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STRATEGY EVALUATION
Strategic evaluation is the assessment process that provides executives and
managers performance information about programs, projects and activities
designed to meet business goals and objectives.
Strategy Evaluation is as significant as strategy formulation because it throws light
on the efficiency and effectiveness of the comprehensive plans in achieving the
desired results. Strategic Evaluation is the final phase of strategic management.
Significance of strategy evaluation
The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc., through control of performance.
Strategic Evaluation is significant because of various factors such as developing
inputs for new strategic planning, the urge for feedback, appraisal and reward,
development of the strategic management process, judging the validity of strategic
choice etc.
Types of strategy evaluation
a) Internal evaluation: This is evaluation that is carried out by someone from
the actual project team. Clearly, such an evaluator has the advantage of
understanding fully the thinking behind the development, together with an
appreciation of any problems that may have arisen, and should also
command the trust and cooperation of the other members of the team. On
the other hand, such an evaluator may find it difficult to make any criticisms
of the work carried out, and, because of their close involvement with the
project, may be unable to suggest any innovative solutions to such problems
that are identified. Such an internal evaluator will know only too well how the
members of the group have struggled to produce their course, curriculum or
package, and may shrink from the thought of involving them in more work.
b) External evaluation: This is evaluation that is carried out by someone who
is (or was) not directly involved in the development or operation of the
system being evaluated, i.e., by someone from out with the project team.
i.
Advantages:
- Bringing objectivity,
- Lack of vested interest, and
- The ability to look at matters from a fresh perspective.
ii.
Disadvantages:
- Are related to relative value systems and to the lack of involvement the
evaluator has had in project-related decisions.
-
-- Neil Bohr
The external factors include competitors, changes in demand, technology,
economic changes, demographic shifts, and governmental actions. Increasing
turbulence in markets and industries around the world means the external
audit has become an explicit and vital part of the strategic management
process.
Most often the external evaluation is required for funding purposes or to
answer questions about the program's long-term impact by looking at
changes in demographic indicators such as graduation rate or poverty level.
In addition, occasionally a manager may request an external evaluation to
assess programmatic or operating problems that have been identified but
that cannot be fully diagnosed or resolved through the findings of internal
evaluation.
EXTERNAL AUDIT
External audit is the identification and evaluation of trends and events
beyond control of single firm. The purpose of external audit is development of
finite list of opportunities and avoiding the threats.
Why Does the External Environment Matters?
Understanding the environment that surrounds an organization is important
to the executives in charge of the organizations. There are several reasons for
this.
a) First, the environment provides resources that an organization needs in
order to create goods and services. In the seventeenth century, British
poet John Donne famously noted that no man is an island. Similarly, it is
accurate to say that no organization is self-sufficient. As the human body
must consume oxygen, food, and water, an organization needs to take in
resources such as labor, money, and raw materials from outside its
boundaries. Subway, for example, simply would cease to exist without the
contributions of the franchisees that operate its stores, the suppliers that
provide food and other necessary inputs, and the customers who provide
Subway with money through purchasing its products. An organization
cannot survive without the support of its environment.
b) Second, the environment is a source of opportunities and threats for an
organization. Opportunities are events and trends that create chances to
improve an organizations performance level. Threats are events and
trends that may undermine an organizations performance. Executives
must also realize that virtually any environmental trend or event is likely
to create opportunities for some organizations and threats for others.
c) Third, the environment shapes the various strategic decisions that
executives make as they attempt to lead their organizations to success.
The environment often places important constraints on an organizations
goals, for example. A firm that sets a goal of increasing annual sales by 50
percent might struggle to achieve this goal during an economic recession
or if several new competitors enter its business. Environmental conditions
also need to be taken into account when examining whether to start doing
business in a new country, whether to acquire another company, and
whether to launch an innovative product, to name just a few.