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Strategy Evaluation and Control

Strategy Evaluation and Control. Strategic Control Process. Quantitative Qualitative In both cases process consists of three phases – 1. Evaluation Criteria . 2. Performance Evaluation 3. Feedback. Quantitative. To compare the performance of the organization over different time periods

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Strategy Evaluation and Control

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  1. Strategy Evaluation and Control

  2. Strategic Control Process • Quantitative • Qualitative In both cases process consists of three phases – 1. Evaluation Criteria . 2. Performance Evaluation 3. Feedback

  3. Quantitative • To compare the performance of the organization over different time periods • To compare the performance with it’s competitors in the industry • To compare the performance against industry averages

  4. Financial Ratios • ROI • Return on Equity • Profit Margin • Market Share • Debt to Equity • EPS • Sales Growth • Asset Growth

  5. Methods of Control • DuPont Chart • Budgets • Audits

  6. Time Related Control • Critical Path Method • PERT • MBO

  7. Problems of Control System • Reporting data validity • Criteria for measurement in question • Performance standards may be set with inherent contradictions • Over emphasis on short term measures

  8. Evaluation of Strategy • Strategy Formulation • Strategy Implementation • Strategy Evaluation

  9. Business Portfolio Analysis • BCG Matrix • McKinsey Matrix • Strategic Planning Institute’s Matrix • Arthur D’Little Company’s Matrix • Hofer’s Product / Evolution Matrix

  10. Qualitative Factors • Balanced Score Card by Norton and Kaplan

  11. The Basic Performance Pyramid What are we in business for? Mission Where are we going? Vision What do we want to achieve? Goals/Objectives How will you achieve your goals/objectives? Strategies What do you need to do well? Success Drivers How will you measure how well you are doing? Performance Measures

  12. Balanced Scorecard Approach • The Balanced Scorecard translates an organization’s mission and strategy into goals and measures, organized into four different perspectives • customer • financial • internal business process • innovation and learning

  13. Balanced Scorecard Approach (Cont’d) • The Balanced Scorecard helps an organization to: • determine progress towards its goals/objectives • communicate strategic direction • determine success or failure of its strategies/initiatives • define future strategies • establish benchmarks • demonstrate value-added

  14. Balanced Scorecard Approach (Cont’d) • The best Balanced Scorecards will tell the story of the organization’s strategy and cause the overall performance to be managed such that the stated mission is accomplished.

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