Lesson 1, Topic 1
In Progress

9.1 The nature of strategy evaluation Copy

Nik Shazana November 1, 2022

Strategic Management Models

Strategic management is a broader term that includes not only the stages already identified but also the earlier steps of determining the mission and objectives of an organization within the context of its external environment. The basic steps of the strategic management can be examined through the use of strategic management model.

The strategic management model identifies concepts of strategy and the elements necessary for development of a strategy enabling the organization to satisfy its mission. Historically, a number of frameworks and models have been advanced which propose different normative approaches to strategy determination. However, a review of the major strategic management models indicates that they all include the following elements:

  • Performing an environmental analysis
  • Establishing organizational direction
  • Formulating organizational strategy
  • Implementing organizational strategy
  • Evaluating and controlling strategy

Strategic management is a continuous and dynamic process. Therefore, it should be understood that each element interacts with the other elements and that this interaction often happens simultaneously. The major models differ primarily in the degree of explicitness, detail, and complexity. The best formulated and best implemented strategies become obsolete as a firm’s external and internal environments change. It is essential, therefore, that strategists systematically review, evaluate, and control the execution of strategies.

Strategy evaluation is the final stage in strategic management. Managers desperately need to know when particular strategies are not working well; strategy evaluation is the primary means for obtaining this information. All strategies are subject to future modification because external and internal factors are constantly changing.

Three fundamental strategy-evaluation activities are:

 (1) Reviewing external and internal factors that are the bases for current strategies

 (2) Measuring performance

 (3) Taking corrective actions

Strategy evaluation is needed because success today is no guarantee of success tomorrow! Success always creates new and different problems; complacent/successful organizations experience demise. Strategy formulation, implementation, and evaluation activities occur at three hierarchical levels in a large organization: corporate, divisional or strategic business unit, and functional.

Self-Check Activity

  1. What is a strategic model?
  2. Describe major strategic management models. 
  3. 1. Discuss the three fundamental strategy-evaluation activities.