required 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. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives
  6. 6. Strategic Evaluation is an significant 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 dynamic world with socio-economic, political and technological innovations. Strategic evaluation is the final phase of Strategic Management.
  7. 7. Nature of Strategic Evaluation  Nature of the strategic evaluation and control process is to test the effectiveness of strategy.  During the strategic management process, the strategists formulate the strategy to achieve a set of objectives and then implement the strategy.  There has to be a way of finding out whether the strategy being implemented will guide the organisation towards its intended objectives. Strategic evaluation and control, therefore, performs the crucial task of keeping the organisation on the right track.  In the absence of such a mechanism, there would be no means for strategists to find out whether or not the strategy is producing the desired effect.
  8. 8. Importance of Strategic Evaluation • Strategic evaluation can help to assess whether the decisions match the intended strategy requirements. • Strategic evaluation, through its process of control, feedback, rewards and review, helps in a successful culmination of the strategic management process. • The process of strategic evaluation provides a considerable amount of information and experience to strategists that can be useful in new strategic planning.
  9. 9. Participants in Strategic Evaluation • Shareholders • Board of Directors • Chief executives • Financial controllers • Company secretaries • External and Internal Auditors • Audit and Executive Committees • Corporate Planning Staff or Department • Middle-level managers
  10. 10. Process of Strategic Evaluation 1) Fixing benchmark of performance 2) Measurement of performance 3) Analyzing Variance 4) Taking Corrective Action
  11. 11. 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 organization can use both quantitative and qualitative criteria for comprehensive assessment of performance.  Quantitative criteria includes determination of net profit, ROI, earning per share, cost of production, rate of employee turnover etc. Among the Qualitative factors are subjective evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc.
  12. 12.  Qualitative criteria includes the factors such as capabilities, core competencies, risk-bearing capacity, strategic clarity, flexibility and workability.
  13. 13. 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.  For measuring the performance, financial statements like - balance sheet, profit and loss account must be prepared on an annual basis.
  14. 14. Analyzing 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.
  15. 15. 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.
  16. 16. Thank You
  17. 17. Any Queries