PHILIPPINE CHRISTIAN UNIVERSITY

GRADUATE STUDIES
Master of Business Administration

Topic Report: Strategy Evaluation and Control

Nature of Strategy Evaluation; Strategic Control Process

Submitted to:

Prof. Edilberto A. Lagunda, Ph.D.

Submitted by:

Macabale, Jenine D.
MBA - E
 PHILIPPINE CHRISTIAN UNIVERSITY
GRADUATE STUDIES
Master of Business Administration

Introduction

In the dynamic and competitive business environment, organizations need to develop effective strategies
to achieve their goals and maintain a sustainable competitive advantage. However, formulating a strategy
is only the initial step; it is equally important to evaluate and control the strategy's implementation to
ensure its success. The Nature of Strategy Evaluation and the Strategic Control Process are crucial
aspects of strategic management. These processes help organizations assess the effectiveness of their
strategies, identify deviations from planned outcomes, and make necessary adjustments. In the 13th
edition of "Strategic Management: Concepts and Cases" by Fred R. David, the nature and significance of
strategy evaluation, as well as the strategic control process, are discussed in detail. This topic report aims
to provide an overview of the nature of strategy evaluation and the strategic control process, drawing
insights from David's renowned book.

Nature of Strategy Evaluation

Strategy evaluation is the final stage in strategic management. It is the systematic assessment of an
organization's strategies to determine their effectiveness and make necessary adjustments, which
involves analyzing the progress and outcomes of strategic initiatives against predetermined goals and
objectives. Strategy evaluation serves several purposes, including:

 Assessing the progress towards achieving strategic objectives and goals.

 Identifying the gaps between planned and actual performance.
 Determining the relevance and viability of the current strategy in light of changing internal and
external factors.
 Providing feedback for learning and improvement in future strategic planning.

The nature of strategy evaluation can be understood through the following key aspects:

A. Performance Measurement: Strategy evaluation requires the establishment of clear and specific
performance metrics to measure progress and track the achievement of strategic objectives.
These metrics should be quantifiable, measurable, and time-bound, enabling organizations to
assess their performance objectively. Examples of performance metrics include financial
indicators (such as revenue growth, profitability, and return on investment), market share,
customer satisfaction ratings, and employee productivity.
B. Data Collection and Analysis: Gathering relevant data and conducting a thorough analysis are
crucial steps in strategy evaluation. Both quantitative and qualitative data may be collected from
various sources, such as financial statements, market research, customer feedback, and
employee surveys. This data is then analyzed to identify trends, patterns, and performance gaps.
C. Internal and External Assessment: Strategy evaluation involves conducting both internal and
external assessments to evaluate the alignment of strategies with the organization's resources,
capabilities, and the external environment. Internal assessments examine factors such as the
organization's strengths, weaknesses, core competencies, and operational efficiencies. External
assessments analyze industry trends, competitive forces, market dynamics, technological
advancements, and regulatory changes. By assessing internal and external factors, organizations
can identify whether their strategies are still appropriate and relevant or if adjustments are
required.
D. Comparative Analysis: Comparative analysis involves benchmarking the organization's
performance against industry peers or best practices. This analysis helps identify performance
 PHILIPPINE CHRISTIAN UNIVERSITY
GRADUATE STUDIES
Master of Business Administration

gaps and areas for improvement. By comparing their performance with that of others,
organizations gain valuable insights into their relative strengths and weaknesses.
E. Review of Assumptions: Strategy evaluation requires a critical examination of the assumptions
made during strategy formulation. Changes in the internal or external environment may render
certain assumptions invalid, necessitating strategic adjustments.

Timing and Frequency of Strategy Evaluation

Strategy evaluation is an ongoing process that should be conducted at regular intervals. The timing and
frequency of evaluation may vary depending on the organization's industry, competitive landscape, and
the nature of the strategy itself. However, it is generally recommended to conduct strategy evaluations
annually or whenever significant changes occur that may impact the strategy's effectiveness.

Outcomes of Strategy Evaluation

The outcomes of strategy evaluation may include:

 Identification of areas where the strategy is working well and delivering desired results.
 Identification of performance gaps or deviations from planned outcomes.
 Insights into the reasons behind the deviations and performance gaps.
 Recommendations for strategic adjustments or refinements.
 Improved decision-making for future strategic planning efforts.

In summary, strategy evaluation is a comprehensive and continuous process that involves measuring
performance, assessing internal and external factors, conducting comparative analysis, reviewing
assumptions, and seeking stakeholder involvement. By undertaking robust strategy evaluation,
organizations can make informed decisions about their strategies, identify areas for improvement, and
adapt to changing circumstances to achieve long-term success.

Rumelt’s Criteria for Evaluating Strategies

Evaluating strategies is a critical component of strategic management, as it allows organizations to

assess the effectiveness and suitability of their chosen courses of action. In the realm of strategy
evaluation, Richard Rumelt, a renowned strategist, proposed a set of criteria commonly known as
Rumelt's Criteria. These criteria provide a framework for assessing strategies and determining their
strengths and weaknesses.

