Strategic Evaluation & Control

Presented By:
Neha
Navkiran
Pranjal
Prateek
Neeraj
Raghu
Strategic Management Process
Determining Strategy Strategy
Envt. Strategy
goals and Formulatio implement
Scanning evaluation
objectives n ation

• Strategic Evaluation is defined as the process of determining the

effectiveness of a given strategy in achieving the organizational
objectives and taking corrective action wherever required.

• Strategy evaluation is the final step of strategy management process.

The key strategy evaluation activities are: appraising internal and
external factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions. Evaluation
makes sure that the organizational strategy as well as it’s
implementation meets the organizational objectives.
Importance of Strategic Evaluation
• Strategic evaluation can help to assess whether the
decisions match the intended strategy requirements.
• Strategic evaluation, through its process of control,
feedback, rewards, and review, helps in a successful
culmination of the strategic management process.
• The process of strategic evaluation provides a
considerable amount of information and experience
to strategists that can be useful in new strategic
planning
Process of HR Strategic Evaluation
1) Fixing benchmark of performance
 While fixing the benchmark, strategists encounter questions such as -
o What benchmarks to set
o How to set them
o 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 organization can use both quantitative and qualitative criteria for
comprehensive assessment of performance.

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 helps in measuring the performance.
• 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.

• 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.
Techniques of Strategic Evaluation
1)Gap Analysis
• The gap analysis is one strategic evaluation technique used to measure the gap between the
organization’s current position and its desired position.
• The gap analysis is used to evaluate a variety of aspects of business, from profit and
production to marketing, research and development and management information
systems.
• Typically, a variety of financial data is analyzed and compared to other businesses within
the same industry to evaluate the gap between the organization and its strongest
competitors.

2) SWOT Analysis
• The SWOT analysis is another common strategic evaluation technique used as a part of the
strategic management process. The SWOT analysis evaluates the organization’s strengths,
weaknesses, opportunities and threats.
• Strengths and weaknesses are internal factors, while opportunities and threats are external
factors.
• This identification is essential in determining how best to focus resources to take advantage
of strengths and opportunities and combat weaknesses and threats
Techniques of Strategic Evaluation
3) PEST Analysis
• Another common strategic evaluation technique is the PEST analysis, which identifies the
political, economic, social and technological factors that may impact the organization’s
ability to achieve its objectives.
• Political factors might include such aspects as impending legislation regarding wages and
benefits, financial regulations, etc
• Economic factors include all shifts in the economy, while social factors may include
demographics and changing attitudes. Technological pressures are also inevitable as
technology becomes more advanced each day.
• These are all external factors, which are outside of the organization’s control but which
must be considered throughout the decision making process.

4) Benchmarking
• Benchmarking is a strategic evaluation technique that’s often used to evaluate how close
the organization has come to its final objectives, as well as how far it has left to go.
• Organizations may benchmark themselves against other organizations within the same
industry, or they may benchmark themselves against their own prior situation.
• A variety of performance measures, as well as policies and procedures, may be evaluated
regularly to identify where adjustments are necessary to maintain the sustainable
competitive advantage.
TYPES OF CONTROL
Strategic controls take into account the changing assumptions
that determine a strategy, continually evaluate the strategy as
it is being implemented, and take the necessary steps to adjust
the strategy to the new requirements.

In this manner, strategic controls are early warning systems

and differ from post-action controls which evaluate only after
the implementation has been completed.

• Premise Control
• Implementation Control
• Special alert Control
• Strategic Surveillance Control
Premise Control:
• Premise control is necessary to identify the key
assumptions, and keep track of any change in them so as
to assess their impact on strategy and its
implementation.
• Premise control serves the purpose of continually testing
the assumptions to find out whether they are still valid
or not. This enables the strategists to take corrective
action at the right time rather than continuing with a
strategy which is based on erroneous assumptions.
• The responsibility for premise control can be assigned to
the corporate planning staff who can identify key
assumptions and keep a regular check on their validity.
 Implementation Control:
• Implementation control may be put into practice through the
identification and monitoring of strategic thrusts such as an
assessment of the marketing success of a new product after pre-
testing, or checking the feasibility of a diversification programme
after making initial attempts at seeking technological collaboration.

Special Alert Control:

Special alert control is based on trigger mechanism for rapid response
and immediate reassessment of strategy in the light of sudden and
unexpected events such as natural disasters, product recalls or market
spikes. Special alert controls allow you to reconsider the relevancy of
your strategy in light of these new events.
Strategic Surveillance Control:

• Strategic surveillance can be done through a

broad-based, general monitoring on the basis of
selected information sources to uncover events
that are likely to affect the strategy of an
organisation.
Fun Fact:
Did you know that Netflix was originally called Kibble?
Source: https://bstrategyhub.com
An Overview of Netflix
With 137.1 million subscribers from around the world, Netflix has grown tremendously
over the years. It is one of the leading internet entertainment services in the world with
paid memberships in over 190 countries.

