STRATEGY

MONITORING
Gusti Rhamadhani T.P. | Hanna K. | Jovana H.S. | Merry R. |
Vania Khanza

Strategy Monitoring

The Nature of
Strategy
Evaluation

The strategic-management
process results in decisions
that can have significant, longlasting consequences.
Strategy evaluation includes
three basic activities:
examining the underlying
bases of a firms strategy
comparing expected results
with actual results, and

 Richard Rumelt offered four criteria that could be used

to evaluate a strategy: consistency, consonance,
feasibility, and advantage.
Consonance and advantage are mostly based on a
firms external assessment, whereas consistency and
feasibility are largely based on an internal assessment.
Strategy evaluation is important because organizations
face dynamic environments in which key external and
internal factors often change quickly and dramatically.
A fundamental problem facing managers today is how
to control employees effectively in light of modern
organizational demands for greater flexibility,
innovation, creativity, and initiative from employees

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
Regardless of the size of the organization, a certain amount
of management by wandering around at all levels is essential
to effective strategy evaluation
Waiting until the end of the year, for example, could result in
a firm closing the barn door after the horses have already
escaped.
Successful strategies combine patience with a willingness to
promptly take corrective actions when necessary
Managers and employees of the firm should be continually
aware of progress being made toward achieving the firms
objectives.

A StrategyEvaluation
Framework

Measuring
Organizational
Performance

Strategists use common quantitative

criteria to make three critical
comparisons:
Comparing the firms performance
over different time periods
Comparing the firms performance
to competitors
Comparing the firms performance
to industry averages

Problems with
Quantitative Criteria

Most quantitative criteria are geared

to annual objectives rather than
long-term objectives
Different accounting methods can
provide different results on many
quantitative criteria
Intuitive judgments are almost
always involved in deriving
quantitative criteria

Additional Key Questions

1. How good is the firms balance of investments between
high-risk and low-risk projects?
2. How good is the firms balance of investments between
long-term and short-term projects?
3. How good is the firms balance of investments between
slow-growing markets and fast-growing markets?
4. How good is the firms balance of investments among
different divisions?
5. To what extent are the firms alternative strategies
socially responsible?
6. What are the relationships among the firms key internal
and external strategic factors?
7. How are major competitors likely to respond to particular
strategies?

Taking
Corrective
Actions

Balanced
Scorecard
Balanced Scorecard derives its name from the perceived
need of firms to balance financial measures that are
oftentimes used exclusively in strategy evaluation and
control with nonfinancial measures such as product quality
and customer service
An effective Balanced Scorecard contains a carefully
chosen combination of strategic and financial o bjectives
tailored to the companys business.

Strategy
Evaluation
Tools

Financial
Performance

Customer
Knwoledge

International
Business
Process

Learning
and Growth

Published Sources of StrategyEvaluation Information

A number of publications are
helpful in evaluating a firms
strategies.

Although published sources of

strategy-evaluation
information focus primarily on
large, publicly held
businesses, the comparative
ratios and related information
are widely used to evaluate
small businesses and privately
owned firms as well

Characteristics of
an Effective
Evaluation System

strategy- evaluation
activities must be
economical

should be
meaningful

should provide
timely information

should be designed
to provide a true
picture of what is
happening

should not
dominate decisions

Preapare
contigency plans

Characteristics of an Effective
Evaluation System
Syarat
evaluasi
strategi yang
efektif

Aktivitas evaluasi strategi harus ekonomis

Aktivitas evaluasi strategi harus memberi arti
Aktivitas evaluasi strategi harus memberikan informasi yang berguna
Didesain untuk memberikan gambaran nyata dari hal yang terjadi
Harus dapat memotret kejadian secara objektif
Tidak boleh mendominasi keputusan
Tidak boleh ada departemen yang gagal bekerja sama dengan
departemen lainnya
Sistem evaluasi strategi yang lebih detail dan terelaborasi
Kemampuan meyakinkan bahwa kegagalan bukanlah refleksi
sesungguhnya dari kinerja perusahaan

CONTINGENCY PLAN
Didefinisikan sebagai suatu rencana alternatif yang dapat digunakan

ketika terjadi sesuatu yang tidak diinginkan.

