It is essential for managers to systematically review, evaluate and control the execution of strategies, because even the best-formulated and best-implemented strategies can become obsolete as the internal and external environments change.
Strategy evaluation is essential to ensure that the stated objectives are being achieved.
Strategy evaluation is important because organisations face dynamic environments in which key external and internal factors often change quickly and dramatically.
Strategy evaluation includes three basic activities :
1. Examining the underlying bases of the firm’s strategy
2. Comparing expected results with the actual results
3. Corrective action to ensure performance conforms to plans
Richard Rumelt lays down four criteria that can be used to evaluate a strategy :
1. Consistency : Strategy must be consistent with goals and policies.
2. Consonance : A strategy must represent an adaptive response to the external environment and to the critical changes occurring within.
3. Feasibility : The strategy should be attempted within the physical, human and financial resources of the enterprise.
4. Advantage : The strategy must provide for creation and/ or maintenance of a competitive advantage in a selected area of activity (Resource, skill or position).
Business Policy & Strategic Managementc