Question

List and discuss each of the three strategy evaluation activities

Answer 1

The best and most effectively formulated strategies become obsolete over a period of time as the external and internal environment undergoes a change. It is critical that the strategist should systematically and at regular intervals review, evaluate, and control the implementation of the strategies.

The strategic management process results in making decisions which have significant and long term impact on the organization. It is important for the strategists to evaluate the strategy on a timely basis to become aware of potential problems and to take necessary corrective actions before the situation becomes critical.

The three strategy evaluation activities are as follows:

1. Examining the underlying basis of the company’s strategies: This requires reviewing the internal and external factors that are the basis of the current strategy. The company should evaluate the changing business requirements and understand the factors which are hindering the company’s ability to meet its objectives. Continual qualitative and quantitative analysis can be conducted to review and understand which factors will support the company's objectives and which factors are hindering the progress of the objectives. The quantitative and qualitative data are collected and analyzed to understand the defining factors. An information system will continuously update managers on progress of the objectives and when the data indicate changes in underlying factors the manager should change the strategy to meet the objectives. It is critical to revisit and revise the strategy to ensure the key objectives are successfully achieved

2. Monitoring performance by comparing expected results with action results: The company should continuously evaluate and compare actual results with the expected results. The deviations from the plan should be reviewed. The individual performance should be evaluated and the progress meeting the objectives monitored. The criteria for monitoring the performance of each strategy should be measurable and easily verifiable. Criteria that predict future happenings are more relevant than past information. For example, the management focus should not be on reasons why sales were lower by 20% in the last quarter but the focus should be on why sales will be 20% less in the next quarter and the measures which should be taken to counter the trend. A failure to make satisfactory progress to achieve the defined long term plans or annual objectives is a signal to take corrective action. Many factors contribute to the inability to make satisfactory progress. The key factors are unexpected legislations, the downturn in the economy, ineffective strategies, unreliable supply chains, etc. The monitoring performance activity will lead to identifying the reasons for the existing inefficiencies and will help to identify the areas which need to be reworked and reevaluated.

3. Take corrective actions to ensure that performance matches the plans: Corrective action requires the company to continuously evaluate the factors, which are causing inefficiencies. The strategies, which are making the organization ineffective and are creating barriers in the company’s ability to meet the objectives are identified. Then the company will determine which objectives are most important and strategy can be reworked to meet those objectives. The company can identify the resources it needs to allocate and reassign to achieve its strategic goals. They must continuously keep track of the progress of the objectives to detect flaws and make changes and take corrective action. Quick decisions to make the strategy complaint to achieving the organization's objectives are critical for the success of the organization. The organization's strategy should be built around the key objectives and it should be adapted and be agile to match the changing trends in the industry and the organization.

To conclude the strategic evaluation will identify if the strategy is aligned to organization policies, the events in the external environment are anticipated and factored in, adequate resources are assigned to achieving the objectives, the long term and short terms goals are being achieved and the strategy implementers are on track to achieving the objectives.