Question based on NIMS SM Solved Assignment and other course
Answer:
Strategy can neither be formulated nor adjusted to changing circumstances without a process of strategic evaluation. Whether performed by an individual or as a part of organizational preview process, strategy evaluations forms an essential step in the process of guiding an enterprise. Evaluation can be defined as a “careful retrospective assessment of the merit, worth and value of administration, output, and outcomes of governmental interventions, which is intended to play in future, practical action situations” (Vedung, 1997, p. 3). For some strategy evaluation is simply an appraisal of how well a business performs. Has it grown? Is the profit rate normal or better? If the answers to these questions are affirmative, it is argued that the firm’s strategy must be sound. But the evaluation process is much more that that. It is the understanding of the long term critical factors that determine the quality of long term results that are often not directly affect the operating results. Thus, strategy evaluation is an attempt to look beyond the obvious facts regarding the short term health of the business and appraise instead those more fundamental factors and trends that govern success in the chosen field of endeavor.
Evaluation, the process of determining a program’s utility or direction; is critical to program planning, budgeting, and management. Through evaluation, program planners can ascertain how well components of their program are functioning. Evaluation also provides clues as to why components may or may not work. Managers often need to determine whether their programs are having the intended effect on participants and the organization. Documenting a program’s impact provides valuable information to decision and policy-makers, such as program management and bankers among others. Strategic evaluation can aid long-term strategic planning for managers, leaders, and policy-makers. Carefully documented results from an evaluation provide guidance to those planning similar strategies.
Program managers can use a variety of methods for evaluating programs, which yield different results and have different uses and purposes. Evaluation design and scope dictate the required resources. Several common types of evaluation are:
Process evaluations, which assesses the performance or completion of steps taken to achieve desired outcomes. Process evaluation can occur throughout the project cycle and can guide managers to make changes to maximize effectiveness. Examples of process measures are the number of ads shown in a media campaign.
Output measures, which are commonly used in process evaluations, help gauge a program’s processes; they describe a project and its functioning (e.g., how well can they launch a new product or effectiveness of the ongoing ad campaign ), rather than the ultimate effect of the program (e.g., changes in demand). Output measures allow managers to plan appropriately for clients or classes. Project planners can also use outputs to identify a need to better tailor strategies to a target population (for example, if the ad campaign is not successful) or monitor changes in project outputs.
Outcome evaluations, which consider program goals to determine if desired changes to attitudes, behavior, or knowledge have been attained as a result of the intervention. Outcome metrics are usually measured at the beginning and end of a project cycle or program. Examples of outcomes include changes in the demand or a quantifiable increase in the sales.
Impact evaluations, which seek to isolate strategy’s impact on participants and organization, while filtering out effects from other potential sources. Although impact evaluations require a higher level of technical expertise, they are considered the “gold standard” of evaluation. Impact evaluations (known as “experimental” or “quasi-experimental” studies) compare a strategy group against one that is not.
The General Principal of Strategy Evaluation: The term strategy has been so widely used for different purposes that it has lost any clearly defined meaning. Normally a strategy is a set of objectives, policies and plans that taken together define the scope of an enterprise and its approach to survival and success. Alternatively, it is said that the particular policies, plans and objectives of a business express its strategy for coping with a complex competitive environment.
It is impossible to demonstrate conclusively that a particular business strategy is optimal or guarantee that it will work. Its only the test of critical flaws which could be justifiably applied to a business strategy, most fit within one these board criteria:
- Consistency: The strategy must not present mutually inconsistence goals and policies. Gross inconsistency within a strategy seems unlikely until it is realized that many strategies have not been explicitly formulated but have been evolved over time in an adhoc fashion. Even strategies that are the result of formal procedures may easily contain compromise arrangements between opposing power groups.
A key function of strategy is to provide coherence to organizational action. A clear and explicit strategy concept of strategy can foster a climate of implied coordination that is more efficient than most administrative mechanism. A clear consistent strategy, by contrast, allow a managers to negotiate a contract within minimum trade offs.
