Analysis of External Environment
Setting objective (Long & Short Term)
Strategy Implementation Organization Strategy Evaluation
Strategy Evaluation: Strategy Evaluation can be defined as a process of determining the effectiveness of a given strategy. Therefore, the purpose of strategy evaluation is to evaluate the effectiveness of a strategy that the organization to achieve predetermined goal. Why is strategy evaluation? Strategy evaluation is the key function /task of a manager. Thus the importance of strategic evaluation depends on its abilities to coordinate task performed by individual manager, also group, divisions or Strategic Business Units (SBU). Strategy evaluation is also important for following reasons: Need for feedback Check on the validity of strategic choice Congruence between decisions and intended strategy Creating inputs for new strategic planning Feedback provides information about the performance can know the feedback of the organization or group of organization that is the information about the performance of the organization so that strategic evaluation is important to know the feedback. Example: Medicine company at the end of the month, meet together and give feedback about their performance & then the medical representative/ board take corrective action. For this need strategic leadership. Strategic choice cash cow, dog, question mark, star which should choice in strategic evaluation Relationship between the managers’ decisions and intended strategy. In long term planning need input. What is input, what is previous performance, input created strategic evaluation. Participants in strategic evaluation: Every organization is responsible to its shareholders, lenders and the public in the case of Public Ltd Company. Therefore, shareholders, lenders and the public are the evaluator of the company. That means shareholders, lenders and public participants in the activities & decision making of the organization. Board of directors exacts the formal roles of reviewing on evaluation the executive decisions.
Chief executive officer (CEO) is responsible for all the administrative aspects of strategic evaluation are controlled. CEOs are the top level managers. They formulate the strategy & implement the strategy by the other level managers. Financial controller or controller of accounts, company secretaries, internal & external auditors are responsible for financial analysis, budgeting & reporting. Example: The banking industry’s head office is the auditor. When BD bank sent auditors to the commercial bank to audit is called external auditors. If bank’s head office audit their branches is called external auditors. Lower level & mid level managers are also responsible for the strategic evaluation. Audit & executive committee set up by the board of directors on chief executive of the company may be changed with responsibility of continuous reviewing the performance of the company. The SBU head or profit center head may be involve in performance evaluation of their levels. Requirements/characteristics of an effective strategy conditions: The characteristics of an effective strategy evaluation are listed below: 1. Economical: The activities related to strategic evaluation must be economical. That means cost effective. If they are not cost effective, wastage would be creep up. 2. Meaningful: The activities related to strategic evaluation must be meaningful that means every activities should be meaningful and the results should also meaningful. 3. Providing useful information: Strategic evaluation providing useful information that helps in taking new strategic planning. 4. Providing timely information: Strategic evaluation provides information to manager on time. If it provides information lately then managers can’t take action properly on proper measures....