Chapter 9: Strategy Review, Evaluation, and Control Flashcards
1
Q
Strategy Review, Evaluation, and Control
A
- Strategies become obsolete
- Internal environments are dynamic
- External environments are dynamic
2
Q
Strategy Evaluation
A
- 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
- Complex & sensitive undertaking
- Overemphasis can be expensive & counterproductive
3
Q
Strategy Review, Evaluation, and Control: Three Basic Activities
A
- Examine the underlying bases of a firm’s strategy
- Compare expected to actual results
- Take corrective actions to ensure that performance conforms to plans
4
Q
Appraisal of Strategic Performance
A
- Appraisal of Strategic Performance
- Increase in profitability?
- Increase in sales?
- Increase in productivity?
- Increases in profit margins, ROI, and EPS ratios?
5
Q
Rumelt’s 4 Criteria
A
- Consistency
- Consonance
- Feasibility
- Advantage
6
Q
Consistency
A
- Strategy should not present inconsistent goals and policies
7
Q
Consonance
A
- Need for strategists to examine sets of trends, as well as individual trends
8
Q
Feasibility
A
- Neither overtax resources nor create unsolvable subproblems
9
Q
Advantage
A
- Creation or maintenance of competitive advantage
10
Q
Difficulties in Strategy Evaluation
A
- Increase in environment’s complexity
- Difficulty predicting future with accuracy
- Increasing number of variables
- Rate of obsolescence of plans
- Domestic and global events
- Decreasing time span for planning certainty
11
Q
Strategy Evaluation Should:
A
- Initiate managerial questioning of expectations and assumptions
- Trigger a review of objectives & values
- Stimulate creativity in generating alternatives and formulating criteria for evaluation
12
Q
Reviewing Effectiveness of a Strategy
A
- Competitors’ reaction to strategy
- Competitors’ change in strategy
- Competitors’ changes in strengths & weaknesses
- Reasons for competitors’ strategic change
- Competitors’ satisfaction with present market positions & profitability
- Potential for competitor retaliation
- Potential for cooperation with competitors
13
Q
Monitor Strengths & Weaknesses; Opportunities & Threats
A
- Are strengths still strengths?
- Have we added additional strengths?
- Are weaknesses still weaknesses?
- Have we developed other weaknesses?
- Are opportunities still opportunities?
- Other opportunities develop?
- Are threats still threats?
- Other threats emerged?
- Are we vulnerable to hostile takeover?
14
Q
Measuring Organizational Performance
A
- Compare expected to actual results
- Investigate deviations from plan
- Evaluate individual performance
- Examine progress toward stated objectives
15
Q
Quantitative Criteria for Strategy Evaluation: Financial Ratios
A
- Compare performance over different periods
- Compare performance to competitors
- Compare performance to industry averages
