Strategy Evaluation Process and its Significance

by Shamsul
Strategy Evaluation
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Strategy Evaluation Process and its Significance


It is as important as strategy formulation. It highlights the effectiveness and efficiency of the plans in attaining the chosen goals. Managers must analyze the current strategy on the basis of technological advancements, socio-economic factors, and political situations. In the strategic management process, it is the last step.

The importance of strategy evaluation relies on its potential to link the actions performed by departments, managers, or groups through performance control. It helps in developing inputs for strategic planning, rewards, appraisal, and judging the effectiveness of strategic choice. The following 4 steps are involved in the process of strategy evaluation.


1- Setting Benchmark of Performance:

In the process of strategy evaluation, it is necessary to set the performance benchmark. You must know how to express and fix them. In order to perform the major tasks, you must discover special requirements needed to accomplish the task. These indicators will later help in the strategy evaluation process. An organization can use both qualitative and quantitative criteria for assessing its performance. In quantitative criteria, managers must determine ROI, net profit, employee turnover, production cost, and earnings per share. Qualitative criteria should determine flexibility, skills, competencies, and risk-taking capacity.


2- Measurement of Performance:

In measuring performance, two factors, communication and reporting, play a huge role. It is really easy to measure performance if you correctly set the standards. It is hard to measure managers’ contributions. 

However, so many other variables help in the evaluation process. Factors like loss, profit, and balance sheets are important for measuring performance.


3- Assessing Variance:

In order to analyze the variance, you need to compare actual performance with the standard performance. If the deviation is positive, then it shows a better performance. If the variation is negative, then it highlights the shortfall in the performance. That’s why you must analyze the deviation method in order to assess the right actions and performances.


4- Taking Corrective Action:

Once you have identified the deviation in performance, it is imperative to plan a correct action. If you are not achieving the desired performance, you need to change the plan. If you are getting the right performance or outcomes, then stick to the plan. However, you should not compromise on your desired performance. This process may take some time, but you need to start from the beginning in case of failure.


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