1. Ch 11 -1 Copyright © 2011 Pearson Education

2. Strategic Management: Concepts and Cases Arab World Edition Fred R. David Abbas J. Ali Abdulrahman Y. Al-Aali Chapter 11: Strategy Review, Evaluation and Control Ch 11 -2 Copyright © 2011 Pearson Education

3. Chapter Outline Ch 11 -3Copyright © 2011 Pearson Education The Nature of Strategy Evaluation A Strategy-Evaluation Framework The Balanced Scorecard Published Sources of Strategy Evaluation Information Characteristics of an Effective Evaluation System Contingency Planning Auditing 21st Century Challenges in Strategic Management

4. Vital to the organization’s well-being Alert management to potential/actual problems in a timely fashion Strategy Review, Evaluation, and Control Strategy Evaluation Ch 11 -4Copyright © 2011 Pearson Education

5. Ch 11 -5Copyright © 2011 Pearson Education Source: Adapted from Fred R. David, “How Companies Define Their Mission,” Long Range Planning 22, no. 3 (June 1988) 40.

6. 1.Examine the underlying bases of a firm’s strategy. 2.Compare expected to actual results. 3.Taking corrective actions to ensure that performance conforms to plans. Strategy Review, Evaluation, and Control Three Basic Activities Ch 11 -6Copyright © 2011 Pearson Education

7. Strategy evaluation can be complex & sensitive undertaking Too much emphasis can be costly & counterproductive Strategy Review, Evaluation, and Control Strategy Evaluation Ch 11 -7Copyright © 2011 Pearson Education

8. Strategy Review, Evaluation, and Control Appraisal of Strategic Performance In many organizations, strategy evaluation is simply an assessment of the following :- How well an organization has performed? Have assets increased? Is the profitability increased ? Is there any increasing in sales? Is there any increasing in productivity? Is there any increasing in profit margins? If the answers are “yes” thus the strategy may be correct ? Ch 11 -8Copyright © 2011 Pearson Education

9. Strategy Review, Evaluation, and Control Coherence Consistency Feasibility Advantage Rumelt’s 4 Criteria Ch 11 -9Copyright © 2011 Pearson Education

10. Strategy Review, Evaluation, and Control Consistency: Strategy should not present inconsistent goals & policies Ch 11 -10Copyright © 2011 Pearson Education

11. Strategy Review, Evaluation, and Control Coherence: Coherence refers to the need for strategies to examine sets of trends Ch 11 -11Copyright © 2011 Pearson Education

12. Strategy Review, Evaluation, and Control Feasibility: The strategy must neither overtax resources or create unsolvable sub-problems Ch 11 -12Copyright © 2011 Pearson Education

13. Strategy Review, Evaluation, and Control Advantage: A strategy must provide for the creation or maintenance of competitive advantage Ch 11 -13Copyright © 2011 Pearson Education

14. Strategy Review, Evaluation, and Control Difficulties in Strategy Evaluation 1.Increase in environment’s complexity 2.Increasing number of variables 3.Rate of obsolescence of plans 4.Domestic and global events 5.Decreasing time span for planning certainty Ch 11 -14Copyright © 2011 Pearson Education

15. A Strategy-Evaluation Framework Review of Underlying Bases of Strategy Develop revised EFE Matrix Develop revised IFE Matrix Ch 11 -15Copyright © 2011 Pearson Education

16. Review Effectiveness of Strategy 1.Competitors’ reaction to strategy 2.Competitors’ change in strategy 3.Competitors’ changes in strengths & weaknesses 5.Reasons for competitors’ strategic change 6.Reasons for competitors’ successful strategies 7.Competitors’ present market positions & profitability 8.Potential for competitor retaliation 9.Potential for cooperation with competitors Ch 11 -16Copyright © 2011 Pearson Education

17. Monitor Strengths & Weaknesses; Opportunities & Threats Are strengths still strengths? Have we added additional strengths? Are weaknesses still weaknesses? Have we developed other weaknesses? Are opportunities still opportunities? Are there any other opportunities develop? Are threats still threats? Are there any other threats emerged? Ch 11 -17Copyright © 2011 Pearson Education

18. Compare expected to actual results Investigate deviations from plan Evaluate individual performance Progress toward stated objectives Measuring Organizational Performance Ch 11 -18Copyright © 2011 Pearson Education

19. Quantitative Criteria for Strategy Evaluation Financial Ratios – Compare performance over different periods – Compare performance to competitors’ – Compare performance to industry averages Ch 11 -19Copyright © 2011 Pearson Education

20. Qualitative Evaluation of Strategy Internal consistency of strategy Consistency with environment Acceptable degree of risk Appropriate time frame Workability of the strategy Ch 11 -20Copyright © 2011 Pearson Education

21. Making changes to competitively reposition a firm for the future Keeping organization on track toward achieving stated objectives Taking Corrective Actions Ch 11 -21Copyright © 2011 Pearson Education

22. Balanced Scorecard Ch 11 -22Copyright © 2011 Pearson Education Evaluate strategies from 4 perspectives: 1.Financial performance 2.Customer knowledge 3.Internal business processes 4.Learning & growth

23. Characteristics of Strategy Evaluation  Strategy evaluation must meet several basic requirements to be effective : 1.Economical 2.Meaningful 3.Generates useful information 4.Provides accurate picture of events 5.Action-oriented Ch 11 -23Copyright © 2011 Pearson Education

24. 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? Ch 11 -24Copyright © 2011 Pearson Education

25. computerized Evaluation  Computer networks and the internet help to coordinate SM activities and to ensure that decisions are based on good information  The checkmate strategic planning software is especially good in this regard (www.checkmateplan.com )www.checkmateplan  Using a combination of intuition and analysis is key to effective strategy evaluation and to successful S.M. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 9- 25

26. Auditing :- Auditing is defined by the American Accounting Association (AAA) as : A systematic process of objectively obtaining and evaluating evidence about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria. Two important types of auditing :- Financial audits determine correspondence between assertions based on strategic plan & established criteria Environmental audits ensure sound and safe practices Ch 11 -26Copyright © 2011 Pearson Education

27. The End Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall Ch 9- 27