This chapter discusses strategy evaluation, review, and control. It outlines several frameworks for evaluating strategy, including Rummelt's four criteria of consonance, consistency, feasibility, and advantage. It also discusses the balanced scorecard approach and measuring organizational performance both quantitatively using financial ratios and qualitatively. Challenges to modern strategy evaluation include increased complexity, faster changes, and debates around transparency and top-down vs bottom-up processes. The key is for evaluation to provide timely, accurate information to allow corrective actions if needed.

1. Chapter 9 Strategy Review, Evaluation, & Control Strategic Management: Concepts & Cases 10 th Edition Fred David PowerPoint Slides by Anthony F. Chelte Western New England College

2. Chapter Outline The Nature of Strategy Evaluation A Strategy-Evaluation Framework The Balanced Scorecard

3. Chapter Outline Published Sources of Strategy Evaluation Information Characteristics of an Effective Evaluation System Contingency Planning

4. Chapter Outline ( cont’d ) Auditing 21 st Century Challenges in Strategic Management

5. Organizations are most vulnerable when they are at the peak of their success -- R.T. Lenz Strategy Review

6. -- Strategies become obsolete -- Internal environments are dynamic -- External environments are dynamic Strategy Review, Evaluation & Control

7. Vital to the organization’s well-being Alert management to potential/actual problems in a timely fashion Erroneous strategic decisions can have severe negative impact on organizations Strategy Evaluation, Review, & Control Strategy Evaluation

8. Examine the underlying bases of a firm’s strategy Compare expected to actual results Identify corrective actions to ensure that performance conforms to plans Strategy Evaluation, Review & Control 3 Basic Activities

9. Complex & sensitive undertaking Overemphasis can be costly & counterproductive Strategy Evaluation, Review & Control Strategy Evaluation

10. Strategy Evaluation, Review & Control Have assets increased Increase in profitability Increase in sales Increase in productivity Profit margins, ROI, & EPS ratios increased Appraisal of Strategic Performance

11. Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria

12. Strategy Evaluation, Review & Control Strategy should not present inconsistent goals & policies Consistency

13. Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria

14. Strategy Evaluation, Review & Control Need for strategies to examine sets of trends Consonance

15. Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria

16. Strategy Evaluation, Review & Control Neither overtax resources or create unsolvable sub-problems Feasibility

17. Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria

18. Strategy Evaluation, Review & Control Creation or maintenance of competitive advantage Advantage

19. Strategy Evaluation, Review & Control Increase in environment’s complexity Difficulty predicting future with accuracy Increasing number of variables Difficulties in Strategy Evaluation

20. Strategy Evaluation, Review & Control Rate of obsolescence of plans Domestic and global events Decreasing time span for planning certainty Difficulties in Strategy Evaluation

21. Strategy Evaluation, Review & Control Initiate managerial questioning Trigger review of objectives & values Stimulate creativity in generating alternatives Strategy Evaluation Should --

22. Strategy Evaluation, Review & Control Develop revised EFE Matrix Develop revised IFE Matrix Review of underlying bases of strategy --

23. Strategy Evaluation, Review & Control Competitors’ reaction to strategy Competitors’ change in strategy Competitors’ changes in strengths & weaknesses Reasons for competitors’ strategic change Review effectiveness of strategy --

24. Strategy Evaluation, Review & Control Reasons for competitors’ successful strategies Competitors’ present market positions & profitability Potential for competitor retaliation Potential for cooperation with competitors Review effectiveness of strategy --

25. Strategy Evaluation, Review & Control Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses? Monitor Strengths & Weaknesses; Opportunities & Threats

26. Strategy Evaluation, Review & Control Are opportunities still opportunities? Other opportunities develop? Are threats still threats Other threats emerged? Are we vulnerable to hostile takeover? Monitor Strengths & Weaknesses; Opportunities & Threats

27. Evaluation Framework Continue present course Differences? Differences? Yes NO Yes NO I. Review Underlying Bases II. Measure Firm Performance III. Take Corrective Actions

28. Strategy Evaluation, Review & Control Compare expected to actual results Investigate deviations from plan Evaluate individual performance Progress toward stated objectives Measuring Organizational Performance

29. Strategy Evaluation, Review & Control Financial Ratios Compare performance over different periods Compare performance to competitors Compare performance to industry averages Quantitative Criteria for Strategy Evaluation

30. Strategy Evaluation, Review & Control Return on investment (ROI) Return on equity (ROE) Profit margin Market Share Key Financial Ratios

31. Strategy Evaluation, Review & Control Debt to equity Earnings per share (EPS) Sales growth Asset growth Key Financial Ratios

32. Strategy Evaluation, Review & Control Internal consistency of strategy Consistency with environment Appropriateness in view of resources Qualitative Evaluation of Strategy

33. Strategy Evaluation, Review & Control Acceptable degree of risk Appropriate time frame Workability of the strategy Qualitative Evaluation of Strategy

34. -- Evaluate strategies from 4 perspectives: 1. Financial performance 2. Customer knowledge 3. Internal business processes 4. Learning & growth Strategy Evaluation, Review & Control Balanced Scorecard

35. Balanced Scorecard 2 1 Financial 2 1 Business Ethics/Natural Environment 2 1 Community/Social Responsibility 2 1 Operations/Processes 2 1 Managers/Employees 2 1 Customers Primary Responsibility Time Expectation Measure or Target Area of Objectives

36. Strategy Evaluation, Review & Control Economical Meaningful Generates useful information Timely information Provides accurate picture of events Characteristics of strategy evaluation

37. Strategy-Evaluation Assessment Matrix Continue course Yes No No Corrective actions No Yes No Corrective actions Yes Yes No Corrective actions No No Yes Corrective actions Yes No Yes Corrective actions No Yes Yes Corrective actions Yes Yes Yes Corrective actions No No No Result 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?

38. Strategy Evaluation, Review & Control Alternative plans that can be put into effect if certain key events do not occur as expected Contingency Planning

39. Strategy Evaluation, Review & Control Financial audits determine correspondence between assertions based on strategic plan & established criteria Environmental audits insure sound and safe practices Auditing

40. Strategy Evaluation, Review & Control Process is more an “art” than “science” Should strategies be visible or hidden from stakeholders Should process be more top-down or bottom up 21 st Century Challenges in Strategic Management

41. Key Terms & Concepts For Review (Chapter 9) Advantage Contingency Plans Auditing Corporate Agility Feasibility Consonance Balanced Score Card Consistency

42. Key Terms & Concepts For Review (Chapter 9) Management by Wandering Around Revised EFE Matrix Measuring Organizational Performance Revised IFE Matrix Taking Corrective Action Reviewing Underlying Bases of Strategy Future Shock