Strategic Management complete course...

1. JahanUniversity
BachelorofBusinessAdministration
Departmentof BusinessAdministration
Subject: Strategic Management
Lecture# 11th Strategy Monitoring
Lecturer: Hijratullah Tahir
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2. Objectives of the lecture
After completion of this lecture students will be able to know:
1. Strategy-evaluation process, criteria, and methods used.
2. Three activities that comprise strategy evaluation.
3. Balanced Scorecard, published sources of strategy-evaluation information.
4. Six characteristics of an effective strategy-evaluation system.
5. Contingency planning in strategy evaluation, auditing in strategy evaluation.
6. Twenty-first-century challenges in strategic management.
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3. Outline of the lecture
Topic 1 : Discuss the strategy-evaluation process, criteria, and methods used.
Topic 2 : Discuss three activities that comprise strategy evaluation.
Topic 3 : Describe and develop a Balanced Scorecard.
Topic 4 : Identify and describe published sources of strategy-evaluation information.
Topic 5 : Describe six characteristics of an effective strategy-evaluation system.
Topic 6 : Discuss the nature and role of contingency planning in strategy evaluation.
Topic 7 : Explain the role of auditing in strategy evaluation.
Topic 8 : Identify and discuss three twenty-first-century challenges in strategic mgt.
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4. Strategy – Evaluation Process, Criteria, and Methods
• The strategic-management process results in decisions that can
have significant, long-lasting consequences.
• Erroneous strategic decisions can inflict severe penalties
• Strategists, Strategy evaluation is vital to an organization’s well-
being;
• Timely evaluations can alert management to problems or
potential problems before a situation becomes critical.
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5. Strategy – Evaluation Process, Criteria, and Methods
• The strategy-evaluation process includes three basic activities:
1. Examine the underlying bases of a firm’s strategy.
2. Compare expected results with actual results.
3. Take corrective actions to ensure that performance conforms to
plans.
• Adequate and timely feedback is the cornerstone of effective strategy
evaluation.
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6. Strategy Evaluation Process
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• Is necessary for all sizes and kinds of organizations.
• Strategy evaluation should initiate managerial questioning of
expectations and assumptions,
• Review objectives and values, and should stimulate creativity in
generating alternatives and formulating criteria of evaluation.
• Should be performed on a continuing basis, rather than at the end of
specified periods of time or just after problems occur.

7. Observations about Change; Solomon
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• There is a time for everything,
• A time to be born and a time to die,
• A time to plant and a time to uproot,
• A time to kill and a time to heal,
• A time to tear down and a time to build,
• A time to weep and a time to laugh,
• A time to mourn and a time to dance,
• A time to scatter stones and a time to gather them,
• A time to embrace and a time to refrain,
• A time to search and a time to give up,

8. Three Steps Strategy-Evaluation Activities
• Notice that corrective actions are almost always needed except when;
1. External and internal factors have not significantly changed and
2. The firm is progressing satisfactorily toward achieving stated
objectives.
• Three Steps of strategy-Evaluation Activities;
1. Reviewing base of Strategy
2. Measuring Organizational Performance. 3. Taking Corrective actions
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9. 1- Reviewing Base of Strategy
1. Revised EFE Matrix and IFE Matrix.
2. A revised IFE Matrix should focus; organization’s management,
marketing, finance and accounting, production and operations, research
and development (R&D), and management information systems (MIS)
strengths and weaknesses.
3. A revised EFE Matrix should indicate how effective a firm’s strategies
have been in response to key opportunities and threats.
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10. 2. Measuring Organizational Performance
• Comparing expected results to actual results;
• Investigating deviations from plans, evaluating individual performance,
and progress toward objectives.
• Criteria should be measurable, easily verifiable and Predictive.
• For example, Next quarter may be 20% below standard unless some
action is taken to counter the trend.
• Really effective control requires accurate forecasting.
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11. 3. Taking Corrective Actions
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• Requires making changes to competitively move a firm for the future.
• Changes; altering an organization’s structure, replacing one or more key
individuals, selling a division, or revising a business mission.
• Other changes; establishing or revising objectives, devising new policies,
issuing stock to raise capital, adding additional salespersons, differently
allocating resources, or developing new performance incentives.
• Not necessary to abandoned existing or formulating new strategies

12. Balance Score Card
• 1990s, by Harvard Business School professors Robert Kaplan and David
Norton, and refined continually through today,
• Its Strategy evaluation and control technique.
• Balance Financial measures with nonfinancial measures.
• Aim, to “balance” shareholder objectives with customer and operational
objectives.
• Consistent with the notions of CIM & TQM
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13. Balance Score Card
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Areas of Objectives Measure or Target Time Expectation Primary
Responsibility
Customers 1,2,3,4
Employees/Managers 1,2,3,4
Operation/Process 1,2,3,4
Community/Social
Responsibility 1,2,3,4
Business Ethics/ Natural
Environment 1,2,3,4
Financials 1,2,3,4

