Copyright 2005 Prentice Hall1 BUS 411 Day 13
Copyright 2005 Prentice Hall Ch 9-2 Agenda Templates available in WebCT Assignment 4 Graded 3 A’s, 3 B’s and 3 F’s F’s were due to unauthorized “group” work Assignment 5 will be at the end of the semester Mid-term exam mailed in WebCT Chapters 1-9 Due March 21, 9:30 Discussion on Case Study Groups Discussion on Strategy Review, Evaluation, & Control
Copyright 2005 Prentice Hall Ch 9-3 Schedule for next two weeks This week Chap 9 Next Monday Discussion on how to prepare a oral Case presentation Next Thursday Case 1 by Tony Group Work Starting Monday March 28 Group Case Presentation 40 Min Group Work 40 Min
Copyright 2005 Prentice Hall Ch 9-4 Case Studies Groups Static or Dynamic? Static Same group all semester One case every 3 Classes Dynamic Changing groups Schedule coordination difficult Compromise Start with Static and change groups after 3 weeks? Schedule Case 2 on March 28 Dave, Keith, Louise Case 3 on March 31 Seth, Megan, Corey Case 4 on April 4 Beth, Jessica, Amy Case Info
Copyright 2005 Prentice Hall Ch 9-5 Chapter 9 Strategy Review, Evaluation, & Control Strategic Management: Concepts & Cases 10 th Edition Fred David PowerPoint Slides by Anthony F. Chelte Western New England College
Copyright 2005 Prentice Hall Ch 9-6 Chapter Outline The Nature of Strategy Evaluation A Strategy-Evaluation Framework The Balanced Scorecard
Copyright 2005 Prentice Hall Ch 9-7 Chapter Outline Published Sources of Strategy Evaluation Information Characteristics of an Effective Evaluation System Contingency Planning
Copyright 2005 Prentice Hall Ch 9-8 Chapter Outline ( cont’d ) Auditing 21 st Century Challenges in Strategic Management
Copyright 2005 Prentice Hall Ch 9-9 Organizations are most vulnerable when they are at the peak of their success -- R.T. Lenz Strategy Review
Copyright 2005 Prentice Hall Ch 9-10 Strategic Management Process Model
Copyright 2005 Prentice Hall Ch Strategies become obsolete -- Internal environments are dynamic -- External environments are dynamic Strategy Review, Evaluation & Control
Copyright 2005 Prentice Hall Ch 9-12 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, Review, & Control Strategy Evaluation
Copyright 2005 Prentice Hall Ch 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 Strategy Evaluation, Review & Control 3 Basic Activities
Copyright 2005 Prentice Hall Ch 9-14 Complex & sensitive undertaking Overemphasis can be costly & counterproductive Strategy Evaluation, Review & Control Strategy Evaluation
Copyright 2005 Prentice Hall Ch 9-15 Strategy Evaluation, Review & Control Have assets increased Increase in profitability Increase in sales Increase in productivity Profit margins, ROI, & EPS ratios increased Appraisal of Strategic Performance
Copyright 2005 Prentice Hall Ch 9-16 Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria
Copyright 2005 Prentice Hall Ch 9-17 Strategy Evaluation, Review & Control 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
Copyright 2005 Prentice Hall Ch 9-18 Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria
Copyright 2005 Prentice Hall Ch 9-19 Strategy Evaluation, Review & Control Need for strategies to examine sets of trends Need a Holistic view Consonance
Copyright 2005 Prentice Hall Ch 9-20 Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria
Copyright 2005 Prentice Hall Ch 9-21 Strategy Evaluation, Review & Control Neither overtax resources or create unsolvable sub-problems Can it be done with the given resources? Feasibility
Copyright 2005 Prentice Hall Ch 9-22 Strategy Evaluation, Review & Control Consonance Consistency Feasibility Advantage Rummelt’s 4 Criteria
Copyright 2005 Prentice Hall Ch 9-23 Strategy Evaluation, Review & Control Creation or maintenance of competitive advantage If it doesn't create a competitive advantage then what’s the point? Advantage
Copyright 2005 Prentice Hall Ch 9-24 Process of strategic evaluation Management should be continually aware of progress Management by walking around Things Change
Copyright 2005 Prentice Hall Ch 9-25 Strategy Evaluation, Review & Control 1. Increase in environment’s complexity 2. Difficulty predicting future with accuracy 3. Increasing number of variables Difficulties in Strategy Evaluation
