Strategic Evaluation: Tools/techniques for Evaluating Strategies

Understand the criteria available to evaluate potential strategic options developed within an organisation.

Here’s how Strategy Evaluation is typically carried out in big organizations.

First, the firm assesses the performance outcomes of the various strategies in terms of direct economic outcomes & overall organisational effectiveness. Then Gap Analysis is carried out to assesses performance & the need for new strategies. Three success criteria are considered for evaluating new Strategic Options; these need to follow the SAFe criteria which stands for Suitability, Acceptability & Feasibility. The firm applies a range of different techniques for evaluating strategic options, both financial & non-financial.

Developing Strategies

• Basis of Choice: Corporate purpose and aspirations, SBU (Strategic Business Units) generic competitive strategies
• Alternative Directions: Protect and build, Market penetration, Product development, Market development, Diversification (related, unrelated)
• Alternative methods: Internal development, Acquisition, Joint development alliances

Evaluating Strategies

So what are the criteria available to evaluate potential strategic options developed within an organisation? Whilst there are a range of possible criteria that can be identified, many can be consolidated into three broad categories:

• Suitability – an assessment of the underlying rationale or logic of the potential strategy.
• Acceptability – an assessment of risks and returns of a potential strategy relative to the goals of the organisation.
• Feasibility – an assessment of the resources and capabilities needed to achieve the potential strategy.

You need to provide a rational, concise and coherent explanation of what your company’s proposed strategic direction means for your organisation in your assignment, supported by appendices which utilise these tools!

Read: Johnson & Scholes framework for evaluation and selection of strategies.