III. Strategy evaluation

Measuring the effectiveness of the organizational strategy. It's extremely important to conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question. This may require to take certain precautionary measures or even to change the entire strategy.

In corporate strategy, Johnson and Scholes present a model in which strategic options are evaluated against three key success criteria:

Suitability (would it work?)

Feasibility (can it be made to work?)

Acceptability (will they work it?)

Suitability. Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position.

Does it make economic sense?

Would the organisation obtain economies of scale, economies of scope or experience economy?

Would it be suitable in terms of environment and capabilities?

Feasibility. Feasibility is concerned with the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time and information.

Acceptability. Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder reactions.

Return deals with the benefits expected by the stakeholders (financial and non-financial). For example, shareholders would expect the increase of their wealth, employees would expect improvement in their careers and customers would expect better value for money.

Risk deals with the probability and consequences of failure of a strategy (financial and non-financial).

Stakeholder reactions deals with anticipating the likely reaction of stakeholders. Shareholders could oppose the issuing of new shares, employees and unions could oppose outsourcing for fear of losing their jobs, customers could have concerns over a merger with regards to quality and support.

Notes

anticipate v – to see what might happen in the future

assign v – to give sb some work or responsibility

conversion n – the process of changing from one form (or system) to another

efficacy n – the ability to produce the results that are wanted

feasibility n – sth that is possible and likely to be achieved

precaution n – sth that is done in advance in order to prevent problems or to avoid danger; precautionary adj

rationale n – the principles or reasons which explain a particular decision, course of action, belief, etc.