Sei sulla pagina 1di 54

St evaluation & types of

St evaluation.
 Peter Drucker's well-known advice:

 You can’t manage what you don’t measure.

 (Evaluation)
What is organizations evaluation ?
 Organizational evaluation means "measuring

comparing and analyzing the performance

vis a vis the specific objectives and general
objectives of company; whether the
organization is adapting to new
environments, new technology, new systems,
new process
 --· areas which need to be improved,

modified or strengthened.
 Evaluation and control mechanisms are set in
place to inform every stage of the
strategic management process.

They are a means of collecting whatever

information the company may need to
compare plans against actual events to
ensure that things are working well and to
anticipate or correct any faults or weaknesses
in the system.
 Evaluation is really just a part of the overall
control process, but it is a very important
part. Without it, managers may end up
making the wrong decisions.

 Because of this close relationship between

evaluation and control, it is common to talk
of them as if they were one and the same
Techniques for strategy evaluation
 Strategic evaluation calls for---
 Performing an environmental analysis.

 Establishing organizational direction.

 Formulating organizational strategy.

 Implementing organizational strategy.

 Evaluating and controlling strategy.

GAP analysis--
 Where are we now ?

 Where do we want to be ?

The difference between the two is GAP.

 GAP compares the actual performance with

potential performance.

 Sometimes it is refereed as NEED-GAP

analysis or need analysis.
 Both SWOT & GAP are used to evaluate
business but different aspects of business.

 Output from one can be used as an input for

another & vice versa.

 SWOT is frequently used by companies while

GAP is not used frequently
 GAP is a three step process.
 1)co will determine factors that define its

current state.

 2)List down the factors needed to reach its

target state.

 3)Plan on how to fill the gap between two

 So the GAP is closed.
GAP helps to identify flaws in resource allocation.
Planning, production, sales, marketing strategies

SWOT 1)Evaluates
co against peers

1)Internal evaluation to identify performance

 2)TO reach short term goals
 3)Comprehensive study evaluating many

parameters & competitors

 Can be a simple process targeted towards

fine-tuning planning, production, resource

 Strengths—Advantages that co has over

 Weakness—Areas that need improvement

compared to competitors
 Opportunities- trends & market gaps to take

advantage of

 Threats—External factors that can threaten

your business.
SWOT---- stands for strengths, weaknesses,
opportunities and threats, is an analytical
framework that can help the company face
its greatest challenges and find its most
promising new markets.
 SWOT analysis enables organizations to

identify both internal and external influences.

SWOT's primary objective is to help
organizations develop a full awareness of all
the factors involved in a business decision
Benefits of SWOT--
 SWOT analysis is often used during
strategic planning. It can serve as a basis
to company actions eg---- exploring new
initiatives, making decisions about new
policies, identifying possible areas for
change, or refining and redirecting efforts
towards the goal.

 Performing a SWOT analysis is also great way

to improve business operations
 S (strengths) and W (weaknesses), refer to internal
 Financial resources such as funding, sources of
income and investment opportunities
 Physical resources such as the company's location,
facilities and equipment
 Human resources, such as employees and target
 Natural resources--- trademarks, patents and
copyrights, current processes, such as employee
programs, department hierarchies and software
 External factors
 External forces influence and affect every

company, organization and individual.

Whether or not these factors are connected
directly or indirectly to an opportunity or
threat, it is important to take note of and
document each one.
 External factors typically refer factors the

company do not control

 Once the SWOT analysis is ready the
marketer need to come up with some
recommendations and strategies based on the
results. These strategies should be focused on
leveraging strengths and opportunities to
overcome  weaknesses and threats.
 This is actually the area of strategy
development where organizations have an
opportunity to be most creative and where
innovative ideas can emerge.
Haley's vintage hats--
 Online business that sells unique & affordable
replica of vintage designer hats. Start up
 Strengths ---
 Founder has 15 yrs experience creating &

selling hats.
 Low capital requirements– Low overheads &

high customer reach

 Founder owns a rare collection of vintage

hats to replicate.
 Weakness-
 Founder has virtually no assistance.

 Founder is slogging herself.

 Founder has no marketing background.

Haley's vintage Hats
 opportunities
 1) co-promote with other vintage fashion


 2)Can hire few sales people if it reaches

break even.

 3)Maximize partnership with alumni of Art

institute of Philadelphia.
Haley's vintage hats--
 Threats
 Supplier dependent business

 Fabric supplier of unique vintage fabric could

go out of business or stop supplying.

 A competitor could knock them off from the

 strengths
 1)state of the art manufacturing plants
 2)Great image in the society, industry
 3)well trained, well motivated field force.
 4)Excellent team of brand management
 5)Huge reserves
 6)following all the modern practices,

processes, technology for drug

 weakness
 1)does not have strong presence in long

term therapy—eg psychotropic, neurorleptics


 2)Block buster molecules have not come for a

long time.

3)Products are expensive

 opportunity
 1) scope for more acquisitions & mergers

 2)Enter anti cancer therapy

 3) can get into wellness medicines which is

an upcoming field
 Threats

 1)More pressures from governments for

price reduction—the margins will suffer

 2)Will meet huge competition from Bio –

similar—will affect MS
Strategic evaluation

Another common strategic evaluation technique is the PESTEL analysis,

which identifies the political, economic, social technological,
environmental & legal factors that may impact the organization's
ability to achieve its objectives.

