TOPIC SEVEN
STRATEGY EVALUATION AND CONTROL
Strategy Evaluation and control
Strategy Evaluation and control is a process of determining the effectiveness of a given strategy in achieving the organization objectives and taking corrective action whenever required Strategy evaluation is that phase of the strategic management process in which top management try to assure that the strategy formulated is being properly implemented and is meeting its objectives of the enterprise.
Strategic controls are intended to steer the company towards its long-term strategic direction. Strategic control is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments.
Control can be exercised through formulation of contingency strategies and a crisis management team. There can be the following types of control.
1. Operational control- Aimed at allocation and use of organizational resources through evaluation of performance
of organizational units to access their contribution in achieving organizational objectives.
2. Strategic control- It takes into account the changing assumptions that determine a strategy, continually evaluate
the strategy as it is being implements and take the necessary steps to adjust the strategy to the new requirements.
Importance of strategy evaluation and control
3. It helps to keep check on the validity of a strategic choice.
4. It provides feedback on the continued relevance of the strategic choice made during the formulation phase
5. Helps access whether the decisions match the intended strategy requirements.
6. In absence of such evaluation, mangers would not know
explicity how to exercise such dicretion.
7. Control and evaluation process help strategic managers monitor the progress of a plan.
Criteria for Evaluating Strategies:
a. Consistency: Strategy must not present mutually inconsistent goals and policies.
b. Consonance: The Strategy must represent an adaptive response to the external environment and to the critical changes occurring within it.
c. Advantage: A Strategy must provide for the creation and/or maintenance of competitive advantage in a selected area of the activity.
d. Feasibility: A Strategy must neither overtax available resources nor create unsolvable sub-problems. The final broad test of Strategy is
its feasibility, that is, can the Strategy be attempted within the physical, human and financial resources of the enterprise?
Levels of strategy evaluation
Strategy Evaluation is operated at two levels
1. Strategic Control. At Strategic level the concern is more about the consistency of strategy with the Environment.
2. Operational Control. At the Operational Level, the effort is given towards assessing how well the organization is pursuing a given strategy.
Approaches in strategy evaluation
Approaches by Seymour Tiles:
Seymour Tiles suggests the following approaches to evaluate strategy soon after the implementation is over:
1. Internal Consistency:
The consistency of policy implementation of the strategy fits into the integrated pattern of the organization should also be related to the other policies of the organization, which has been established, and to the goals it is pursuing.
2. Consistency with the Environment: Long-range planning implements the strategy that looks for long-run success. For
long-run success, it is necessary for continuous assessment of high degree to which previously established policies are consistent with the environment and how current policies are accounted with future of the environment.
3. Appropriateness of the Strategy in the Light of Available Resources:
The implementation of strategy has to make use of the critical resources most effectively. The management should assess the available resource and identify the critical one, which is the most the company poses and which is the least it has. To evaluate competence in relation to strategy, the company must identify its strength whether it is good in marketing, in production or in R&D.
4. Acceptability of the Degree of Risk Involved in the Strategy:
In the given environment, attitude of the management is to eliminate risks involved in the strategy. This criterion does not imply that the strategy is the one with minimum risk. High returns often go with high degree of risk
Steps in the process of strategic evaluation
The steps in the process of strategic evaluation are:
(i) The first step is a strategic analysis in order to gain a clear understanding of
the circumstances affecting the organization‘s strategic situation.
(ii) The second step is to produce a range of strategic options.
(iii) The third step is to develop a basis of comparison. This may be available from
the strategic analysis or may need to be specially developed.
(iv) It is helpful to establish the underlying rationale for each strategy by explaining why the strategy might succeed. This is often done in qualitative terms and by using techniques like scenario building product portfolio analysis
and the assessment of synergy.
(v) At this stage, the large number of strategic alternatives may be narrowed down, before a more detailed analysis is undertaken. Strategic alternatives may be ranked, based on their relative merits and demerits.
(vi) Suitability of each alternative should be tested. There are a number of techniques for testing. The specific choice of technique will depend upon the circumstances.
(vii) The next stage is assessing the feasibility and acceptability of strategies which appear reasonably suitable based on the analysis. The choice of the technique should be based on the circumstances of the company.
(viii) Finally, the company will need some system for selecting future strategies as a result of these evaluations