Dalam

beberapa

kasus

rencana

kontingensi

harus

sesederhana

mungkin
Manfaat rencana kontingensi :

1)

Memungkinkan respon yang cepat terhadap perubahan

2)

Mencegah kepanikan dalam situasi krisis

3)

Membuat manajer lebih mudah beradaptasi

Contoh rencana kontingensi yang umumnya dibuat oleh perusahaan :

Jika pesaing utama menarik diri dari perusahaan, tindakan apa yang harus
dilakukan perusahaan?

Jika tujuan tidak tercapai, tindakan apa yang harus dilakukan perusahaan untuk
menghindari kerugian?

AUDITING

Alat yang sering digunakan untuk mengevaluasi

strategi
Berguna untuk memeriksa laporan keuangan
perusahaan apakah sesuai dengan prinsip-prinsip
akuntansi yang berlaku umum (GAAP)
Menunjukkan aktivitas yang sebenarnya terjadi
Auditor independen -> menggunakan standar
audit yang berlaku umum (GAAS)
Terdapat standar akuntansi baru untuk pelaporan
keuangan internasional, yakni IFRS

AUDITING

Pro IFRS:
Menyederhanakan akuntansi
Memperpudah perbandingan bagi investor
Mempermudah untuk menambah modal secara global

Kontra IFRS:
Memakan biaya yang besar
Tidak setuju dengan gagasan memberi sebuah badan
internasional kekuasaan untuk menulis aturan akuntansi
Pajak lebih tinggi
Metode LIFO yang tidak memungkinkan untuk menggunakan IFRS

21st Century
Challenges in
Strategic
Management

Deciding whether
the process should
be more an art or a
science

Deciding whether
strategies sgould be
visible or hidden
from stakeholders

Deciding whether
the process should
be more top-down or
bottom-up in their
firm

The Art or
Science Issue

that firms need to

systematically assess
their external and
internal environments

conduct research

perform analyses

carefully evaluate
the pros and cons of
various alternatives

decide on a particular
course
of action

The Visible or
Hidden Issue

Some reasons to be completely open with the strategy

process and resultant decisions are these:
1. Managers, employees, and other stakeholders can
readily contribute to the process. They often have excellent
ideas. Secrecy would forgo many excellent ideas.
2. Investors, creditors, and other stakeholders have greater
basis for supporting a firm when they know what the firm is
doing and where the firm is going.
3. Visibility promotes democracy, whereas secrecy
promotes autocracy. Domestic firms and most foreign firms
prefer democracy over autocracy as a management style.
4. Participation and openness enhance understanding,
commitment, and communication within the firm.

The Visible or
Hidden Issue

Reasons why some firms prefer to conduct strategic

planning in secret and keep strategies hidden from all
but the highest-level executives are as follows:
1. Free dissemination of a firms strategies may easily
translate into competitive intelligence for rival firms
who could exploit the firm given that information.
2. Secrecy limits criticism, second guessing, and
hindsight.
3. Participants in a visible strategy process become
more attractive to rival firms who may lure them away.
4. Secrecy limits rival firms from imitating or duplicating
the firms strategies and undermining the firm.

The Top-Down
or Bottom-Up
Approach

collective
experience

acumen

iduciary
responsibility to
make key strategy
decisions.

CONCLUSION

This chapter presents a strategy-evaluation framework that can facilitate

accomplishment of annual and long-term objectives.
Effective strategy evaluation allows an organization to capitalize on internal
strengths as they develop, to exploit external opportunities as they emerge,
to recognize and defend against threats, and to mitigate internal weaknesses
before they become detrimental.
Strategists in successful organizations take the time to formulate,
implement, and then evaluate strategies deliberately and systematically.
Although not a guarantee for success, strategic management allows
organizations to make effective long-term decisions, to execute those
decisions efficiently, and to take corrective actions as needed to ensure
success.
A potentially fatal problem is the tendency for analytical and intuitive issues
to polarize.
Strategists in successful organizations realize that strategic management is
first and foremost a people process.
The real key to effective strategic management is to accept the premise that
the planning process is more important than the written plan, that the
manager is continuously planning and does not stop planning when the
written plan is finished.