what is it, why it is required, who are evaluated, process of evaluation, tools of evaluation all are included here

1. STRATEGY
EVALUATION
PREPARED BY:
MD TAHER AHMED
ROLL: 08
M.COM 4TH SEM
COURSE CODE: MC-401
ASSAM UNIVERSITY, SILCHAR

2. STRATEGY EVALUATION:
 Finding out what is going on is what evaluation is all about. Strategy evaluation means
collecting information about how well the strategic plan is progressing.
 Strategic Evaluation is defined as the process of determining the
effectiveness of a given strategy in achieving the organizational
objectives and taking corrective action wherever required.
 Strategy evaluation is the final step of strategy management process. The key
strategy evaluation activities are: (1)examining the underlying bases of a firm’s
strategies, (2)comparing actual results with expected results, and (3)taking
remedial/corrective actions. Evaluation makes sure that the organizational
strategy as well as it’s implementation meets the organizational objectives.

3. NATURE OF STRATEGY EVALUATION:
 Nature of the strategic evaluation and control process is to test the
effectiveness of strategy.
 There has to be a way of finding out whether the strategy being implemented
will guide the organisation towards its intended objectives. Strategic
evaluation and control, therefore, performs the crucial task of keeping the
organisation on the right track.
 Through the process of strategic evaluation and control, the strategists
attempt to answer set of questions, as below.
 Are the premises made during strategy formulation proving to be correct?
 Is the strategy guiding the organization towards its intended objectives?
 Are the organization and its managers doing things which ought to be done?
 Is there a need to change and reformulate the strategy?
 How is the organization performing?

4. Contd.
 Are the time schedules being adhered to?
 Are the resources being utilized properly?
 What needs to be done to ensure that resources are utilized properly
and objectives met?
 Has there been an increase in profitability?
 Have sales increased?
 Have profit margin, ROI, EPS ratios increased?
 Adequate & timely information is the cornerstone of effective
Strategy Evaluation.
 Strategy Evaluation is operated at two levels– (1) Strategic Control &
(2) Operational Control. At Strategic level we are concerned more
about the consistency of strategy with the Environment. At the
Operational Level, the effort is given towards assessing how well the
organization is pursuing a given strategy.

5. IMPORTANCE OF STRATEGY EVALUATION:
 Strategy Evaluation helps to keep a check on the validity of a strategic
choice.
 An ongoing process of evaluation would, in fact, provide feedback on the
continued relevance of the strategic choice made during the formulation
phase. This is due to the efficacy of strategic evaluation to determine the
effectiveness of strategy.
 Strategy Evaluation can help to assess whether decisions match the intended
strategy requirements.
 Strategy Evaluation, through its process of control, feedback, rewards and
review, helps in a successful culmination of the Strategic Management
process.
 In the absence of such evaluation process, managers would not know
explicitly how to exercise such discretion.
 The process of Strategic Evaluation provides a considerable amount of
information and experience to strategists that can be useful in new strategic
planning.

6. PARTICIPANTS IN STRATEGIC EVALUATION:
 Shareholders
 Board of Directors
 Chief Executives
 Profit-Centre Heads or SBU Heads
 Financial Controllers
 Company Secretaries
 External and Internal Auditors
 Audit and Executive Committees
 Corporate Planning Staff or Department
 Middle-Level Managers

7. BARRIERS IN EVALUATION :
Ф Limits of Control
Ф Difficulties in measurements
Ф Resistance to evaluation
Ф Short-termism
Ф Relying on efficiency (doing things right) versus effectiveness(doing right things)
DIFFICULTIES IN EVALUATION:
Strategy Evaluation is becoming increasingly difficult due to the following reasons:
 A dramatic increase in the environment’s complexity.
 The increasing difficulty of predicting future with accuracy.
 The increasing numbers of variables.
 The rapid rate of obsolescence of even the best plans.
 The increase in the number of both domestic & world events affecting the organizations.
 The decreasing time span for which planning can be done with any degree of certainty.

8. REQUIREMENTS FOR EFFECTIVE EVALUATION:
 Control should involve only minimum amount of information as too much information creates
confusion.
 Control should monitor only managerial activities and results.
 Controls should be timely so that corrective actions can be taken quickly.
 Long-term and short-term controls should be used so that a balanced approach can be adopted.
 Controls should aim at pinpointing exceptions as nitpicking does not result in effective
evaluation. The ‘80:20 principle’ where 20 per cent of the activities results in 80 per cent of
achievements, needs to be emphasized.
 Reward of meeting or exceeding standards should be emphasized so that managers are
motivated to perform.
 Unnecessary emphasis on penalties tend to pressurise the managers to rely on efficiency rather
than effectiveness

9. CRITERIA FOR EVALUATING STRATEGIES:
 CONSISTENCY: Strategy must not present mutually inconsistent
goals and policies.
 CONSONANCE: The Strategy must represent an adaptive
response to the external environment and to the critical
changes occurring within it.
 ADVANTAGE: A Strategy must provide for the creation and/or
maintenance of competitive advantage in a selected area of the
activity.
 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?

