1. Strategic Evaluation
C M Clarke-Hill 1

2. Evaluation - Two Basic Types
Post Hoc Evaluation - evaluation of a strategy that has already been in operation. Here we evaluate the outcomes of the strategy against the strategic benchmarks we set. The role of this form of evaluation is to allow for corrective action. Models widely used are:
The Balanced Scorecard
The Margin Return Model
Strategic Choice Evaluation - is about techniques that allow the manger to decide which of several strategic options to chose from.

3. Evaluation Of Strategies
Evaluation is not just about finding our preferred strategy. We also need:
Contingency plans
An understanding of a variety of options - how might each fit different circumstances
Evaluation should assess consequence of following a strategy and how sensitive that strategy is to our assumptions.
Therefore:
Evaluation must be a continuous part of a continuous process
Must evaluate low priority options to guard against future possibilities 2

4. Strategy Support Tools
Development
Process
Ability to
Formulate
Strategy
Ability to
Deduce
Consequences
of Strategy
Strategy
Support Tool 3

5. Models, Computing And Strategic Choice
Models should be an aid
i.e.. do things we are not very good at
Models do not replace managerial creativity and judgement
Models help give sharper insight into consequences of pursing particular strategy
Choice is based on combination of quantitative and qualitative information
Models, of whatever type, should be seen to generate "opinions" not "answers" 4

6. Assumptions Underpinning Rational Strategy Selection Criteria
Organisations are systems driven by rules producing predictable long term outcomes
These rules establish clear-cut relationships between cause and effect; action and outcome
Successful organisations are in a state of stable equilibrium
Successful organisations exhibit characteristics of stability, regularity, predictability and harmony 5

7. Evaluation Criteria (According to Johnson & Scholes)
Suitability
Does it fit situation revealed by our strategic analysis
Feasibility
Will it work in practice?
Have we got the resources?
Acceptability
Will stakeholders like it? 6

8. Evaluation Criteria (According to Lynch)
Consistency
Is the proposed strategy in line with our mission and objectives?
Suitability
Does it fit our business and competitive environment?
Validity
Is it based upon realistic assumptions?
Feasibility
Will it work in practice and have we got the resources?
Business Risk
Do the potential returns justify the exposure?
Attractiveness to stakeholders
Will stakeholders like it? 7

9. Evaluation Criteria (According to Thompson)
Appropriateness
Does the proposed strategy deal with the influencing factors identified in our strategic analysis?
Feasibility
Does the organisation have the capability to implement the proposed strategy effectively?
Desirability
Does the proposed strategy satisfy stakeholder aspirations and expectations? 8

10. Johnson And Scholes, Lynch and Thompson Compared
Although using different words (labels/terminology) approach is essentially similar:
Johnson & Scholes
Suitability
Feasibility
Acceptability
Lynch
Consistency
Suitability
Validity
Feasibility
Business Risk
Attractiveness to
Stakeholders
Thompson
Appropriateness
Feasibility
Desirability 9

11. The Johnson & Scholes Framework For Evaluating and Selecting Strategies
Strategic Analysis
identifies the
organisation’s circumstances
Strategic Options
identifies possibilities
for development
Assessment of Suitability
establish the rationale
screening options
Acceptability
return, risk
stakeholder reactions
Feasibility
Selection of Strategy
planned, enforced,
learning, command 10

12. financial performance?
Suitability
Life-cycle Analyses
does it fit the stage
we will be in?
Positioning
is the positioning
viable?
Suitability
is this a
good strategy?
Value Chain Analysis
does it improve value
for money?
Does it exploit core
competences?
Business Profile
will it lead to good
financial performance?
Portfolio Analysis
does it strengthen the
balance of activities? 11

13. Criteria for Assessing Suitability
Does the proposed strategy exploit opportunities and avoid threats?
Does the proposed strategy capitalise upon our strengths and core competences whilst avoiding our weaknesses?
Does the proposed strategy fit our culture and political context? 12

14. Techniques for Assessing Suitability
Portfolio / Life-cycles analyses
assess the position of the organisation and the product/service in relation to theoretical product and organisation life-cycles
assess the proposed strategy in terms of the attractiveness of the proposed market and the current competitive position of the organisation
Value Chain Analysis
assess the extent to which the value chain needs to be reconfigured and whether such reconfiguration is sustainable
Business Profile
assess the proposed strategy against available research evidence such as the PIMS database 13

15. Undertaking an Initial Screening of Options
Gap Analysis
extent to which proposed strategies will meet, exceed or fail to meet performance objectives
Decision Trees
progressive elimination of proposed strategies assessed against progressively more rigourous criteria
Scenario Planning
assess the match between proposed strategies and likely future scenarios
prepare contingency plans
Ranking
scoring proposed strategies against a range of criteria to assess best fit 14

16. Criteria for Assessing Acceptability
Financial Return
do the likely profit and cashflow outcomes meet expectations?
Risk
is the level of exposure satisfactory given the likely returns?
Stakeholder Reactions
will stakeholders be motivated to act in a positive manner towards the proposed strategy? 15

17. Techniques for Assessing Acceptability16

18. Criteria for Assessing Feasibility
Does the organisation have the resources necessary to deliver the proposed strategy successfully?
Can any resource deficiencies be remedied easily?
Does the organisation have the competences required to enact the proposed strategy successfully? 17

19. Techniques for Assessing Feasibility
Funds Flow Analysis
assessing whether the available sources can provide sufficient funds to enable the proposed strategy to be implemented successfully
Break-even Analysis
determining the level of performance required to enable the outcome of the proposed strategy to exactly cover the costs of enacting the proposed strategy
Resource Deployment Analysis
understanding the changes and developments needed in organisational activities to enable the proposed strategy to be enacted successfully 18

20. Thompson’s Criteria for Effective Strategies
Mission &
objectives
Skills & resources
Available & needed
Culture
Effect on strategic
perspective
E-V-R
Congruence
Appropriateness
SWOT: Current
Strategic position
Simplicity
Change demands -
issues of
Implementation
Strategic needs:
planning gap
Feasibility
Desirability
Finance & other
resource
availability
Level of return
expected
Ability to meet key
success factors
Synergy
Competitive
Advantage
Timing
Risk
Stakeholder needs
& preferences 19

21. Selecting Strategies
Acceptability
Suitability
Feasibility 20

22. Processes for Selecting Strategies21

23. Criteria For Selecting A Policy
Goal Consistency Test
Frame Test
Competence Test
Workability Test
According to Byars but note similarity to Johnson and Scholes
(Acceptability)
(Suitability)
(Feasibility)
(Feasibility) 22

24. Methods Of Making The Choice
Selection against pre-determined objectives
Referral to a higher authority
Incrementalism
Using outside agencies 23

25. Influences On The Selection Decision
Managerial perceptions of external dependence
Managerial attitudes towards risk
Managerial awareness of past policies
Managerial power relationships 24

26. Making the Choice Risks Reactions Resources Requirements Returns
Revenues 25

27. The Selection Decision
Judgement
Perception
Research
Sentiment
Analysis
Feelings
Evaluation
Intuition 26