 1)Political
factors might include aspects such as impending
legislation regarding wages and benefits, financial regulations, or
even the risk of a military invasion in another country.

 2)Economic factors include all shifts in the economy

3) social factors may include demographics and changing attitudes.

Strategic evaluation--
4)Technological factors are also inevitable as
technology becomes more advanced each day.
 5)Environmental factors may include preservation of

ecology, going green, preventing pollution & e-waste.

 6)Legal factors include trade blocks, multilateral

agreements between the countries, rules & regulations
for conducting the business.

 These are all external factors, which are outside of the

organization's control but which must be considered
throughout the decision making process
St evaluation--
 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----
 1)Strategic control can be defined as process
of monitoring various strategies adopted by
the organization

 Strategic control processes allow managers to
evaluate a company's program from a critical
long-term perspective.
The process of strategic control is to review
and evaluate the performance of the system
against these established norms.
 Rewards for meeting or exceeding standards

may range from special recognition or salary

rise or promotions.
 A failure to meet expectations may signal the

need to reorganize the resources or change

the strategic direction or reformulate the
 2)Operational control-- serves to regulate the day-
to-day output related to schedules, specifications
and costs as per the policies and set norms.
 a)Is the output of product or service of proper

quality and is it available as scheduled?

 b)Are inventories of raw materials, goods-in-

process, and finished products being purchased

and produced in the desired quantities?
 c)Are the costs associated with the transformation

process ( Input to output ) in line with cost

estimates ?
 Op---
 d)Is the information needed in the

transformation process available in the right

form and at the right time?

 e)Is the energy resource being utilized

efficiently ?
 The purpose of strategic control is to see that
the specified function is achieved.

 The purpose of operational control is to

ensure that variations in daily output are
maintained within prescribed limits.
 3)Premise Control
 Every strategy is based on certain planning
premises or predictions. Premise control is
designed to check methodically and constantly
whether the premises on which a strategy is
grounded on are still valid. If the company
discovers that an important premise is no longer
valid, the strategy may have to be changed. The
sooner the company recognize and reject an
invalid premise, the better. This is because the
strategy can be adjusted to reflect the reality.
 4)Special Alert Control---
 A special alert control is the rigorous and rapid
reassessment of an organization's strategy
because of the occurrence of an immediate,
unforeseen event. Eg-- acquisition of
company's competitor by an outsider. Such an
event will trigger an immediate and intense
reassessment of the firm's strategy.
 Companies form crisis teams to handle the
company's initial response to the unforeseen
 5)Implementation Control
 Implementing a strategy means execution of plans ----
series of steps, activities, investments over the passage
of time.
 Managers mobilize resources, carry out special projects
and employ or reassign staff.
 There are two types of implementation controls:
a)strategic thrusts b) Milestone reviews.
 Strategic thrusts provide the company with information
that helps them determine whether the overall strategy is
shaping up as planned.
 Milestone reviews– company monitors the progress of
the strategy at various intervals or milestones.
 6)Strategic Surveillance control--
 Strategic surveillance is designed to observe a
wide range of events within and outside the
organization that are likely to affect the track of
the organization's strategy.
 The organization can get unanticipated
information by monitoring multiple information
sources. Such sources include trade magazines,
journals such as The Wall Street Journal, Trade
conferences, conversations with consultants ,
industry experts and observations.
 The important internal factors which have a bearing on the
strategy .
 ⇒
 Value system:
 The value system of the founders and those at the helm of

the affairs has important bearing on the choice of

business, the mission and objectives of the organization,
business policies and practices.
 ⇒
 Mission and Objectives:
 The directions of development, business philosophy,

business policy etc., are guided by the mission and

objectives of the company.
 Management structure and Nature:
 The organizational structure, the composition of
the Board of Directors, professionalization of
management etc., are important factors
influencing business decisions..
 ⇒
 Internal power relationship:
 The support the top management enjoys from
different levels of employees, shareholders and
Board of Directors have important influence on
the decisions and their implementation.
 Human resources:
 The characteristics of the human resource --- skill,

quality, morale, commitment, attitude etc also

contribute to the strength and weaknesses of an
 ⇒

 Company image and Brand equity:

 The image of the company matters while raising

finance, forming joint ventures or other alliances,

entering purchase or sale contracts, launching new
products etc.
 ⇒
 Miscellaneous Factors:
 There are a number of other internal factors
which contribute to the business success/ failures
or influence the decision-making which are----
 1.Physical Assets and Facilities like the production
 2.R&D and technological capabilities
 3.Marketing Resources and distribution network.
 4.Financial factors like financial policies, financial
position and capital structure
 Benefits of Strategic Control
 Controls are an integral part of any organization's business

policies and procedures.

 Protecting its resources against waste, fraud, and

 .
 Ensuring accuracy and reliability in accounting and

operating data

 2.Securing compliance with the policies of the organization

 .
 3.Evaluating the level of performance in all
organizational units of the organization

 4.It optimizes Organizational performance

 5.Ensures competitive advantage

 6.Keeps the organization on track

 7.It helps anticipate events that might occur in

 8.Allows the organization to respond to new
opportunities that may present itself

 9.strategic control determines the quality of

goods & services

 10.Can make continuous improvements with

quality over time and this gives the company
a competitive advantage.