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MGT603 - Strategic Management - Lecture Handout 42

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STRATEGY EVALUATION

Learning objectives

This topic covers various aspects concerning with the strategy evaluation and enables you to understand the process of strategy evaluation.

Four Criteria (Richard Rummelt): He explains four criteria for strategy valuation. These four criteria are as follow

  • Consistency
  • Consonance
  • Feasibility
  • Advantage

Consistency
Strategy should not present inconsistent goals and policies.

  • Conflict and interdepartmental bickering symptomatic of managerial disorder and strategic inconsistency

Consonance
Need for strategies to examine sets of trends

  • Adaptive response to external environment
  • Trends are results of interactions among other trends

Feasibility
Neither overtaxes resources nor creates unsolvable sub problems

  • Organizations must demonstrate the abilities, competencies, skills and talents to carry out a given strategy

Advantage
Creation or maintenance of competitive advantage

MGT603 - Strategic Management - Lecture Handout 28

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BOSTON CONSULTING GROUP (BCG) MATRIX

Learning objective

After understanding this chapter you are able to understand BCG and IE matrices and also understand how to prepare these matrices for any organization and what its practical implementation in various organizations.

The Internal-External (IE) Matrix

This is also an important matrix of matching stage of strategy formulation. This matrix already explains earlier. It relate to internal (IFE) and external factor evaluation (EFE). The findings form internal and external position and weighted score plot on it. It contains nine cells. Its characteristics is a s follow

  • Positions an organization’s various divisions in a nine-cell display.
  • Similar to BCG Matrix except the IE Matrix:
    • Requires more information about the divisions
    • Strategic implications of each matrix are different
  • Based on two key dimensions
    • The IFE total weighted scores on the x-axis
    • The EFE total weighted scores on the y-axis
  • Divided into three major regions