QUESTION FIVE (20 MARKS)
Strategy evaluation is vital to the well-being of an organisation because timely evaluations can alert management to problems or potential problems before a situation becomes critical.
Critically examine the stages of strategy evaluation framework. (20)
The stages of strategy evaluation framework are a crucial part of the strategic management process. They help organizations assess their strategies' effectiveness and identify any necessary adjustments or improvements. The stages typically include the following:
1. Establishing standards of performance: This stage involves setting clear and measurable performance targets or standards against which the organization's strategies can be evaluated. These standards should be aligned with the organization's overall objectives and provide a benchmark for evaluating strategy implementation and outcomes.
2. Measuring actual performance: In this stage, the organization collects data and measures its actual performance against the established standards. This can be done through various tools and techniques, such as financial indicators, customer surveys, market share analysis, or internal audits. The purpose is to objectively assess the extent to which strategic goals have been achieved.
3. Comparing actual performance with standards: Once the actual performance has been measured, it is compared to the established standards. This comparison helps identify any gaps or deviations between the expected and actual results. These gaps might indicate areas where the strategy is not working effectively or where adjustments are required.
4. Analyzing reasons for deviations: After identifying deviations from the standards, the organization needs to analyze the reasons behind them. This analysis seeks to understand the factors that are contributing to or hindering the achievement of strategic goals. It can involve investigating internal factors (e.g., resource constraints, skills gaps) or external factors (e.g., changes in the business environment, competitor actions).
5. Taking corrective actions: Based on the analysis of the reasons for deviations, the organization can develop and implement corrective actions or adjustments to its strategies. These actions aim to address the identified problems and improve performance. They can involve changes in the strategic direction, resource allocation, organizational structure, or operational processes.
6. Monitoring and reviewing: Strategy evaluation is an ongoing process, and the organization needs to continuously monitor and review its performance against the established standards. This enables the organization to stay informed about its strategies' effectiveness and adapt to changing circumstances. Regular monitoring and reviewing also provide management with timely insights into emerging problems or potential opportunities.
These stages help organizations systematically assess their strategies' impact and enable proactive management intervention when needed. They provide a structured approach to strategy evaluation, ensuring that it is ongoing, comprehensive, and aligned with organizational goals. By conducting timely evaluations, organizations can identify and address strategic issues before they become critical, thereby enhancing their overall performance and competitiveness.