Copyright 2005 Prentice Hall 1 Bus 411 Day 14. Copyright 2005 Prentice Hall Ch 3 -2 Agenda...

Copyright 2005 Prentice Hall 1

Bus 411

Day 14

Copyright 2005 Prentice Hall

Ch 3 -2

Agenda Assignment 5 Due

Mid term Exam Available March 16 Due March 27 20 Short essays @ 5 points each

New Course schedule 2 Oral and 1 Written Case study Pick Groups and cases

Discussion Strategy Review, Evaluation, and Control

Option 2 2 case study presentations @ 7.5% = 15% 1 written case study @ 10% =10%

Ch 8-3Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Mar 20 Strategy Review, Evaluation and Control

Chapter 9

Mar 24 How to Prepare and Present a Case Study

Pages 360-374 in text

Mar 27 Case 1 (Instructor)Mar 31 Group work

Apr 3 Case 2 (Group 1)Apr 7 Case 3 (Group 2)

Apr 10 Case 4 (Instructor)Apr 14 Group work Apr 17 Case 5 (Group 1)

Apr 21 Case 6 (Group 2)Apr 24 Free day

Apr 31 Take home final assigned Written case study due

May 1 Free day to work on take home finalMay 7 @ 8AM

In class portion of Final Exam

May 8 Turn in Take home portion of Final Exam by 3PM

Mid Term Exam (Chapter 1-9) 15%Final Exam (Chaps 1-9 and Cases) 25%Assignments (5 @ 5%) 25%Case Presentations 15%Written Case Study 10%Pre-professional Conduct 10%

100%

Case study assignments First Round - Restaurants

Tony 20. Wendy’s International — 2007

Group 1 21. McDonald’s Corporation — 2007

Group 2 22. Compass Group PLC — 2007

Second Round – Automotive Tony

11. Skoda Auto — 2007 Group 1

9. Ford Motor Company — 2007 Group 2.

10. Winnebago Industries — 2008

Written Case Study Pick one of the remaining 25 cases in the text

List on page xxvii in text E-mail choice by next class



Chapter 9Strategy Review, Evaluation, and Control

Strategic Management: Concepts & Cases

12th Edition

Fred David


Ch 6 -6

Strategic Management Process Model

Develop Mission and Mission Statements

Chap 2

Measure and Evaluate

PerformanceChap 9

Implement StrategiesManagement Issues

Chap 7

Generate, Evaluate and Select Strageies

Chap 3

Implement StrategiesMarketing, Finance, accounting, R&D,

MIS issuesChap 8

Perfrom External Audit

Chap 3

Establish Long-termObjectives

Chap 4

Perform Internal Audit

Chap 4


“Organizations are most vulnerable when they are at the peak of their success.”

– R. T. Lenz

Strategy Evaluation


– Strategies become obsolete

– Internal environments are dynamic

– External environments are dynamic

Strategy Review, Evaluation, and Control


Vital to the organization’s well-being Alert management to potential/actual problems

in a timely fashion Erroneous strategic decisions can have severe

negative impact on organizations


Strategy Evaluation


1. 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.


Three Basic Activities


Complex & sensitive undertaking

Overemphasis can be costly & counterproductive


Strategy Evaluation



Have assets increased? Increase in profitability? Increase in sales? Increase in productivity? Profit margins, ROI, and EPS ratios

increased?

Appraisal of Strategic Performance


Ch 6 -13

Strategy Evaluation, Review & Control

Consonance

Consistency

Feasibility

Advantage

Rumelt’s4 Criteria


Ch 6 -14


Strategy should not present inconsistent goals & policies Issue and not “people” problems Success for one department means failure for another Policy problems rise to the top

Consistency


Ch 6 -15


Consonance

Consistency

Feasibility

Advantage



Ch 6 -16


Need for strategies to examine sets of trends Need a Holistic view (internal and external)

Consonance


Ch 6 -17


Consonance

Consistency

Feasibility

Advantage



Ch 6 -18


Neither overtax resources or create unsolvable sub-problems Can it be done with the given or available

resources?

Feasibility


Ch 6 -19


Consonance

Consistency

Feasibility

Advantage



Ch 6 -20


Creation or maintenance of competitive advantage If it doesn't create a competitive advantage

then what’s the point?

Advantage


Ch 6 -21

Process of strategic evaluation Management should be continually aware of

progress Management by wandering around

Don't wait for information get to you, go out and get the information

Things Change



1. Increase in environment’s complexity

2. Difficulty predicting future with accuracy

3. Increasing number of variables

Difficulties in Strategy Evaluation



4. Rate of obsolescence of plans

5. Domestic and global events

6. Decreasing time span for planning certainty

Difficulties in Strategy Evaluation



Initiate managerial questioning Trigger review of objectives & values Stimulate creativity in generating

alternatives

Strategy Evaluation Should –



Develop revised EFE Matrix

Develop revised IFE Matrix

Review of Underlying Bases of Strategy –



1. Competitors’ reaction to strategy

2. Competitors’ change in strategy

3. Competitors’ changes in strengths & weaknesses

4. Reasons for competitors’ strategic change

Review Effectiveness of Strategy –



5. Reasons for competitors’ successful strategies

6. Competitors’ present market positions & profitability

7. Potential for competitor retaliation

8. Potential for cooperation with competitors

Review Effectiveness of Strategy –



Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses?

Monitor Strengths & Weaknesses; Opportunities & Threats



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


Strategy-Evaluation Assessment Matrix

Continue courseYesNoNo

Corrective actions

NoYesNo

Corrective actions

YesYesNo

Corrective actions

NoNoYes

Corrective actions

YesNoYes

Corrective actions

NoYesYes

Corrective actions

YesYesYes

Corrective actions

NoNoNo

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?



Compare expected to actual results Investigate deviations from plan Evaluate individual performance Progress toward stated objectives

Measuring Organizational Performance



Financial Ratios Compare performance over different periods Compare performance to competitors’ Compare performance to industry averages

Quantitative Criteria for Strategy Evaluation



Return on investment (ROI) Return on equity (ROE) Profit margin Market share

Key Financial Ratios



Debt to equity Earnings per share (EPS) Sales growth Asset growth

Key Financial Ratios



Internal consistency of strategy Consistency with environment Appropriateness in view of resources

Qualitative Evaluation of Strategy



Acceptable degree of risk Appropriate time frame Workability of the strategy

Qualitative Evaluation of Strategy



– Evaluate strategies from 4 perspectives:1. Financial performance2. Customer knowledge3. Internal business processes4. Learning & growth

Balanced Scorecard


Ch 6 -40

Balanced Scorecard

Area of Objectives Measure or Target Time Expectation Primary 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



Economical Meaningful Generates useful information Timely information Provides accurate picture of events

Characteristics of Strategy Evaluation



Alternative plans that can be put into effect if

certain key events do not occur as expected

Contingency Planning



Financial audits determine correspondence between assertions based on strategic plan & established criteria

Environmental audits ensure sound and safe practices

Auditing



Process is more an “art” than “science” Should strategies be visible or hidden from

stakeholders? Should process be more top-down or

bottom-up?

21st Century Challenges in Strategic Management

Copyright 2005 Prentice Hall 1 Bus 411 Day 14. Copyright 2005 Prentice Hall Ch 3 -2 Agenda...

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