The final stage in strategic management is strategy evaluation and control.

All strategies are

subject to future modification because internal and external factors are constantly changing. In
the strategy evaluation and control process managers determine whether the chosen strategy is
achieving the organization's objectives. The fundamental strategy evaluation and control
activities are: reviewing internal and external factors that are the bases for current strategies,
measuring performance, and taking corrective actions.

Strategic Management Models

Strategic management is a broader term that includes not only the stages already identified but
also the earlier steps of determining the mission and objectives of an organization within the
context of its external environment. The basic steps of the strategic management can be
examined through the use of strategic management model.

The strategic management model identifies concepts of strategy and the elements necessary for
development of a strategy enabling the organization to satisfy its mission. Historically, a number
of frameworks and models have been advanced which propose different normative approaches to
strategy determination. However, a review of the major strategic management models indicates
that they all include the following elements:

1. Performing an environmental analysis.

2. Establishing organizational direction.
3. Formulating organizational strategy.
4. Implementing organizational strategy.
5. Evaluating and controlling strategy.

Strategic management is a continuous and dynamic process. Therefore, it should be understood

that each element interacts with the other elements and that this interaction often happens
simultaneously.

The major models differ primarily in the degree of explicitness, detail, and complexity. These
differences derive from the differences in backgrounds and experiences of the authors. Some of
these models are briefly presented below.

Strategy Evaluation Process and its Significance

Strategy Evaluation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results. The
managers can also assess the appropriateness of the current strategy in todays dynamic world
with socio-economic, political and technological innovations. Strategic Evaluation is the final
phase of strategic management.

The significance of strategy evaluation lies in its capacity to co-ordinate the task
 performed by managers, groups, departments etc, through control of performance.
Strategic Evaluation is significant because of various factors such as - developing inputs for
new strategic planning, the urge for feedback, appraisal and reward, development of the
strategic management process, judging the validity of strategic choice etc.

The process of Strategy Evaluation consists of following steps-

1. Fixing benchmark of performance - While fixing the benchmark, strategists encounter questions
such as - what benchmarks to set, how to set them and how to express them. In order to
determine the benchmark performance to be set, it is essential to discover the special
requirements for performing the main task. The performance indicator that best identify and
express the special requirements might then be determined to be used for evaluation. The
organization can use both quantitative and qualitative criteria for comprehensive assessment of
performance. Quantitative criteria includes determination of net profit, ROI, earning per share,
cost of production, rate of employee turnover etc. Among the Qualitative factors are subjective
evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc.
2. Measurement of performance - The standard performance is a bench mark with which the
actual performance is to be compared. The reporting and communication system help in
measuring the performance. If appropriate means are available for measuring the performance
and if the standards are set in the right manner, strategy evaluation becomes easier. But various
factors such as managers contribution are difficult to measure. Similarly divisional performance
is sometimes difficult to measure as compared to individual performance. Thus, variable
objectives must be created against which measurement of performance can be done. The
measurement must be done at right time else evaluation will not meet its purpose. For
measuring the performance, financial statements like - balance sheet, profit and loss account
must be prepared on an annual basis.
3. Analyzing Variance - While measuring the actual performance and comparing it with standard
performance there may be variances which must be analyzed. The strategists must mention the
degree of tolerance limits between which the variance between actual and standard
performance may be accepted. The positive deviation indicates a better performance but it is
quite unusual exceeding the target always. The negative deviation is an issue of concern
because it indicates a shortfall in performance. Thus in this case the strategists must discover
the causes of deviation and must take corrective action to overcome it.
4. Taking Corrective Action - Once the deviation in performance is identified, it is essential to plan
for a corrective action. If the performance is consistently less than the desired performance, the
strategists must carry a detailed analysis of the factors responsible for such performance. If the
strategists discover that the organizational potential does not match with the performance
requirements, then the standards must be lowered. Another rare and drastic corrective action is
reformulating the strategy which requires going back to the process of strategic management,
reframing of plans according to new resource allocation trend and consequent means going to
the beginning point of strategic management process.

Definition
Business strategy ealuation is the quality control task during which the customer organization’s
business strategy is evaluated.

  

Objectives
The typical objectives of the business strategy evaluation task are to:

 Determine if the customer organization’s business strategy is:

o Complete.
o Consistent with its digital branding strategy and technical strategy.
o Effective.
o Efficient.
 Determine if the deliverable business strategy work products are:
o Correct.
o Complete.
o Consistent (internally, externally with other work products, and externally with related
conventions).
o Understandable.
 Identify defects in the deliverable business work products so that:
o The defects can be fixed.
o Defect trend analysis can be performed to improve the process and staff training.
 Determine if the associated requirements engineering and architecting tasks are:
o Completed.
o Effective.
o Efficient.

