David SM13 Ppt
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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch 9 -1 Chapter 9 Strategy Review, Evaluation, and Control Strategic Management: Concepts & Cases 13 th Edition Fred David
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Chapter 9Strategy Review, Evaluation, and Control
Strategic Management: Concepts & Cases13th EditionFred David
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -* Organizations are most vulnerable when they are at the peak of their success. R. T. LenzStrategy Evaluation
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -* Strategies become obsolete Internal environments are dynamic External environments are dynamicStrategy Review, Evaluation, and Control
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Vital to the organizations well-beingAlert management to potential/actual problems in a timely fashionErroneous strategic decisions can have severe negative impact on organizationsStrategy Review, Evaluation, and ControlStrategy Evaluation
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Examine the underlying bases of a firms strategyCompare expected to actual resultsTake corrective actions to ensure that performance conforms to plansStrategy Review, Evaluation, and ControlThree Basic Activities
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Complex & sensitive undertaking
Overemphasis can be expensive & counterproductiveStrategy Review, Evaluation, and ControlStrategy Evaluation
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlIncrease in assets?Increase in profitability?Increase in sales?Increase in productivity?Increases in profit margins, ROI, and EPS ratios?Appraisal of Strategic Performance
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlConsonanceConsistencyFeasibilityAdvantageRumelts 4 Criteria
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlStrategy should not present inconsistent goals and policiesConsistency
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlConsonanceConsistencyFeasibilityAdvantageRumelts 4 Criteria
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlNeed for strategists to examine sets of trends, as well as individual trendsConsonance
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlConsonanceConsistencyFeasibilityAdvantageRumelts 4 Criteria
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlNeither overtax resources nor create unsolvable subproblemsFeasibility
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlConsonanceConsistencyFeasibilityAdvantageRumelts 4 Criteria
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlCreation or maintenance of competitive advantageAdvantage
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlIncrease in environments complexityDifficulty predicting future with accuracyIncreasing number of variablesDifficulties in Strategy Evaluation
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlRate of obsolescence of plansDomestic and global eventsDecreasing time span for planning certaintyDifficulties in Strategy Evaluation
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlInitiate managerial questioning of expectations and assumptionsTrigger a review of objectives & valuesStimulate creativity in generating alternatives and formulating criteria for evaluationStrategy Evaluation Should
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlDevelop revised IFE Matrix
Develop revised EFE MatrixReview of Underlying Bases of Strategy
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlCompetitors reaction to strategyCompetitors change in strategyCompetitors changes in strengths & weaknessesReasons for competitors strategic changeReview Effectiveness of Strategy
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlReasons for competitors successful strategiesCompetitors satisfaction with present market positions & profitabilityPotential for competitor retaliationPotential for cooperation with competitorsReview Effectiveness of Strategy
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlAre strengths still strengths?Have we added additional strengths?Are weaknesses still weaknesses?Have we developed other weaknesses?
Monitor Strengths & Weaknesses; Opportunities & Threats
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlAre opportunities still opportunities?Other opportunities develop?Are threats still threats?Other threats emerged?Are we vulnerable to hostile takeover?
Monitor Strengths & Weaknesses; Opportunities & Threats
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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The BCG Matrix is a concept developed by the Boston Consulting Group (BCG) that evaluates SBUs with respect to the dimensions of business growth rate and market share. Business growth rate pertains to how rapidly the entire industry is increasing. Market Share defines whether an SBU has a larger or smaller share of the market than its competitors.
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The BCG MatrixMarket ShareHIghLowAnticipated Growth RateLowHigh
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The cash cow exists in a mature, slow-growth industry but is a dominant business in the industry with a large market share. Because heavy investments in advertising and plant expansion are no longer required, the corporation earns a positive cash flow. It can milk the cash cow to invest in other, riskier businesses. The Star has a large share in a rapidly growing industry. The star may provide additional growth potential and profits can be plowed back into the business as investment for future growth and profits. The star is visible and attractive and will generate profits and a positive cash flow even as the industry matures and market growth slows down.
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The dog is a poor performer. It has only a small market share in a slow-growth industry. The dog provides little profit for the corporation and may be targeted for divestment or liquidation if turnaround is not possible or fails.The question mark exists in a new, rapidly growing industry but has only a small market share. The question mark business is risky; it could become a star or it could fail. The corporation can invest in question mark business the cash earned from cash cows with the goal of nurturing them into future stars.
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlCompare expected to actual resultsInvestigate deviations from planEvaluate individual performanceExamine progress toward stated objectivesMeasuring Organizational Performance
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlFinancial RatiosCompare performance over different periodsCompare performance to competitorsCompare performance to industry averages
Quantitative Criteria for Strategy Evaluation
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlReturn on investment (ROI)Return on equity (ROE)Profit marginMarket shareDebt to equityEarnings per share (EPS)Sales growthAsset growth
Key Financial Ratios
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlHuman Resource FactorsMarketingFinance/AccountingR&DManagement Information Systems
Qualitative Evaluation of Strategy
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlEvaluate strategies from 4 perspectives:1. Financial performance2. Customer knowledge3. Internal business processes4. Learning & growthBalanced Scorecard
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlEconomicalMeaningfulGenerates useful informationTimely informationProvides accurate picture of events
Characteristics of an Effective Evaluation System
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlAlternative plans that can be put into effect if certain key events do not occur as expected
Contingency Planning
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlA systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested usersAuditing
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice HallCh 9 -*Strategy Review, Evaluation, and ControlShould the process be more an art or a 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 2011 Pearson Education, Inc. Publishing as Prentice Hall
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