For educational purpose only

1. © 2001 Prentice Hall
Ch. 9-1
Strategic Management
Concepts & Cases
8th edition
Fred R. David
Chapter 9:
Strategy Review,
Evaluation, & Control
PowerPoint Slides By:
Anthony F. Chelte
Western New England College

2. Comprehensive Strategic MMaannaaggeemmeenntt MMooddeell
© 2001 Prentice Hall
Strategy
Review,
Evaluation,
&
Control
Chapter 9
Ch. 9-2
Vision
&
Mission
Statements
Chapter 2
External
Audit
Chapter 3
Strategies
In
Action
Chapter 5
Internal
Audit
Chapter 4
Strategy
Analysis
&
Choice
Chapter 6
Implement
Strategies:
Management
Issues
Chapter 7
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Chapter 8

3. © 2001 Prentice Hall
Ch. 9-3
SSttrraatteeggyy RReevviieeww
“Complicated controls do not work.
They confuse. They misdirect attention
from what is to be controlled to the
mechanics and methodology of the
control.”
—Seymour Tilles—

4. © 2001 Prentice Hall
Ch. 9-4
SSttrraatteeggyy RReevviieeww
“Organizations are most vulnerable when
they are at the peak of their success.”
—R.T. Lenz—

5. © 2001 Prentice Hall
Ch. 9-5
SSttrraatteeggyy RReevviieeww
“While strategy is a word that is usually
associated with the future, its link to the past is
no less central. Life is lived forward but
understood backward. Managers may live
strategy in the future, but they understand it
through the past.”
—Henry Mintzberg—

6. © 2001 Prentice Hall
Ch. 9-6
SSttrraatteeggyy RReevviieeww
The firm’s internal and external
environments are dynamic. Therefore,
the best conceived and implemented
strategies become obsolete!

7. © 2001 Prentice Hall
Ch. 9-7
SSttrraatteeggyy RReevviieeww
Strategy Evaluation—the 3 Basics
• Examining the underlying basis of the
firm’s strategy
• Comparing actual to expected results
• Taking corrective action to address
performance gaps

8. SSttrraatteeggyy RReevviieeww
Effective Strategy Evaluation
• Adequate and timely feedback
The cornerstone of effective
evaluation
© 2001 Prentice Hall
Ch. 9-8

9. © 2001 Prentice Hall
Ch. 9-9
SSttrraatteeggyy RReevviieeww
Strategy Evaluation
• Must have both
Short- & long-term focus

10. © 2001 Prentice Hall
Ch. 9-10
SSttrraatteeggyy RReevviieeww
Four Criteria (Richard Rumelt):
• Consistency
• Consonance
• Feasibility
• Advantage

11. A strategy should not present inconsistent
goals and policies
• If managerial problems continue despite changes in
personnel and are issue based, then strategies may be
inconsistent.
• If success for one department means failure for another
department, then strategies may be inconsistent.
© 2001 Prentice Hall
Ch. 9-11
CCoonnssiisstteennccyy
• If policy problems/issues continue to be brought to the
top for resolution, then strategies may be inconsistent.

12. Strategists need to examine sets of trends as well
as individual trends in evaluating strategies.
• Strategy must represent an adaptive response to the
external environment and critical changes occurring
within it.
• Most trends are the result of interactions among other
© 2001 Prentice Hall
Ch. 9-12
CCoonnssoonnaannccee
trends.
• Difficult in matching key internal and external factors in
formulation of strategy.

13. Strategy must neither overtax available resources
nor create unsolvable subproblems.
• Can the strategy be attempted within the physical, human
and financial resources of the enterprise?
• Limitation on strategic choice imposed by individual and
organizational capabilities must be considered.
© 2001 Prentice Hall
Ch. 9-13
FFeeaassiibbiilliittyy
• Important to examine whether in the past the organization
has demonstrated the capabilities, abilities,
competencies, skills, and talents to carry out strategy.

14. © 2001 Prentice Hall
Ch. 9-14
SSttrraatteeggyy RReevviieeww
• Increase in environment’s
complexity
• Difficulty in predicting the
future with accuracy
• Increasing number of
variables
Contemporary
Strategy
Evaluation
Difficulties

15. © 2001 Prentice Hall
Ch. 9-15
SSttrraatteeggyy RReevviieeww
• Rate of obsolescence of even
the best plans
• Increase in domestic and
world events
• Decreasing time span for
which planning can be done
with any certainty
Contemporary
Strategy
Evaluation
Difficulties

16. © 2001 Prentice Hall
Ch. 9-16
SSttrraatteeggyy RReevviieeww
Process of Evaluating Strategies:
• Should initiate managerial questioning
of expectations and assumptions
• Should trigger a review of objectives
and values
• Should stimulate creativity in generating
alternatives and criteria of evaluation

17. I. Review Underlying Bases FFrraammeewwoorrkk
II. Measure Firm Performance
© 2001 Prentice Hall
EEvvaalluuaattiioonn
Ch. 9-17
Continue present course
III.
Take
Corrective
Actions
Differences?
Differences?
Yes
NO
Yes
NO

18. © 2001 Prentice Hall
Ch. 9-18
II.. RReevviieeww BBaasseess ooff
SSttrraatteeggyy
• Develop a Revised EFE Matrix:
• How have competitors reacted to our
strategies?
• How have competitors’ strategies
changed?
• Have major competitors’ strengths and
weaknesses changed?

19. © 2001 Prentice Hall
Ch. 9-19
II.. RReevviieeww BBaasseess ooff
SSttrraatteeggyy
• Why are competitors making certain
strategic changes?
• Why are some competitors’ strategies
more successful than others?
• How satisfied are our competitors with
their present market positions and
profitability?

