Copyright 2007 Prentice Hall Ch 9 -1 Chapter 9 Strategy Review, Evaluation, & Control Strategic Management: Concepts & Cases 11 th Edition Fred David
Copyright 2007 Prentice Hall Ch 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 Review, Evaluation & Control 3 Basic Activities
Copyright 2007 Prentice Hall Ch 9 -3 Strategy Review, Evaluation, & Control Consonance Consistency Feasibility Advantage Rumelt’s 4 Criteria
Copyright 2007 Prentice Hall Ch 9 -4 Strategy Review, Evaluation, & Control Strategy should not present inconsistent goals & policies Consistency
Copyright 2007 Prentice Hall Ch 9 -5 Strategy Review, Evaluation, & Control Need for strategies to examine sets of trends Consonance
Copyright 2007 Prentice Hall Ch 9 -6 Strategy Review, Evaluation, & Control Neither overtax resources or create unsolvable sub-problems Feasibility
Copyright 2007 Prentice Hall Ch 9 -7 Strategy Review, Evaluation, & Control Creation or maintenance of competitive advantage Advantage
Copyright 2007 Prentice Hall Ch 9 -8 Strategy Review, Evaluation, & Control Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses? Monitor Strengths & Weaknesses; Opportunities & Threats
Copyright 2007 Prentice Hall Ch 9 -9 Strategy Review, Evaluation, & 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
Copyright 2007 Prentice Hall Ch Evaluation Framework I. Review Underlying Bases Continue present course II. Measure Firm Performance III. Take Corrective Actions Differences? Yes NO Yes NO
Copyright 2007 Prentice Hall Ch Strategy Review, Evaluation, & Control Return on investment (ROI) Return on equity (ROE) Profit margin Market Share Key Financial Ratios
Copyright 2007 Prentice Hall Ch Strategy Review, Evaluation, & Control Debt to equity Earnings per share (EPS) Sales growth Asset growth Key Financial Ratios
Copyright 2007 Prentice Hall Ch Strategy Review, Evaluation & Control -- Evaluate strategies from 4 perspectives: 1. Financial performance 2. Customer knowledge 3. Internal business processes 4. Learning & growth Balanced Scorecard
Copyright 2007 Prentice Hall Ch Balanced Scorecard Area of ObjectivesMeasure or TargetTime ExpectationPrimary 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
Copyright 2007 Prentice Hall Ch Strategy-Evaluation Assessment Matrix Continue courseYesNo Corrective actionsNoYesNo Corrective actionsYes No Corrective actionsNo Yes Corrective actionsYesNoYes Corrective actionsNoYes Corrective actionsYes Corrective actionsNo 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?
Copyright 2007 Prentice Hall Ch Strategy Review, Evaluation, & Control Alternative plans that can be put into effect if certain key events do not occur as expected Contingency Planning
Copyright 2007 Prentice Hall Ch Strategy Review, Evaluation, & Control Financial audits determine correspondence between assertions based on strategic plan & established criteria Environmental audits ensure sound and safe practices Auditing
Copyright 2007 Prentice Hall Ch Strategy Review, Evaluation, & 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