In 1997, Reed Hastings and Marc Randolph co-founded Netflix, starting as a DVD
sales and rental by mail but after a year they focused on online DVD rental service.

In 2007, Netflix introduced streaming media online while retaining its DVD rental
service. They started expanding online streaming internationally in 2010. With such a
global reach, Netflix’s profits tripled this year.
SWOT Analysis of Netflix
Netflix’s Strengths – Internal Strategic
Factors:
Exponential Growth – In the past ten years, Netflix has become an influential brand for online
streaming content not only in the US but across the world.

Global Customer Base – Netflix is serving over 190 countries across the world, having a global
customer base. There are over 137 million subscribers of Netflix, and it gives the company a strong
bargaining power with the studios for securing exclusive content.

Originality – Another one of its strength is that Netflix has been producing original content over the
years with the highest quality. Some of its original shows like Stranger things, Narcos, Mindhunter,
Sacred games etc.

Adaptability – Netflix adapted to various technologies instantly by providing streaming on all

internet-connected devices like personal computers, iPads, mobile devices, and televisions. Due to
this, their business grew immensely over the years.

Competitive Pricing – The pricing strategy of Netflix has given it leverage over its competitors. The
plans that Netflix has designed are affordable and offer great value. Subscribers can watch unlimited
movies, either on DVD or streaming for an affordable price of $8.99 a month. It is less expensive than
cable movies or going to the cinema and also offers a wider selection. For a higher price, subscribers
can even get premium plans.
Netflix’s Weaknesses — Internal
Strategic Factors:
• Growing Operational Costs – The original content produced by Netflix gives it
a competitive advantage, but the cost of supporting this content keeps growing. The
projected spending (June 2018) on original programming by the Economist for this year
was 12-13 billion USD. The amount has exceeded from the last year’s spending.

• Limited Copyrights – Netflix does not own most of its original programming, and this
affects the company negatively. The rights taken from other studios expire after a year, and
that content starts appearing on other sites.

• Increasing Debt – Netflix is serving its diversified content in many countries around the
world which requires huge amounts of money. Netflix keeps adding to its long-term debt to
fund new content, and as of September 30, 2018, it reported $ 34 billion in long-term debt.
The increase in debt every year is the sign of a significant weakness.

• Lack of Green Energy – Netflix has still not utilized renewable energy and hasn’t
created a business model to promote environmental sustainability. Contrary to this, tech
companies like Amazon, Google, Apple, and Facebook have already started using renewable
energy to help sustain the environment. The four tech giants have committed to using
100% renewable energy for their businesses. The lack of green energy utilization has a
negative impact on the brand image of Netflix.
Netflix’s Opportunities – External
Strategic Factors:
• Expand Customer Base – With such a huge current subscriber base, Netflix can tap into
many other countries and expand its services and subscribers. They can start to target
the countries where it is currently not available. Recently, Netflix expanded its operations
and added a few more countries on its operation list. However, it is still unavailable in
China, Crimea, North Korea, and Syria.

• Refresh Content library – It can expand its content licensing by increasing the
contracts with various movie distributors. Additionally, Netflix should refresh its content
library as it is now producing its original content.

• Alliances – It can also partner up with various telecom providers and offer bundle
packages in different countries. Alliances and partnerships can prove to be beneficial for
Netflix. In the past, Netflix partnered with Channel 4. It can form more solid partnerships
with local broadcasters.

• Niche Marketing – Producing region-specific content in their local languages is also

another big opportunity for Netflix. Niche marketing has been proven beneficial for Netflix.
For example, it started an original TV series ‘Sacred Games’ in India, which is a massive
hit. Netflix is now planning to move forward with the second season of ‘Sacred Games’.
Netflix’s Threats — External Strategic
Factors:
Competitive Pressure – Netflix is not the only one which provides
digital streaming around the world. Its competitor base keeps
increasing every year. HBO, Amazon, Hulu, AT&T, and YouTube are
competing continuously with Netflix by giving repeated access to new
and original content to its subscribers.

• Government Regulations – Strict governmental rules and

regulations regarding service providers like Netflix in many countries
can be a big threat for them. For example, Netflix expansion to China
will be unlikely because of its restriction on foreign content.

• Piracy – Digital piracy is still at its peak as thousands of people around

the world find ways of downloading media content because of high
monthly costs which they cannot afford. It is another big threat that
Netflix faces.
Recommendations:

The SWOT analysis of Netflix highlights where the brand currently stands
and the threats it is facing in this era. Following are a few suggestions for
Netflix that were recommended after this detailed analysis:
Tap into new geographical locations by partnering up with their local
cable providers and streaming their local content as well as international
content in various languages. In this way, they will gain more profits and
subscribers.
Netflix should try connecting with IMDB, Rotten Tomatoes, and other
internet services to provide a variety of ratings and other information for
their users.
To avoid digital piracy, Netflix should strengthen their security and
expose whoever is behind digital They can also provide even more generous
subscribing packages for different economic classes.
Improve their application and website by providing a more user-friendly
interface for their subscribers.
That’s all!