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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

  • Superiority in resources, skills, or position

Difficulty in strategy evaluation –

  1. Increase in environment’s complexity
  2. Difficulty predicting future with accuracy
  3. Increasing number of variables
  4. Rate of obsolescence of plans
  5. Domestic and global events
  6. Decreasing time span for planning certainty

The process of evaluating Strategies

  1. Strategy evaluation is necessary for all sizes and kinds of organization. Strategy evaluation should initiate managerial questioning of expectations and assumptions should trigger a review of objectives and values and should stimulate creativity in generating alternative and formulating criteria of evaluation
  2. Evaluating strategies on continuous rather than a periodic basis allows benchmark of progress to established and o\more effectively monitored
  3. Managers and employees of the firm should be continually aware of progress being made towards achieving the firm’s objectives. As a critical success factors change, organization members should be involved in determining appropriate corrective action.

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