Visible or Hidden
Sun Tzu: Strategies is secret
War based on deception
Strategy cant be duplicated
Less attractive to rival
Limit critisicm
Free disemination
Business Organisation prefer Visible
Reason
Cant implement strategy well
Inhibit commitment
Inhibit understanding
Secret inhibit communication
Advantages
Enhance commitment,understanding + communication
Democracy
Full support
All staff involve
Art or Science
Mintzberg's notion : More as Arts
Politics
Creativity
Hunch
Emotion
More as Science
Research
Access Internal + External environment
Decide action
Perform analysis
Pros + cons alternative
Top-Down or Bottom-Up
'Top-Dowm'
Top executive makes decision
'Bottom-Up'
Manager + employee involve in decision making
MGM4139 CHP11 STRATEGY MONITORING
The Process of Evaluating Strategies
Organizational members should involved.
Managers and employees shold be aware of the firm's progress
Example : If the assumptions made are deviate significantly from forecast, then a change or renew in Strategy-Formulation is needed.
Performed in CONTINUING BASIS
NOT in the end of specific time or when problems occurred.
Should
Stimulate creativity in generating ALTERNATIVES & CRITERIA of EVALUATION
Trigger a review of OBJECTIVES & VALUES
Initiate managerial questions of EXPECTATION & ASSUMPTIONS.
21st-Century Challenges in Strategic Management
Auditing
Reason of switching standards from GAAP to IFRS
IFRS rules are more streamlined and less complex than GAAP
New standard - International Financial Reporting Standards (IFRS)
Old standard - Generally Accepted Accounting Principles (GAAP)
A systematic process of objectively obtaining and evaluating evidence - assert and communicate the results to interested users
Contingency Planning
Five-step process of effective Contingency Planning
Determine early warning trigger points key contingency events
Develop contingency plans for key contingency events
Determine the expected pros and cons of each contingency events
Determine when the events occur
Identify events that could jeopardize strategies
Benefits of Contingency Planning
It made managers more adaptable the changes
It prevent panic in crisis situations
It permit quick response to change
The organization need a major change after the evaluation phase - thus, can promote a strategist's ability to respond quickly
Alternative plans that can take into action if certain strategy/plan do not occur as expected
Characteristics of an Effective Evaluation System
Do not dominate decision
Provide current situation
Simple
Provide timely info
Meaningful to managers
Adequate control
Adequate info
Economical
Published Sources of Strategy-Evaluation Information
Dun's Business Month
Industry Week
Businessweek
Fortune
Innovativeness
Product quality
Quality of management
Financial soundness
Global competitiveness
Social responsibilty
Long-term investment
Use of assets
People management
The Balanced Scorecard
aims to balance:
Internal & External
Financial & Nonfinancial
Long terms & short terms
allows firms to evaluate strategies
6 Key issues
financial
business ethics/natural environment
community/social responsibility
operations processes
managers/employees
customers
from 4 prospectives
Learning and growth
customer knowledge
internal business processes
financial performance
Strategy Evaluation Framework
Reviewing Bases of Strategy
S-W-O-T of the current strategies shoud be continually monitored for a better change
Develop a revised IFE and EFE Matrices
-to prevent any upcoming failures toward the organization's objectives
Measuring Organizational Performance
Strategy evaluation based on
Qualitative criteria
Quantitative criteria
Activities
Examining progress
Evaluating individual performance
Investigating deviations from plans
Comparing expected results to actual results
Taking Corrective Action
Outsource (or rein in) business functions
Allocate resources differently
Add or terminate salespersons, employees or managers
Raise capital with stock or debt
Install new performance incentives
Devise new policies
Alter policies
Revise Objectives
Alter the firm's vision or mission
Divest a division
Replace one or more key individuals
Alter the firm's structure
The Nature of Strategy Evaluation
Difficulties
Decreasing time span for planning certainty
Domestic and global events
Rate of obsolescence of plans
Increasing number of variables
Difficulty predicting future with accuracy
Increase in environment’s complexity
Rumelt 4 Criteria
Consonance
Advantage
Feasibility
Consistency
Appraisal of Strategic Performance
Profit margins, ROI, & EPS ratios increased
Increase in productivity
Increase in sales
Increase in profitability
Have assets increased
3 Basic Activities
Corrective actions
Compare expected to actual results
Examine the underlying bases of a firm’s strategy
Strategy Evaluation
Overemphasis can be costly & counterproductive
Complex & sensitive undertaking
Erroneous strategic decisions can have severe negative impact on organizations
Alert management to potential/actual problems in a timely fashion
Vital to the organization’s well-being
