Monday, 29 July 2013

Strategic evaluation

Strategic options can be evaluated by a variety of formal or informal procedures.

The criteria used are of three types:
  1. Suitability - how well does the strategy address the circumstances identified by strategic analysis? SWOT analysis can be used as a basis of assessing suitability.
  2. Acceptability - how well do the expected outcomes of the strategy meet stakeholders' expectations? Acceptability can be assessed against the expectations of key stakeholders and their likely reactions. These include expectations of financial performance, risk, security, environmental, and ethical issues. Acceptability can be easier to assess for entities with a strong sense of mission.
  3. Feasibility - how likely is the entity to be able to implement the strategy successfully in practice? Feasibility can be assessed against the entity's resources and capabilities, the time it would take to implement, the power of opposing stakeholders and likely competitor responses.
Such criteria can be applied in a variety of ways. For example, qualitative tests of suitability and acceptability might be used to screen out inappropriate options. Quantitative feasibility assessments, including detailed financial appraisal and resource planning, might then be used to select the best option.

Reference source: Johnson G. and Scholes K. (1997) "Exploring Corporate Strategy", Prentice Hall