10. STRATEGY EVALUATION FRAMEWORK:
ACTIVITY ONE: REVIEW UNDERLYING BASES OF STRATEGY
Prepare Revised Internal Prepare Revised External Factor
Factor Evaluation (IFE) Evaluation (EFE) Matrix
Matrix
Compare Revised to existing Compare Revised to existing
IFE Matrix EFE Matrix
Do significant differences occur? YES
NO
ACTIVITY TWO: MEASURE ORGANISATIONAL PERFORMANCE
Compare planned to actual progress toward meeting stated objectives
YES
ACTIVITY THREE: TAKE
CORRECTIVE ACTIONS
NO
CONTINUE PRESENT
COURSE OF ACTION

11. TECHNIQUES OF STRATEGIC EVALUATION:
1)Gap Analysis:
 The gap analysis is one strategic evaluation technique used to measure the gap between the organization’s
current position and its desired position.
 The gap analysis is used to evaluate a variety of aspects of business, from profit and production to
marketing, research and development and management information systems.
 Typically, a variety of financial data is analyzed and compared to other businesses within the same industry
to evaluate the gap between the organization and its strongest competitors.
2) SWOT Analysis:
 The SWOT analysis is another common strategic evaluation technique used as a part of the strategic
management process. The SWOT analysis evaluates the organization’s strengths, weaknesses, opportunities
and threats.
 Strengths and weaknesses are internal factors, while opportunities and threats are external factors.
 This identification is essential in determining how best to focus resources to take advantage of strengths
and opportunities and combat weaknesses and threats.

12. Contd..
3) PEST Analysis:
 Another common strategic evaluation technique is the PEST analysis, which identifies the political,
economic, social and technological factors that may impact the organization’s ability to achieve its
objectives.
 Political factors might include such aspects as impending legislation regarding wages and benefits,
financial regulations, etc
 Economic factors include all shifts in the economy, while social factors may include demographics and
changing attitudes. Technological pressures are also inevitable as technology becomes more advanced
each day.
 These are all external factors, which are outside of the organization’s control but which must be
considered throughout the decision making process.
4) Benchmarking:
 Benchmarking is a strategic evaluation technique that’s often used to evaluate how close the
organization has come to its final objectives, as well as how far it has left to go.
 Organizations may benchmark themselves against other organizations within the same industry, or
they may benchmark themselves against their own prior situation.
 A variety of performance measures, as well as policies and procedures, may be evaluated regularly to
identify where adjustments are necessary to maintain the sustainable competitive advantage.

13. Contd..
5) The Balanced Scorecard:
 The Balanced Scorecard is an important Strategy Evaluation technique. It is a process that
allows firms to evaluate strategies from four key perspectives: financial performance,
customer knowledge, internal business processes and learning and growth.
 It answers the following questions:
o How well is the firm continually improving & creating values such as innovation, product quality?
o How well is the firm sustaining & even improving upon its core competencies & competitive
advantage?
o How satisfied are the firm’s customers?
6) PERT & CPM:
The Programme Evaluation Review Technique (PERT) & Critical Path Method (CPM) were
developed in order to plan and control activities.

14. Contd..
PERT helps the Management to know:
 When will the project be completed?
 When will each individual part of the project start and finish?
 Of the many parts in a project, which ones should be completed on time to avoid
delaying the project?
 Can resources be shifted from non-critical parts to the critical parts without affecting
the overall project’s completion time?
CPM was developed for the purpose of scheduling. It is concerned with the
reconciliation, enumerates the relationship between applying more resources to
shorten the duration of a given project and the increased cost of these resources.

15. CONCLUSION:
 ‘YOU CAN’T MANAGE WHAT YOU DON’T MEASURE’– PETER DRUCKER.
 ‘UNLESS STRATEGY EVALUATION IS PERFORMED SERIOUSLY AND SYSTEMATICALLY,
AND UNLESS STRATEGISTS ARE WILLING TO ACT ON THE RESULTS, ENERGY WILL
BE USED UP DEFENDING YESTERDAY. NO ONE WILL HAVE THE TIME, RESOURCES
OR WILL TO WORK ON EXPLOITING TODAY, LET ALONE TO WORK ON MAKING
TOMORROW’– PETER DRUCKER.

16. The fact that hot water freezes faster than cold water still remains a mystery…
Thank you…