The best formulated and best implemented strategies become obsolete as a firm’s external and internal environments change. It is essential, therefore, that strategists systematically review, evaluate, and control the execution of strategies.
Strategic evaluation is the process of reviewing and examining the strategies and their effectiveness in achieving the future goals.
Strategy evaluation includes three basic activities:
- examining the underlying bases of a firm’s strategy,
- comparing expected results with actual results,
- And‚ taking corrective actions to ensure that performance conforms to plans.
Characteristics of strategy evaluation
- Provide direction
- Continuous activity
- Top management activity
- Efficiency maintenance
- Focus on key performance
- Future oriented
Criteria for evaluating strategies
- Consistency: consistent with goal and policies.
- Consonance: responsive with environmental trends.
- easibility: practical to the organization, in- terms of resource and capabilities
- Advantage: helps to build competitive advantage in-terms of resource, skill or position.
Operating /performance Evaluation
Operating evaluation is the process of measuring the performance of operation functions. It deals with quality enhancement and sound operational flow in organization.
The steps includes in operation evaluation are:
- Setting performance standard
- Measurement of performance
- Identify deviation
- Take corrective action
Measures of Corporate Performance
- Traditional financial measures (Return on Investment, Earning per share, return on equity, operating cash flow.)
- Shareholder value
- Stakeholder measures
- Balance scorecard method : ( Financial perspective, customer perspective, business process perspective, learning and growth perspective)