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Strategic evaluation is the assessment process that provides executives and managers performance
information about programs, projects and activities designed to meet business goals and objectives.
Strategic Evaluation operates at two levels:
Strategic level - wherein we are concerned more with the consistency of strategy with the environment.
Operational level - wherein the effort is directed at assessing how well the organization is pursuing a
given strategy.
Performance gap analysis helps a business identify how far it has come toward reaching its goals and how
far it still needs to go to attain them, with the objective of developing a concrete strategy to close any
existing gap.
Disadvantages
1. Lack of synergic effect between business units, for companies both dogs and cash cows are important
for achieving completive advantage over competitors
2. High market share is only a part of success factor and high market share does not leads to high profits
3. This model overlooks the external factors which are very important
4. Lacking a clear definition of the word “market”
5. Sometimes Dogs and get you more money
6. This matrix overlooks small compatriots who may have noticeable market share.
Planning Grid - This tool, developed by General Electric, maps the external industry vs. the internal firm's
forces using multiple factors to determine grid placement. It is a systematic perception measurement
used to determine the attractiveness of the industry and the business strengths of the firm. The grid can
be used to identify the strategic development of the product and evaluation of market share.
GE nine-box matrix is a strategy tool that offers a systematic approach for the multi business enterprises
to prioritize their investments among the various business units. It is a framework that evaluates business
portfolio and provides further strategic implications.
horizontal axis: It indicates business strength or in other words competitive position, which is again a
weighted composite rating based on seven factors as listed below:
1. Relative market share
2. Profit margins
3. Ability to compete on price and quality
4. Knowledge of customer and market
5. Competitive strength and weakness
6. Technological capability
7. Caliber of management
PIE chart (circles) denotes the proportional size of the industry the dark segments denote the company’s
respective market share.
Disadvantages
Needs a consultant or an expert to determine industry’s attractiveness and business unit strength as
accurately as possible.
It is expensive to conduct.
It doesn’t take into account the harmony that could exist between two or more business units.
Life cycle approaches and tools have been developed, refined, are now more commonplace in the private
and public sector, and are already stimulating and supporting the transition to a green economy.
Life cycle thinking is made operational through Life Cycle Management (LCM).
Life Cycle Management is a management approach that puts the tools and methodologies in the life cycle
thinking basket into practice. It is a product management system that helps enterprises to minimize the
environmental and social burdens associated with their product or product portfolio during its entire life
cycle.
PIMS (Profit Impact of Market Strategy) of the Strategic Planning Institute is a large scale study designed
to measure the relationship between business actions and business results. The project was initiated and
developed at the General Electric Co. from the mid-1960s and expanded upon at the Management
Science Institute at Harvard in the early 1970s; since 1975 The Strategic Planning Institute has continued
the development and application of the PIMS research.
PIMS database is "a collection of statistically documented experiences drawn from thousands of
businesses, designed to help understand what kinds of strategies (e.g., quality, pricing, vertical
integration, innovation, advertising) work best in what kinds of business environments.
Participation in the PIMS study: cost and benefits
PIMS evaluated businesses' market position and suggest possible strategies, based on the data gathered
from participating companies. Businesses wishing to use the service provide detailed information,
including details of their:
• competitors and market
• balance sheet
• assumptions about future sales.
In return, PIMS provides four reports, described by Lancaster, Massingham and Ashford as:
1. A 'Par' report - showing the ROI and cash flows that are 'normal' for this type of business, given its
market, competition, technology, and cost structure.
2. A 'Strategy Analysis' report, which computes the predicted consequences of each of several alternative
strategic actions, judged by information in similar businesses making similar moves, from a similar
starting-point and in a similar business environment.
3. A 'Report on Look-Alikes' (ROLA), which aimed at predicting the best combination of strategies for that
particular company, by analyzing strategically similar business more closely.
4. An 'Optimum Strategy' report, which is aimed at predicting the best combination of strategies for that
particular company, again based on the experiences of other businesses in 'similar' circumstances.
Qualitative Factors are factors about a company that are not purely numbers driven and it is looking in
the intangibles.
1. Business Model - It is how a company makes money. A business model is a company's plan for how it
will generate revenues and make a profit. It explains what products or services the business plans to
manufacture and market, and how it plans to do so, including what expenses it will incur.
2. Competitive Advantage - are conditions that allow a company produce a good or service at a lower
price or in a more desirable fashion for customers.
3. Management - is the most important aspect for investing in a company.
Effects on Present and Future customers
Positive:
Profits, Loyalty, Internal Benefits
Negative:
Loss of current customers, Loss of potential customers, Loss of future customers, Loss of
Reputation, Loss of Employees, Loss of Profit
4. Corporate governance describes the policies in place within an organization denoting the relationships
and responsibilities between management, directors and stakeholders.
Strategic control is a term used to describe the process used by organizations to control the formation
and execution of strategic plans.
Effective strategic planning communication - The key to developing this understanding at all levels of an
organization
Common Objectives for Your Strategic Plan
Build awareness of the Balanced Scorecard, or strategic plan, at all levels of the organization
Provide education on key Balanced Scorecard concepts to all audiences
Generate the engagement and commitment of key stakeholders in the project
Encourage participation in the process
Generate enthusiasm for the Balanced Scorecard and strategic plan
Ensure that team results are disseminated rapidly and effectively
Key Elements For Your Strategic Plan
Who refers to both the target audience and the communicator.
The why and what in this equation can be understood as the purpose or message.
When should you communicate the message?
Where and how are you supposed to communicate
Structure is how the entire organization operates, not just its organization chart.
functional strategy is the short-term game plan for a key functional area within a company", some others
prefer to regard them "as plans, or tactics, for carrying out the business strategy". It is concerned with
developing and nurturing a distinctive competence to provide a company or business unit with a
competitive advantage.
marketing strategy sets the overall direction and goals for your marketing, and is therefore different from
a marketing plan, which outlines the specific actions you will take to implement your marketing strategy.
Production/Operation strategies refers to the methods companies use to reach their objectives. By
developing operational strategies, a company can examine and implement effective and efficient systems
for using resources, personnel and the work process.
Organizational leadership is a dual focused management approach that works towards what is best for
individuals and what is best for group as a whole simultaneously. It is also an attitude and a work ethic
that empowers an individual in any role to lead from the top, middle, or bottom of an organization.
Short-term objectives represent the goals an organization sets that are centered on tasks that can be
achieved within the next six months or, at the outset, within one year