20. © 2001 Prentice Hall
Ch. 9-20
II.. RReevviieeww BBaasseess ooff
SSttrraatteeggyy
• How far can our major competitors be
pushed before retaliating?
• How could we more effectively
cooperate with our competitors?

21. © 2001 Prentice Hall
Ch. 9-21
II.. RReevviieeww BBaasseess ooff
SSttrraatteeggyy
Key Questions in Evaluating Strategy:
• Are our internal strengths still strengths?
• Have we added other internal strengths?
• Are our internal weaknesses still
weaknesses?

22. © 2001 Prentice Hall
Ch. 9-22
II.. RReevviieeww BBaasseess ooff
SSttrraatteeggyy
• Do we now have other internal
weaknesses?
• Are our external opportunities still
opportunities?
• Are there now external opportunities?

23. © 2001 Prentice Hall
Ch. 9-23
II.. RReevviieeww BBaasseess ooff
SSttrraatteeggyy
• Are our external threats still threats?
• Are there now other external threats?
• Are we vulnerable to a hostile
takeover?

24. IIII.. MMeeaassuurree PPeerrffoorrmmaannccee
• Compare the firm’s performance
over different time periods.
• Compare the firm’s performance to
competitors.
• Compare the firm’s performance to
industry averages.
© 2001 Prentice Hall
Ch. 9-24

25. IIII.. MMeeaassuurree PPeerrffoorrmmaannccee
© 2001 Prentice Hall
Ch. 9-25
Quantitative Analysis:
 Return on investment
 Return on equity
 Profit margin
 Market share
 Debt to equity
 Earnings per share
 Sales growth
 Asset growth

26. IIII.. MMeeaassuurree PPeerrffoorrmmaannccee
© 2001 Prentice Hall
Ch. 9-26
Qualitative Analysis:
 Is the strategy internally consistent?
 Is the strategy consistent with the
environment?
 Is the strategy appropriate in view of
available resources?
 Does the strategy involve an
acceptable degree of risk?

27. IIII.. MMeeaassuurree PPeerrffoorrmmaannccee
© 2001 Prentice Hall
Ch. 9-27
Qualitative Analysis:
 Does the strategy have an appropriate
time framework?
 Is the strategy workable?

28. IIIIII.. TTaakkee CCoorrrreeccttiivvee AAccttiioonn
Making changes to reposition a firm
competitively for the future
© 2001 Prentice Hall
Ch. 9-28

29. Strategy-Evaluation AAsssseessssmmeenntt MMaattrriixx
Result
No No No Corrective actions
Yes Yes Yes Corrective actions
Yes Yes No Corrective actions
Yes No Yes Corrective actions
Yes No No Corrective actions
No Yes Yes Corrective actions
No Yes No Corrective actions
No No Yes Continue course
© 2001 Prentice Hall
Ch. 9-29
Has the firm
progressed
satisfactorily toward
achieving its stated
objectives?
Have major
changes
occurred in
the firm’s
external
strategic
position?
Have major
changes
occurred in
the firm’s
internal
strategic
position?

30. © 2001 Prentice Hall
Ch. 9-30
SSttrraatteeggyy RReevviieeww
Characteristics of an effective
system
• Evaluation activities must be
economical.
• Evaluation activities must be
meaningful.

31. © 2001 Prentice Hall
Ch. 9-31
SSttrraatteeggyy RReevviieeww
Characteristics of an effective
system
• Evaluation activities must provide timely
information.
• Evaluation system should be designed
to provide a true picture of what is
happening.

32. © 2001 Prentice Hall
Ch. 9-32
SSttrraatteeggyy RReevviieeww
Characteristics of an effective
system
• Information derived from evaluation
process should facilitate action.
• Evaluation process should not
dominate decisions.

33. © 2001 Prentice Hall
Ch. 9-33
SSttrraatteeggyy RReevviieeww
Contingency Planning
• Identify both beneficial and unfavorable
events that could possibly derail the
strategy or strategies.
• Specify trigger points. Calculate about
when contingent events are likely to
occur.

34. © 2001 Prentice Hall
Ch. 9-34
SSttrraatteeggyy RReevviieeww
Contingency Planning
• Assess the impact of each contingent
event. Estimate the potential benefit or
harm of each contingent event.
• Develop contingency plans. Insure that
they are compatible with current
strategy and are economically feasible.

35. © 2001 Prentice Hall
Ch. 9-35
SSttrraatteeggyy RReevviieeww
Contingency Planning
• Assess the counterimpact of each
contingency plan. This quantifies the
potential value of each plan.
• Determine early warning signals for key
contingent events.
• Develop advance action plans to take
advantage of available lead time.

36. © 2001 Prentice Hall
Ch. 9-36
SSttrraatteeggyy RReevviieeww
Auditing
• Financial audits to determine
correspondence between assertions
based on strategic plans and
established criteria
• Environmental audits to insure sound
and safe practices

37. KKeeyy TTeerrmmss & CCoonncceeppttss
© 2001 Prentice Hall
Ch. 9-37
• Advantage
• Auditing
• Consistency
• Consonance
• Contingency plans
• Corporate agility
• Feasibility
• Future shock
• MBWA
• Measuring
organizational
performance
• Planning process
audit
• Reviewing the
underlying bases of
an organization’s
strategy
• Revised EFE matrix

38. KKeeyy TTeerrmmss & CCoonncceeppttss
© 2001 Prentice Hall
Ch. 9-38
• Revised IFE matrix
• Taking corrective
actions