Strategies must be systematically reviewed, evaluated, and controlled due to changing internal and external environments. Strategy evaluation involves examining underlying strategy bases, comparing expected and actual results, and identifying corrective actions. It is important but can be complex and sensitive. Key aspects of strategy evaluation include financial performance measures, customer knowledge, internal processes, learning and growth using tools like the balanced scorecard. Contingency planning involves alternative plans for unexpected events. Auditing ensures strategies align with goals and standards. Modern strategic challenges include determining if strategy is more art or science, transparency of strategies, and top-down versus bottom-up processes.

1. Chapter 9
Strategy Review, Evaluation, & Control
Presented by:
Almond Ray
Baldovino
Darryl Agustin
Elizalde M. Herrera
MMT Batch 22

2. Strategic Management Process Model

3. -- Strategies become obsolete
-- Internal environments are dynamic
-- External environments are dynamic
Strategy Review, Evaluation &
Control
-- It is essential therefore that strategists
systematically review, evaluate, and control the
execution of strategy

4.  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
 Complex and sensitive undertaking
 Overemphasis can be costly & counterproductive
 Too much time spent measuring performance rather
than in action and doing
Strategy Evaluation, Review,
& Control
Understanding strategy evaluation

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

6. Strategy Evaluation, Review &
Control
 Have the firm’s assets increased?
 Has there been an increase in profitability?
 Has there been an increase in sales?
 Has there been an increase in productivity?
 Have profit margins, ROI, and EPS ratios
increased?
Strategy evaluation is often an appraisal of
performance. Strategists ask questions like:

7. Strategy Evaluation, Review & Control
 Increase in environment’s complexity
 Difficulty predicting future with accuracy
 Increasing number of variables
 Rate of obsolescence of plans
 Domestic and global events
 Decreasing time span for planning certainty
Difficulties in Strategy Evaluation

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

9. Strategy Evaluation, Review & Control
 Consistency
Strategy should not present inconsistent goals and policies. There is
inconsistency when:
 Persistence of issues-based (not personality-based) conflicts
 Success for one department means failure for another
 Policy problems are frequently referred to the top for resolution
 Consonance
Need for strategies to examine sets of trends rather than a single trend
 Need a holistic view (internal and external environments)
 Feasibility
Neither overtax resources or create unsolvable sub-problems
 Can it be done with the given or available resources?
 Advantage
Creation or maintenance of competitive advantage
 If it doesn't create a competitive advantage then what’s the point?

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

11. Strategy Evaluation, Review &
Control
 Develop a revised EFE Matrix
 What changed in the external environment?
 Develop a revised IFE Matrix
 What internal changes occurred in the
organization ?
Review of underlying bases of strategy --

12. Strategy Evaluation, Review &
Control
1. Competitors’ reaction to strategy
2. Competitors’ change in strategy
3. Competitors’ changes in strengths & weaknesses
4. Reasons for competitors’ strategic change
5. Reasons for competitors’ successful strategies
6. Competitors’ present market positions & profitability
7. Potential for competitor retaliation
8. Potential for cooperation with competitors
Review effectiveness of strategy --

13. 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

14. Strategy Evaluation, Review &
Control
 Are opportunities still opportunities?
 Have other opportunities developed?
 Are threats still threats?
 Have other threats emerged?
 Are we vulnerable to hostile takeover?
Monitor Strengths & Weaknesses;
Opportunities & Threats

15. Evaluation Framework
Review Underlying Bases
Revised IFE and EFE
Continue present course
Measure Firm Performance
Ratios and stated objectives
Take
Corrective
Actions
Differences?
Differences?
Yes
NO
Yes
NO

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

17. 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

18. Strategy Evaluation, Review &
Control
 Return on investment (ROI)
 Return on equity (ROE)
 Profit margin
 Market Share
 Debt to equity
 Earnings per share (EPS)
 Sales growth
 Asset growth
Typical financial ratios used in strategy
evaluation

19. Strategy Evaluation, Review &
Control
 Internal consistency of strategy
 Consistency with environment
 Appropriateness in view of resources
 Acceptable degree of risk
 Appropriate time frame
 Workability of the strategy
Qualitative Evaluation of Strategy

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

21. 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

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

23. Strategy-Evaluation Assessment Matrix
Continue courseYesNoNo
Corrective actionsNoYesNo
Corrective actionsYesYesNo
Corrective actionsNoNoYes
Corrective actionsYesNoYes
Corrective actionsNoYesYes
Corrective actionsYesYesYes
Corrective actionsNoNoNo
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?

24. Strategy Evaluation, Review &
Control
Contingency Planning: Alternative plans that
can be put into effect if certain key events do
not occur as expected
Some examples of situations requiring contingency planning:
 If a major competitor withdraws from particular markets as
intelligence reports indicate, what actions should the firm take?
 If our sales objectives are not reached, what actions should firm
take to avoid losses?
 If demand for new product exceeds plans, what actions should firm
take to meet higher demand?
 If a new technological development makes new product obsolete
sooner than expected, what actions should firm take?

25. Strategy Evaluation, Review &
Control
 Financial audits determine correspondence
between assertions based on strategic plan and
established criteria
 Required for publicly traded companies
 Environmental audits insure sound and safe
practices
Auditing

26. Strategy Evaluation, Review & Control
 Is the process of strategic management more an
“art” than “science” or vice versa? (Your text says it
is more science than art)
 Should strategies be visible or hidden from
stakeholders? (Your text says that they should
hidden only when secrecy gives some competitive
advantage)
 Should process be more top-down or bottom up
(Current research suggests bottom-up)
21st
Century Challenges in
Strategic Management