 Consistency refers to the alignment and coherence of the various components of a company's
strategy. It involves examining whether different elements of the strategy, such as goals,
objectives, actions, and resource allocation, are mutually reinforcing and supportive of each
other. Inconsistencies in the strategy can lead to confusion, inefficiencies, and conflicts. Strategy
evaluation using Rumelt's Criteria requires assessing the consistency of the strategy to ensure
that it is logically connected and provides a clear roadmap for the organization.
 Consonance focuses on the fit between the organization's strategy and the external
environment. It involves evaluating whether the chosen strategy aligns with the prevailing market
conditions, industry trends, competitive dynamics, and customer needs. Strategy evaluation
 PHILIPPINE CHRISTIAN UNIVERSITY
GRADUATE STUDIES
Master of Business Administration

based on consonance requires analyzing whether the strategy is responsive to changes in the
business environment and whether it positions the organization for long-term success. It also
involves assessing the organization's ability to leverage its resources and capabilities in light of
external opportunities and threats.
 Advantage refers to the ability of the company's strategy to create a sustainable competitive
advantage. Strategy evaluation using this criterion entails assessing whether the strategy enables
the organization to differentiate itself from competitors, exploit its unique strengths and resources,
and deliver superior value to customers. Evaluating advantage involves analyzing factors such as
the organization's core competencies, competitive position, value proposition, and ability to
generate sustainable profits over time.
 Feasibility focuses on the practicality and achievability of the strategy. It involves evaluating
whether the organization has the necessary resources, capabilities, and operational capacities to
implement the strategy successfully. Strategy evaluation based on feasibility requires assessing
the availability of financial resources, skilled personnel, technology, infrastructure, and other
critical factors required for effective strategy execution. Evaluating feasibility helps identify
potential barriers or constraints that may hinder the successful implementation of the strategy.

Rumelt's Criteria provide a comprehensive framework for evaluating the quality and effectiveness of a
company's strategy. By applying these criteria during strategy evaluation, organizations can assess the
consistency, consonance, advantage, feasibility, and implementation of their strategies. This evaluation
process helps identify areas of strength and weakness, allows for strategic adjustments, and enhances
the likelihood of achieving strategic objectives.

Strategic Control Process

The strategic control process is the framework through which strategy evaluation is conducted. It
involves a series of interconnected steps that facilitate effective monitoring, evaluation, and adjustment of
strategies. Here are further details on the key components of the strategic control process:

A. Establishing Standards: Setting standards involves defining expected outcomes and

performance targets against which actual performance will be measured. These standards can be
quantitative or qualitative and should be aligned with the organization's strategic objectives.
Standards may include financial targets (e.g., revenue, profit margins), operational metrics (e.g.,
production efficiency, customer satisfaction), or strategic goals (e.g., market share, brand
positioning).
B. Measuring Performance: Once standards are established, the next step is to measure actual
performance. This involves collecting relevant data and information that reflect the progress and
results of strategic initiatives. Performance measurement can be conducted through various
methods, such as financial reports, operational metrics, surveys, market research, and employee
feedback. Key performance indicators (KPIs) are often used to track specific aspects of
performance related to strategic objectives.
C. Analyzing Deviations: Deviation analysis compares actual performance against the established
standards to identify any significant discrepancies or deviations. This analysis aims to understand
the reasons behind the deviations and their implications for strategy execution. Deviations can
occur due to internal factors (e.g., resource constraints, ineffective processes) or external factors
(e.g., market changes, competitive pressures). By analyzing deviations, organizations can gain
insights into the root causes and take appropriate actions.
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Master of Business Administration

D. Taking Corrective Actions: Once deviations are identified and analyzed, organizations need to
take corrective actions to address the gaps between actual and desired performance. Corrective
actions may involve making adjustments to the strategy, reallocating resources, improving
processes, or changing implementation tactics. The objective is to bring performance back in line
with the established standards and to ensure that the strategy is on track to achieve its intended
outcomes.
E. Feedback and Learning: The strategic control process emphasizes the importance of feedback
and learning. It involves capturing lessons from the analysis of deviations and the effectiveness of
corrective actions. This feedback loop helps organizations improve their strategic planning and
implementation capabilities over time. It enables them to learn from both successes and failures,
refine their strategies, and enhance their overall performance.
F. Continuous Monitoring: Strategic control is not a one-time event but a continuous process.
Organizations need to monitor performance regularly to detect any deviations or changes in the
internal or external environment that may impact strategy execution. Ongoing monitoring allows
for timely adjustments and ensures that strategies remain relevant and effective in dynamic
business environments.

By implementing the strategic control process, organizations can enhance their ability to manage and
adapt their strategies effectively. It enables them to identify performance gaps, address deviations, and
maintain strategic alignment, ultimately increasing the likelihood of achieving their desired outcomes.

Conclusion

The nature of strategy evaluation and the strategic control process are essential elements of effective
strategic management. Strategy evaluation enables organizations to assess the effectiveness of their
strategies, learn from experience, and adapt to the changing business environment. The strategic control
process provides a structured framework for monitoring, evaluating, and adjusting strategies to ensure
alignment with organizational goals. By implementing robust strategy evaluation and strategic control
processes, organizations can enhance their strategic decision-making capabilities and improve overall
performance.

References:

1. David, F. R. (2011). Strategic Management: Concepts and Cases. 13th edition. Pearson.
2. Hill, C. W., Jones, G. R., & Schilling, M. A. (2019). Strategic management: theory: an integrated
approach. Cengage Learning.
3. Johnson, G., Whittington, R., & Scholes, K.