Copyright 2005 Prentice Hall Ch 9-26 Strategy Evaluation, Review & Control 4. Rate of obsolescence of plans 5. Domestic and global events 6. Decreasing time span for planning certainty Difficulties in Strategy Evaluation
Copyright 2005 Prentice Hall Ch 9-27 Strategy Evaluation, Review & Control Initiate managerial questioning Trigger review of objectives & values Stimulate creativity in generating alternatives Strategy Evaluation Should --
Copyright 2005 Prentice Hall Ch 9-28 Strategy Evaluation, Review & Control Develop revised EFE Matrix What changed in the external environment? Develop revised IFE Matrix What internal changes occurred in the organization ? Review of underlying bases of strategy --
Copyright 2005 Prentice Hall Ch 9-29 Strategy Evaluation, Review & Control 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 --
Copyright 2005 Prentice Hall Ch 9-30 Strategy Evaluation, Review & Control 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 --
Copyright 2005 Prentice Hall Ch 9-31 Strategy Evaluation, Review & Control Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses? Monitor Strengths & Weaknesses; Opportunities & Threats
Copyright 2005 Prentice Hall Ch 9-32 Strategy Evaluation, Review & Control 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
Copyright 2005 Prentice Hall Ch 9-33 Evaluation Framework I.Review Underlying Bases I.IFE an EFE Continue present course II.Measure Firm Performance I.Ratios and stated objectives III. Take Corrective Actions Differences? Yes NO Yes NO
Copyright 2005 Prentice Hall Ch 9-34 Strategy Evaluation, Review & Control Compare expected to actual results Investigate deviations from plan Evaluate individual performance Progress toward stated objectives Measuring Organizational Performance
Copyright 2005 Prentice Hall Ch 9-35 Strategy Evaluation, Review & Control Financial Ratios Compare performance over different periods Compare performance to competitors Compare performance to industry averages Quantitative Criteria for Strategy Evaluation
Copyright 2005 Prentice Hall Ch 9-36 Strategy Evaluation, Review & Control Return on investment (ROI) Return on equity (ROE) Profit margin Market Share Key Financial Ratios
Copyright 2005 Prentice Hall Ch 9-37 Strategy Evaluation, Review & Control Debt to equity Earnings per share (EPS) Sales growth Asset growth Key Financial Ratios
Copyright 2005 Prentice Hall Ch 9-38 Strategy Evaluation, Review & Control Internal consistency of strategy Consistency with environment Appropriateness in view of resources Qualitative Evaluation of Strategy
Copyright 2005 Prentice Hall Ch 9-39 Strategy Evaluation, Review & Control Acceptable degree of risk Appropriate time frame Workability of the strategy Qualitative Evaluation of Strategy
Copyright 2005 Prentice Hall Ch 9-40 Strategy Evaluation, Review & Control -- Evaluate strategies from 4 perspectives: 1. Financial performance 2. Customer knowledge 3. Internal business processes 4. Learning & growth Balanced Scorecard
Copyright 2005 Prentice Hall Ch 9-41 Balanced Scorecard Area of ObjectivesMeasure or TargetTime ExpectationPrimary 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
Copyright 2005 Prentice Hall Ch 9-42 Strategy Evaluation, Review & Control Economical Meaningful Generates useful information Timely information Provides accurate picture of events Characteristics of strategy evaluation
Copyright 2005 Prentice Hall Ch 9-43 Strategy-Evaluation Assessment Matrix Continue courseYesNo Corrective actionsNoYesNo Corrective actionsYes No Corrective actionsNo Yes Corrective actionsYesNoYes Corrective actionsNoYes Corrective actionsYes Corrective actionsNo 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?
Copyright 2005 Prentice Hall Ch 9-44 Strategy Evaluation, Review & Control Alternative plans that can be put into effect if certain key events do not occur as expected Contingency Planning
Copyright 2005 Prentice Hall Ch 9-45 Strategy Evaluation, Review & Control Financial audits determine correspondence between assertions based on strategic plan & established criteria Environmental audits insure sound and safe practices Auditing
Copyright 2005 Prentice Hall Ch 9-46 Strategy Evaluation, Review & Control Process is more an “art” than “science” Should strategies be visible or hidden from stakeholders Should process be more top-down or bottom up 21 st Century Challenges in Strategic Management