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Chapter 11- Strategy Monitoring

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Safiah Omar

on 1 May 2017

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Transcript of Chapter 11- Strategy Monitoring

Basic Activity
Three basic activities:
Examine the underlying
of a firm’s strategy
expected results with actual results
corrective actions
to ensure that performance conforms to plans.

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The Process of Evaluating Strategies
Strategy evaluation should
initiate managerial questioning
of expectations and assumptions, should trigger a review of objectives and values, and should
stimulate creativity in generating alternatives
and formulating criteria of evaluation
Evaluating strategies on a
continuous rather than on a periodic
basis allows benchmarks of progress to be established and more effectively monitored
Successful strategies
combine patience with a willingness
to promptly take corrective actions when necessary

Chapter 11- Strategy Monitoring
Strategy Evaluation
Reviewing bases of strategy
How have competitors reacted to our strategies?
How have competitors’ strategies changed?
Have major competitors’ strengths and weaknesses changed?
Why are competitors making certain strategic changes?
Why are some competitors’ strategies more successful than others?
How satisfied are our competitors with their present market positions and profitability?
How far can our major competitors be pushed before retaliating?
How could we more effectively cooperate with our competitors?

Balanced Scorecard
The Balanced Scorecard approach to strategy evaluation aims to
balance long-term with short-term concerns
, to balance f
inancial with nonfinancial
concerns, and to balance
internal with external

Key Questions to Address in Evaluating Strategy
1. Are our internal
still strengths?
2. Have we added other internal strengths? If so, what are they?
3. Are our internal
still weaknesses?
4. Do we now have other internal weaknesses? If so, what are they?
5. Are our external
still opportunities?
6. Are there now other external opportunities? If so, what are they?
7. Are our external
still threats?
8. Are there now other external threats? If so, what are they?
9. Are we vulnerable to a
hostile takeover

Characteristics of Effective Evaluation System
Consonance and advantage are mostly based on a firm’s external assessment
Consistency and feasibility are largely based on an internal assessment

The Nature of Strategy Evaluation
Measuring Organizational Performance
Strategists use common quantitative criteria to make three critical comparisons:
Comparing the firm’s performance over
different time periods
Comparing the firm’s performance to
Comparing the firm’s performance to
industry averages

Strategy evaluation activities must be
too much information can be just as bad as too little information
too many controls can do more harm than good
Activities should be
should specifically relate to a firm’s objectives
Activities should provide
timely information
Activities should be designed to
provide a true picture
of what is happening
Activities should
not dominate decisions
should foster mutual understanding, trust, and common sense

Contingency Planning
Contingency Plans can be defined as alternative plans that can be put into effect if certain key events do not occur as expected.

If a
major competitor withdraws
from particular markets as intelligence reports indicate, what actions should our firm take
If our
sales objectives are not reached,
what actions should our firm take to avoid profit losses
demand for our new product exceeds plans
, what actions should our firm take to meet the higher demand?
If certain
disasters occur
, what actions should our firm take?
If a new technological advancement makes our
new product obsolete sooner
than expected, what actions should our firm take?

Effective Contingency Planning
1. Identify
both beneficial and unfavorable events
that could possibly derail the strategy or strategies.
2. Specify
trigger points.
3. Assess the
impact of each contingent event.
Develop contingency plans
5. Assess the
of each contingency plan.
6. Determine
early warning signals
for key contingent events.
7. For contingent events with reliable early warning signals, develop
advance action plans
to take advantage of the available lead time.

“a systematic process of objectively obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between these assertions and established criteria, and communicating the results to interested users

Twenty-First-Century Challenges ​in Strategic Management
Deciding whether the process should be more an art or a science
Deciding whether strategies should be visible or hidden from stakeholder
Deciding whether the process should be more top-down or bottom-up in their firm

Guidelines for Effective Strategic Management
Keep the process simple and easily understandable.
Eliminate vague planning jargon.
Keep the process non-routine; vary assignments, team membership, meeting formats, settings, and even the planning calendar.
Welcome bad news and encourage devil’s advocate thinking
Do not allow technicians to monopolize the planning process.
To the extent possible, involve managers from all areas of the firm.
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