  

Preconditions
The business strategy evaluation task can typically begin when the following preconditions hold:

 The strategy inspection team is adequately:

o Staffed.
o Trained in the business strategy evaluation task.
o Trained in its associated techniques (e.g., inspection).
 At least one business strategy work product is ready for evaluation.

  
Completion Criteria
The business strategy evaluation task is typically complete when the following postconditions
hold:

 The following business strategy work products have passed their evaluations:
o Requirements Set:
 Customer Stakeholder Profile
 Customer Analysis
 Competitor Profile
 Market Analysis
 User Profile
 User-Task Matrix
 User Analysis
 Business Vision Statement
 Glossary
o Architecture Set:
 Business Object Model
 Business Process Model
 Business Organization Chart
 ApplicationBusinessCase
 Application Strategy
 Relationship Strategy
 Business Architecture Document
 Business Transition Plan
 Reuse Strategy

  

Steps
The business strategy evaluation task typically involves the following teams performing the
following steps in an incremental, iterative, parallel manner:

 The business strategy team informally evaluates their work products in accordance with the
associated technique(s) used.
 The strategy inspection team formally evaluates these business strategy work products in
accordance with the associated technique(s) used.

  

Techniques
The business strategy evaluation task can typically be performed using the following techniques:

 Desk Checking
 Inspecting

  

Work Products
The business strategy evaluation results in the production of the following work products:

 Quality Set:
o Inspection Reports
o Inspection Summary Reports

  

Guidelines
 Inspecting tends to be the most effective quality evaluation technique for identifying defects.
 Evaluations can be incremental and are typically iterative.

Strategy evaluation
 Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a
SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal
and external) of the entity in business. This may require taking certain precautionary measures
or even changing the entire strategy.

In corporate strategy, Johnson, Scholes and Whittington present a model in which strategic
options are evaluated against three key success criteria:[3]

 Suitability (would it work?)

 Feasibility (can it be made to work?)
 Acceptability (will they work it?)

[edit] Suitability

Suitability deals with the overall rationale of the strategy. The key point to consider is whether
the strategy would address the key strategic issues underlined by the organisation's strategic
position.
  Does it make economic sense?
 Would the organization obtain economies of scale, economies of scope, or experience
economy?
 Would it be suitable in terms of environment and capabilities?

Tools that can be used to evaluate suitability include:

 Ranking strategic options

 Decision trees

[edit] Feasibility

Feasibility is concerned with whether the resources required to implement the strategy are
available, can be developed or obtained. Resources include funding, people, time and
information.

Tools that can be used to evaluate feasibility include:

 cash flow analysis and forecasting

 break-even analysis
 resource deployment analysis

[edit] Acceptability

Acceptability is concerned with the expectations of the identified stakeholders (mainly

shareholders, employees and customers) with the expected performance outcomes, which can be
return, risk and stakeholder reactions.

 Return deals with the benefits expected by the stakeholders (financial and non-financial). For
example, shareholders would expect the increase of their wealth, employees would expect
improvement in their careers and customers would expect better value for money.
 Risk deals with the probability and consequences of failure of a strategy (financial and non-
financial).
 Stakeholder reactions deals with anticipating the likely reaction of stakeholders. Shareholders
could oppose the issuing of new shares, employees and unions could oppose outsourcing for
fear of losing their jobs, customers could have concerns over a merger with regards to quality
and support.

Tools that can be used to evaluate acceptability include:

 what-if analysis
 stakeholder mapping

Strategy control
Strategic control can be defined as process of monitoring as to whether to various strategies
adopted by the organization are helping its internal environment to be matched with the external
environment. Strategic control processes allow managers to evaluate a company's program from
a critical long-term perspective. This involves a detailed and objective analysis of a company's
organization and its ability to maximize its strengths and market opportunities.

There are four types of strategic control as follows:

1. Premise control: is designed to check systematically and continuous whether or not the
premises set during the planning and implementation process are still valid
2. Implementation control: is designed to assess whether the overall strategy result
associated with incremental steps and actions that implement overall strategy.
3. Strategic surveillance: It is designed to monitor a broad range of events inside and outside
the company to threaten the course of firm's strategy.
4. Special alert control: is the need to thoroughly and often rapidly reconsider the firm's
basic strategy based on a sudden unexpected event.