Transcript Chapter 1 The Nature of Strategic Management

Chapter 9
Strategy Review, Evaluation, & Control
Ch 9 -1
Strategy Evaluation, Review &
Control
3 Basic Activities
1.
2.
3.
Examine the underlying bases of a firm’s
strategy
Compare expected to actual results
Identify corrective actions to ensure that
performance conforms to plans
Ch 9 -2
Strategy Evaluation, Review &
Control
Consistency
Rummelt’s
4 Criteria
Consonance
Feasibility
Advantage
Ch 9 -3
Strategy Evaluation, Review &
Control
Consistency

Strategy should not present inconsistent
goals & policies
Ch 9 -4
Strategy Evaluation, Review &
Control
Consonance

Need for strategies to examine sets of trends
Ch 9 -5
Strategy Evaluation, Review &
Control
Feasibility

Neither overtax resources or create
unsolvable sub-problems
Ch 9 -6
Strategy Evaluation, Review &
Control
Advantage

Creation or maintenance of competitive
advantage
Ch 9 -7
Strategy Evaluation, Review &
Control
Monitor Strengths & Weaknesses;
Opportunities & Threats
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Are strengths still strengths?
Have we added additional strengths?
Are weaknesses still weaknesses?
Have we developed other weaknesses?
Ch 9 -8
Strategy Evaluation, Review &
Control
Monitor Strengths & Weaknesses;
Opportunities & Threats
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Are opportunities still opportunities?
Other opportunities develop?
Are threats still threats
Other threats emerged?
Are we vulnerable to hostile takeover?
Ch 9 -9
Evaluation Framework
I. Review Underlying Bases
Differences?
Yes
NO
II. Measure Firm Performance
Differences?
III.
Take
Corrective
Actions
Yes
NO
Continue present course
Ch 9 -10
Strategy Evaluation, Review &
Control
Key Financial Ratios
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Return on investment (ROI)
Return on equity (ROE)
Profit margin
Market Share
Ch 9 -11
Strategy Evaluation, Review &
Control
Key Financial Ratios
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Debt to equity
Earnings per share (EPS)
Sales growth
Asset growth
Ch 9 -12
Strategy Evaluation, Review &
Control
Balanced Scorecard
-- Evaluate strategies from 4 perspectives:
1. Financial performance
2. Customer knowledge
3. Internal business processes
4. Learning & growth
Ch 9 -13
Balanced Scorecard
Area of Objectives
Measure or Target
Time Expectation
Primary Responsibility
Customers
1
2
Managers/Employees
1
2
Operations/Processes
1
2
Community/Social Responsibility
1
2
Business Ethics/Natural Environment
1
2
Financial
1
2
Ch 9 -14
Strategy-Evaluation Assessment Matrix
Have major
changes
occurred in the
firm’s internal
strategic
position?
Have major
changes
occurred in the
firm’s external
strategic
position?
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
Has the firm
progressed
satisfactorily toward
achieving its stated
objectives?
Result
Ch 9 -15
Strategy Evaluation, Review & Control
21st Century Challenges in
Strategic Management
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Process is more an “art” than “science”
Should strategies be visible or hidden from
stakeholders
Should process be more top-down or bottom
up
Ch 9 -16