Professional Documents
Culture Documents
Strategy Evaluation
Differences? Yes
NO
III.
Take
II. Measure Firm Performance Corrective
Actions
Differences? Yes
NO
• Financial Ratios
– Compare performance over different periods
– Compare performance to competitors
– Compare performance to industry averages
Strategy Review, Evaluation, & Control
Key Financial Ratios
• Return on investment (ROI)
• Return on equity (ROE)
• Profit margin
• Market Share
• Debt to equity
• Earnings per share (EPS)
• Sales growth
• Asset growth
Strategy Review, Evaluation, & Control
Taking Corrective action:
• taking corrective action, requires making
changes to reposition a firm competitively for
the future.
• Examples of changes that may be needed are
altering an organization’s structure, replacing
one or more key individuals, selling a division,
or revising a business mission.
• Taking corrective action raises employees’ and
managers’ anxieties. Research suggests that
participation in strategy-evaluation activities is
one of the best ways to overcome individuals’
resistance to change.
Strategy Review, Evaluation, & Control
CHARACTERISTICS OF AN EFFECTIVE EVALUATION SYSTEM
• Strategy-evaluation activities must be economical; too
much information can be just as bad as too little
information.
• Strategy-evaluation activities should also be
meaningful; they should specifically relate to a firm’s
objectives.
• Strategy-evaluation activities should provide timely
information; on occasion and in some areas, managers
may need information daily.
• Strategy evaluation should be designed to provide a
true picture of what is happening.
Strategy Review, Evaluation, & Control
Key Financial Ratios
• Return on investment (ROI)
• Return on equity (ROE)
• Profit margin
• Market Share
• Debt to equity
• Earnings per share (EPS)
• Sales growth
• Asset growth
Strategy Review, Evaluation, & Control
21st Century Challenges in
strategic Management
• Currently process is more an “art” than “science”
• Should strategies be visible or hidden from
stakeholders
– Visible: Participation and openness enhances understanding,
commitment, and communication within the firm.
– Hidden: Secrecy limits rival firms from imitating or duplicating the
firm’s strategies and undermining the firm.
• Should process be more top-down or bottom up
– Top executives are the only persons in the firm with the
collective experience…; to make key strategy decisions.
– Lower- and middle-level managers and employees who will be
implementing the strategies need to be actively involved in the
process of formulating the strategies to assure their support and
commitment.
Questions
• Formulation, implementation, and evaluation
forms a framework for strategic management.
Discuss the importance of the IT department in
this framework.
• It is essential that IT professional understand
strategy formulation, implementation, and
evaluation if they are develop enterprise
systems that can help the realisation of
organisation strategy. Discuss the validity of this
statement.
• Discuss whether strategic management is an
“art”, a science or an art and a science.