Strategy Review, Evaluation, and Control
THE NATURE OF STRATEGY EVALUATION
A. Importance of Strategy Evaluation
1. The strategic-management process results in decisions that can have significant...
2. Failure to make satisfactory progress toward accomplishing long-term or annual objectives signals a need for corrective action.
3. Quantitative criteria commonly used to evaluate strategies are financial ratios, which strategists use to make three critical comparisons:
a. comparing the firm’s performance over different time periods,
b. comparing the firm’s performance to competitors, and
c. comparing the firm’s performance to industry averages.
4. Key financial ratios for measuring organizational performance:
a. return on investment
b. return on equity
c. profit margin
d. market share
e. debt to equity
f. earnings per share
g. sales growth
h. asset growth
5. Taking Corrective Action
1. The final strategy-evaluation activity, taking corrective action, requires making changes to reposition a firm competitively for the future.
2. 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.
3. 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.
A. Importance of Strategy Evaluation
1. The strategic-management process results in decisions that can have significant...
2. Failure to make satisfactory progress toward accomplishing long-term or annual objectives signals a need for corrective action.
3. Quantitative criteria commonly used to evaluate strategies are financial ratios, which strategists use to make three critical comparisons:
a. comparing the firm’s performance over different time periods,
b. comparing the firm’s performance to competitors, and
c. comparing the firm’s performance to industry averages.
4. Key financial ratios for measuring organizational performance:
a. return on investment
b. return on equity
c. profit margin
d. market share
e. debt to equity
f. earnings per share
g. sales growth
h. asset growth
5. Taking Corrective Action
1. The final strategy-evaluation activity, taking corrective action, requires making changes to reposition a firm competitively for the future.
2. 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.
3. 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.
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