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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 1 Strategy Evaluation and Control Chapter 7
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 2 chapter objectives after finish chapter student will understand: The controlling process What is Key Performance Indicators How to take action correction?
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 3 The Nature of Strategy Evaluation Controlling and evaluation is the last activity in the strategic management process. Most strategists agree, therefore, that strategy evaluation is vital to an organization’s well-being, timely evaluation can alert management to problem or potential problems before a situation become critical. Strategy Evaluation includes three basic activities: 1. Examining the underlying bases of a firm’s strategy, 2. Comparing expected results with actual results, 3. Taking corrective actions to ensure that performance conforms to plans.
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 4 The Process of Evaluation Strategies Set performance standard Measure Performance Compare actual work Determine Deviation Standards Within limit? Continues works No Yes Take Correction action
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 5 Key Performance Indicators (KPIs) -Key performance indicators are quantifiable measurements that reflect the critical success factors of an organization. -In order to set performance standards according to the controlling process mentioned above, strategist should established KPI to measure the organization implementation. -4 KPI should be consider during evaluation: -Financial Perspective -Customer Perspective -Internal Process Perspective -Learning and Growth Perspective
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 6 Financial Perspective Return of Investment Revenues Cost per Unit asset utilization Unit cost...
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 7 Customer Perspective Firms should realize that its revenue comes from their customers who willing to pay for firms value. market share customer retention customer acquisition customer satisfaction
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 8 Internal Process Perspective Customer satisfaction to our products or services come from employee’s effort. employee willing to work according to better work environment.
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 9 Learning and growth perspective Organization capabilities competencies We can measure by: Employee skills Attitude employee turnover employee satisfaction ...
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Strategic Management: Chapter 7 Basic Strategy Evaluation and Control Page 10 The final strategy evaluation activity, taking corrective action, requires making changes to reposition a firm competitively for the future. Examples of changes that may needed are alerting an organization’s structure, replacing one or more key individuals, selling a division, or revising a business mission. Other changes could include establishing or revising objectives, devising new policies, issuing stock t raise capital, adding additional salespersons, allocating resources differently, or developing new performance incentives. Taking Corrective Actions
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