Rumelt's criteria for evaluating strategies example

BBA 4951, Business Policy and Strategy 1

Course Learning Outcomes for Unit VI Upon completion of this unit, students should be able to:

7. Establish a strategic management follow-up process.

9. Assess the strategy evaluation process.

Reading Assignment Chapter 9: Strategy Review, Evaluation, and Control

Unit Lesson Chapter 9 describes how to effectively evaluate strategies and make timely changes as needed. In this context, Chapter 9 explains how to develop a balanced scorecard and utilize contingency planning. Every strategy must have the ability to be flexible and adaptable. Anytime an organization’s environment changes, the existing strategy must be updated or replaced. In this unit, we will dive deeper into the strategy evaluation phase. There are three main types of strategy evaluations, as described below:

1. understanding the foundation of the firm’s strategy,

2. analyzing and comparing expected and actual results, and

3. implementing actions to ensure the performance is consistent with the plan.

When you have an opportunity, please take a look at the case study on page 282 of the course textbook titled International Business Machine (IBM). Personally reflect on how this organization has been adaptable and successful for so many years. Models There are many different criterions and models for evaluating strategies. One example listed in your textbook is Rumelt’s Criteria for Evaluating Strategies. This criteria is often used in the industry because it is proven and vetted among many organizations. There are four main criterion that include consistency, consonance, feasibility, and advantage. The chart below gives a brief description of each:

Rumelt’s Criteria

Description Example

Consistency Organization must present consistent goals and policies.

Have you noticed that Coca- Cola tastes the same in one part of the U.S. as compared to another part of the U.S.?

Consonance Organization must evaluate strategies according to societal and/or individual trends.

Look at the television trends from the 1990s to present. In an effort to remain relevant, organizations must be able to adapt.

UNIT VI STUDY GUIDE

Evaluating Strategies

BBA 4951, Business Policy and Strategy 2

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Feasibility Strategies must be feasible and not over burdensome

Could you imagine if Starbucks attempted to open 500 new stores in a one- month period? This is not feasible and would create a burden.

Advantage Strategies, in regard to 1) resources, 2) skills, and 3) position, must be assessed for competitive advantage.

The iPhone would be a great example of having a competitive advantage among other phone developers.

Measuring Organizational Performance Measuring organizational performance can be accomplished by evaluating the expected results and comparing that data to the actual results. Also, the long-term and short-term objectives are evaluated. If it is noted that an organization did not achieve its expected outcomes related to goals and objectives, the organization must implement corrective actions. In an ideal situation, these corrective actions have already been developed; if not, the actions must be developed and implemented. Time is critical in relation to corrective actions, and any corrections must be implemented quickly. Both internal and external factors must be considered when developing any corrective actions. Also, policies, trends, and other factors need to be considered in an effort to effectively resolve any variable. An example is office supply stores in the United States. Organizations, such as Staples, Office Max, and Office Depot, have noticed major trends in the industry and are making every attempt to remain relevant and adaptable. They face great challenges as more and more office supplies become obsolete due to technology, and the ability and ease of access of ordering supplies online becomes more and more available versus having to shop in a physical store. It is often difficult for these organizations to make the online-only switch because they would lose brand recognition, and they also face steep competition in the online marketplace. The video below expands on the idea of noticing major trends and making adjustments to stay competitive. Wilson, C. (2011). Konica/Minolta: Advancing in the digital age [Video file]. Retrieved from

http://media.pearsoncmg.com/pls/al/csu/1323590498/cb2013_konica_digital.html Konica/Minolta originally started as a photo company, and while they had success with that, they noticed that the photo industry would not survive forever. As technology increased, there became less of a need for such companies. You may remember the example of Kodak used in an earlier unit; Kodak was not able to evolve with the changing times and went out of business. Unlike Kodak, Konica/Minolta was able to adapt, and the company adjusted its strategy by selling technological office supplies and cell phones. By making the change early, Konica/Minolta was able to make the change without losing any profits. They exited the photo business altogether and focused on office supplies. They were also able to use social media to their advantage by promoting their brand and receiving instant feedback from consumers. Effective Evaluation System There are multiple requirements for a strategy to be successful. Strategies must be formed according to economic factors, meaningfulness, and timeliness; strategies must also clearly articulate an overall image of what is happening within the organization. It is also recommended that the strategy evaluation be simple and to the point. When the evaluation becomes complex, it enhances confusion and frustration among the participants. As stated earlier, it is imperative that the organization creates a contingency plan that identifies alternative plans in the event that the strategy does not move forward in the direction that was expected. Contingency plans include avoidance of profit losses, how to meet higher demand, and technology advancements.

http://media.pearsoncmg.com/pls/al/csu/1323590498/cb2013_konica_digital.html

BBA 4951, Business Policy and Strategy 3

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Reference Wilson, C. (2011). Konica/Minolta: Advancing in the digital age [Video file]. Retrieved from

http://media.pearsoncmg.com/pls/al/csu/1323590498/cb2013_konica_digital.html

Suggested Reading The chapter presentations below will provide you with additional information on this unit’s concepts: Click here to access the PowerPoint version of the Chapter 9 presentation. Click here to access the PDF version of the Chapter 9 presentation. In the Unit VI Paper Segment, you will be completing a SWOT analysis. The website below will give you additional information on how to complete this task, including a helpful video and specific questions to answer for each category of the SWOT analysis: SWOT Analysis. (2015). Retrieved from https://www.mindtools.com/pages/article/newTMC_05.htm

https://online.columbiasouthern.edu/bbcswebdav/xid-64372194_1

https://online.columbiasouthern.edu/bbcswebdav/xid-64372193_1