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Session 8 19 November 2011 Civil Service College Dhaka Presentation by Dr. Muhammad G. Sarwar Email: sarwar_mg@yahoo.com Cell: 01821443741
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Strategy Execution
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Quantitative criteria commonly used to evaluate strategies are financial ratios that are used to make three critical comparisons:
1. Comparing organizations performance over different time periods; 2. Comparing organizations performance to competitors; and 3. Comparing organizations performance to industry average.
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Key financial ratios that are particularly useful as criteria for strategy evaluation are:
1. 2. 3. 4. 5. 6. 7. 8. Return on investment Return on equity Profit margin Market share Debt to equity Earnings per share Sales growth Asset growth.
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Potential problems associated with quantitative Criteria for evaluation of strategies are:
Most quantitative criteria are geared to annual objectives rather than long-term objectives. Different accounting methods can provide different results on many quantitative criteria Intuitive judgments are almost always involved in deriving quantitative criteria.
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Contingency Planning
Regardless of how carefully strategies are formulated, unforeseen events like natural disasters, war, inflation, entry of foreign competitors, etc may upset the strategy. To minimize the negative impact of these unforeseen events, organizations develop contingency plans. Contingency plan is defined as alternative plans that can be put into effect if unexpected events occur that upset the organizational strategy.
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Recapitulation: Strategic Management (contd.) In ultimate analysis Strategic Management is the Quest for Competitive Advantage. 4 most frequently used strategic approaches:
Striving to be the industrys low-cost provider Outperforming rivals based on quality, diversity, style, technology, value added services etc Focusing on a narrow market niche Developing capability that rivals cant easily imitate.
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Strategy Evaluation
Strategy Implementation
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ongoing strategy elements + Adaptive reactions to changing circumstances
Arthur A. Thompson, Jr. (2010) Crafting and Executing Strategy: the quest for comparative, 16th Edition, McGraw Hill (Chapter
11, 12 & 13)
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Thanks
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