A final type of consistency that must be sought in strategy is between organizational objectives and the values of the management group. In consistency in this area is more of a problem in strategy formulation than in evaluation of a strategy that has already been implemented. The most frequent source of such conflict is growth. As business expands beyond the scale that allows an easy informal method of operation. While growth can be of course curtailed it will require special attention to a firm’s competitive position if survival without growth is desired. The same basic issue arises when other type of personal or social values comes into conflict with existing or apparently necessary policies: the resolution of the conflict normally require an adjustment in the competitive strategy.
- Consonance: The strategy must represent an adaptive response to external environment and to the critical changes occurring within it. The way in which a business relates to its environment has two aspects: the business must both match and be adaptive to its environment and it must at the same time compete with other firms that are also trying to adapt. This dual character relationship between the firms and its environment has its analog in two different aspects of strategic choice and two different methods of strategy evaluation.
The first aspect of fit deals with the basic mission or scope of the business and the second with its special competitive position. Analysis of the first is normally done by looking at the changing social and economic conditions over time. Analysis of the second by contrast typically focuses on the difference across firms at a given time. The first is called generic aspect and the second is called competitive aspect.
Generic strategy deals with the creation of social values with the question of weather the products and service being created is worth more that their cost. Competitive strategy by contrast deals with the firm’s need to capture some of the social values as profit.
- Advantage: The strategy must provide for the creation and /or maintenance of a competitive advantage in the selected area of activity. Competitive strategy, in contrast with generic strategy, focuses on the differences among firms rather than their common missions. The problem it addresses is not so much “how can this function be performed’ but “how can we perform it either better than, or at least instead of, our competition?”
Competitive advantage can normally be traced to one of three roots:
- Superior Skills
- Superior Resources
- Superior Position
A firm’s skills can be a source of advantage if they are based on its own history of learning by doing and if they are rooted in coordinated behavior of many people. Skills are based on generally understood scientific principles, on training that can be purchased by competitors, or which can be analyzed and replicated by others are nit sources of sustained advantage. The skills which compose advantages are usually organizational, rather than individual skills. They involve the adept coordination or collaboration of individual specialists and are built through the interplay of investment, work and learning. Unlike physical assets, skills are enhanced by their use. Skills that are not continually used and improved will deteriorate.
Resources include patents, trademark rights, specialized physical assets and the firm’s working relationships with suppliers and distribution channels. Resources that constitute advantages are specialized to firm, are builds up slowly over time through the accumulated exercise of superior skills, or are obtained through being an insightful first mover, or by just plain luck.
A firm’s position consists of the products or services it provides, the market segments it sells to, and the degree to which it is isolated from direct competition. In general, the best positions involve supplying very uniquely valuable products to price insensitive buyers, whereas poor positions involve being one of many firms supplying marginally products to very well informed price sensitive buyers.
Positional advantage is the result of foresight, superior skill and resources. Once gained, a good position is defensible. This means that it (i) returns enough value to warrant its continued maintenance and (ii) would be so costly to capture that rivals are deterrent from full scale attacks on the core of the business.
Positional advantages are of two types: (1) first movers advantages and (2) reinforces. Other position based advantages follow from such factors as:
- The ownership of special raw material sources or advantageous long term supply contracts.
- Being geographically located near key customers in a business involving significant fixed investment and high transport costs.
- Being a leader in a service field that permits or requires the building of a unique experience base while serving clients.
- Being a full line producer in a market with heavy trade up phenomena.
- Having a wide reputation for providing a needed product or service trait reliability and dependability.
- Feasibility: The financial resources of a business are the easiest to quantify and are normally the first limitation against which a strategy is tested.
The less quantifiable but actually more rigid limitation on strategic choice is that imposed by the individual and organizational capabilities that are available.