14. Contingency Plan
• Firms strive to be proactive, planning ways to deal with unfavorable and
favorable events before they occur.
• Many firms used it for unfavorable events; this is a mistake, because
both minimizing threats and capitalizing on opportunity.
• Must be used for unforeseen events, such as strikes, boycotts, natural
disasters, arrival of foreign competitors, etc.
• Only high-priority areas require the insurance of contingency plans.
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15. Auditing
• Auditing A frequently used tool in strategy evaluation is the audit.
• Auditors examine the financial statements according to GAAP.
• Independent auditors use a set of standards called (GAAS).
• Public accounting firms often have a consulting arm that provides
strategy-evaluation services.
• Also used International Financial Reporting Standards.
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16. Twenty-First- Century Challenges in Strategic Mgt.
• Three particular challenges or decisions that face all strategists today
are;
1. Deciding whether the process should be more an art or a science,
2. Deciding whether strategies should be visible or hidden from
stakeholders, and
3. Deciding whether the process should be more top-down or
bottom-up in their firm.
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17. 1. The Art or Science Issue
• This book viewed more as a science than an art.
• Firms need to systematically assess their environments analysis,
conduct research, evaluate alternatives, perform analyses, and decide.
• In contrast, Mintzberg’s; suggests that strategic decision making be
based on holistic thinking, intuition, creativity, and imagination.
• Mintzberg and his followers reject strategies that result from objective
analysis, preferring instead subjective imagination.
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18. 1. The Art or Science Issue
• “Strategy scientists” reject strategies that emerge from emotion, hunch,
creativity, and politics.
• Proponents of the artistic view often consider strategic planning
exercises to be time poorly spent.
• The Mintzberg philosophy insists on informality, whereas strategy
scientists (and this text) insist on more formality.
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19. 2. The Visible or hidden Issue
• Whether strategies themselves should be secret or open within firms.
• The Chinese warrior Sun Tzu and military leaders today strive to keep
strategies secret, because war is based on deception.
• But for business organizations, secrecy may not be best.
• Keeping strategies secret from employees and stakeholders at large
could severely cause miss-communication and miss-understanding.
Strategists must decide, about strategy imitation and exploitation risk.
exploiting a firm’s strategies is worth the benefit of improved employee19

20. 2. The Visible or hidden Issue
• Using a firm’s strategies is worth the benefit of improved employee and
stakeholder motivation and input.
• Executives, some strategic information should remain confidential to
top managers, and prohibit dissemination beyond the inner circle.
• There are certainly good reasons to keep the strategy process and
strategies themselves visible and open rather than hidden and secrete
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21. 2. The Visible or hidden Issue
• Using a firm’s strategies is worth the benefit of improved employee and
stakeholder motivation and input.
• Executives, some strategic information should remain confidential to
top managers, and prohibit dissemination beyond the inner circle.
• There are certainly good reasons to keep the strategy process and
strategies themselves visible and open rather than hidden and secrete
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22. Top-Down or Bottom-up Approach
• Top-Down, Top Executives are responsible for Key Strategic Decision.
• In contrast, bottom-up, argue that lower- and middle-level managers
and employees need to be actively involved in Strategic Decisions.
• Recent strategy research emphasize the bottom-up approach,
• Schendel and Hofer, rely on perceptions of their top managers in
strategic planning.
• Strategists must reach a working balance of the two approaches.
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23. Guidelines for Effective Strategic Management
1. It should be a people process more than a paper process.
2. It should be a learning process for all managers and employees.
3. It should be words supported by numbers rather than numbers
supported by words.
4. It should be simple and non-routine.
5. It should vary assignments, team memberships, meeting formats, and
even the planning calendar.
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24. Guidelines for Effective Strategic Management
6. It should challenge the assumptions underlying the current corporate
strategy.
7. It should welcome bad news.
8. It should welcome open-mindedness and a spirit of inquiry & learning
9. It should not be a bureaucratic mechanism.
10. It should not become ritualistic, stilted, or orchestrated.
11. It should not be too formal, predictable, or rigid.
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25. Guidelines for Effective Strategic Management
12. It should not contain jargon or arcane planning language.
13. It should not be a formal system for control.
14. It should not disregard qualitative information.
15. It should not be controlled by “technicians.”
16. Do not pursue too many strategies at once.
17. Continually strengthen the “good ethics is good business” policy.
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26. References
1. Strategic Management Concepts and Cases Sixteen Edition by
Fred R. David.
2. Fundamental of Business Management Process by Marlon
Dumas and Jan Mandelling.
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