Principles and Challenges of Strategy Evaluation - Article Example

Strategic management critique Student’s Name Code & Course Professor’s Name University City Date Overview of the article According to Rumelt in his article on the strategy process, the business is considered using its people working within and the cash flow that makes a business. The management of the company and its working people are the most critical part of the success of a business than the money and the managerial department. The article further stresses on the need for competent management in the industry which is considered to deliver the purpose of the industry’s existence in the market. For the industries in the market, there exist a lot of differences in the way of dealing with things, the strategic competences exhibits some uniqueness which shows the difference in the way of doing things in terms of management and normal operations of the industry. Evaluation of business strategy In this topic, the article explores more on the reason behind business evaluation and the benefits that it has to the success of the industry. In many industries, evaluating strategy is a way to assess its performance in consideration to a certain period of time set. According to the article, the business finds out how its profits are coming in, the process ensures that the profits are in line with the actual performance of the business. The article further shows how important it is for the business to look beyond its short term progress by assessing its performance in relation to the future possible changes. Through evaluation, the industry has to put across its main objectives and goals to be achieved in both short term and long term period of operation. According to Richard rumelt in his article, strategy for a company cannot be formulated or changed without the company evaluating on the strategy to be followed. In this topic, the article faces some weakness as it concerns itself with profit making companies, according to Rumelt the company has to keep on reviewing its strategies in order to check on its performance. The article does not mention how to evaluate the performance of organizations which are less profit oriented. Challenges of strategy evaluation As much as the article recognizes the need for strategy evaluation, it looks at the questions lingering the need for the strategy evaluation. Some of the questions in the article include; Whether the objectives of the industry are appropriate Appropriateness of the policies and plans Comparison between the results obtained and the assumptions laid down by the strategy Some of the issues that make evaluation to be a difficult process are as named below; Business strategy for many industries is unique depending on the situation at hand. Each business has its unique focus to achieve its objectives; one industry may focus on its quality machines to improve on production while another may focus on its strong inputs to for quality production. These two different strategies may be wrong or right depending on the objectives to be achieved. The uniqueness poses a challenge as one business may not adapt to another strategy, it as to look at the situation at hand and find which one is beneficial. The focus of strategy is on the achievement of goals and objectives for the industry. The management is more concerned with the attainment of the goals and objectives in the short run and long run than on evaluating them. This becomes a problem as it involves the ability to solve the existing problems rather than being in a position to structure the problem. The idea of strategy evaluation in the business in most cases may create opposing facts and confusion in the industry. The idea of strategy evaluation looks beyond solving a problem to achieve the set objectives and goals, this counter the idea behind management in today’s industries. Principles of strategy evaluation According to the article by Richard on strategy process, strategy involves setting of objectives and plans that can be combined together for the long term success of the industry. This is one way for the industry to establish its roots and be in a position to maintain strong market control to manage competition from other industries in the market. Just like it is difficult to prove whether a certain theory can work in science, so it is difficult also to prove whether a certain strategy is good and can benefit the industry. Justifying the viability of certain strategy for the business is not easy and thus it may fall in of its principles explained bellow; Consistency Most problems of inconsistency of a strategy is viewed as a result of informal planning, but even the formal planed strategy has some inconsistency problems (Saunders & Lewis 2014). It is the work of management to maintain consistency for the business in terms of productivity to be in line with sales and other departments in the industry. Conflicts in the firm and in the departments may be as a result of poor management or as a result of consistency problem in the industry. According to Richard, consistency problem should be analyzed to know the cause of the inconsistency. In the industry, there exist inconsistency between the objectives of the industry and the values of the management. This is most in relation to the formulation of the strategy rather than evaluation process. The issues arise between the personal values of the management and the required values in the industry; this brings conflict and inconsistency in the industry. Consonance For the business to succeed, it must compete with other firms and also fight to adapt to the surrounding. The process involved here appears in two aspects; that is the generic and the competitive aspect of the business. In strategic management, the industry looks at the value being created and how it relates to the strategy laid down. Generic aspect of the strategic management is the most aspect analyzed by the industry as it largely looks at the value being created by the industry and how it relates to the strategy being set by the firm. Evaluation of consonance becomes difficult considering that most problems affect only certain industry without affecting others. When evaluating consonance, the management has to in first instance understand the reason for the existence of the business and how its pattern are as it stands. Change in economic conditions affect both the profit and non-profit making conditions, this issue should have been addressed in the article rather than focusing on the profit making firms, strategic evaluation should be part and parcel of every firm in operation regardless of their objectives. Advantage The difference between competitive strategy and generic strategy is that the later focuses on the difference that exists between industries rather than on the common issues of the industries (Hill, Jones & Schilling 2014). Competitive strategy does not look on how something should be done but on how it should be done in a better way to suit the industry’s goals and objectives. The firm’s competitive advantage depends on how its principle can remain relevant and enjoy the market without being borrowed by competitors. The organizational skills bear more competitive advantage than individuals. The article lists the resources that an industry has among them being trademarks, patent rights, and the assets of the industry. Further, the industry’s strong relationship between its employees, customers and suppliers is one of the best resources for the industry. These strong resources that form the advantage for the firm are built overtime through creative management and continuous delivery of services for the firm. The position of the firm depends on number of customers for its products and how strong the firm is in sustaining competition in the market (Grant 2016). The firm can establish a strong position in the market by delivering unique products or similar products to the competitor’s products but at a lower price than the competitors. A firm can also strengthen its position in the market by providing same products like other firms but with addition of extra services like free delivery unlike the competitors. Position of the firm is one of its advantages depending on the way it is planned; it involves first mover advantage and then reinforcers. Reinforcers are the practices that the firm engages in to strengthen its position in the market. A firm with less demand becomes weak it will not be in a position to cater for its operational cost, such a firm experience competitive disadvantage in the market. Large firms may not always experience advantage in the market, but they can use their products in the market to their advantage due to their large size. These large firms enjoy better promotional practices in the market putting them at a better position than small firms. Other advantages based on the position include position of unique raw materials, better geographical location of the firm, and also high reputation in the market. The article overlooks other economic conditions that may affect even the large firms in the market, it focuses on operational conditions which are not the only determinants when it comes to performance in the long run. Feasibility The strategy to be tested has to undergo some test to show whether the resources required for it are available. The strengths of an organization to achieve a given strategy depend on answering of the questions below; Whether the organization poses the abilities to solve a problem as needed by the strategy. Checking if the organization has demonstrated the skills that are important and necessary in carrying out the strategy set. Are the key managers excited and willing to integrate the strategy in the firm to achieve their goals and objectives? Process of strategy evaluation According to the article, strategy evaluation is an integral part of the firm (Bryman & Bell 2014). Evaluation differs depending on the firm or organizational structure, some firms have formal way of evaluation while others do it in an informal way. Most firms do not always evaluate their strategy formulation, it only happens in most cases when there is leadership change in the firm. Though, if the strategy is strong and good for the firm, it does not need to be reviewed every time. Competitive positions in the firms lead to strategy evaluation to show that the position held by one manager is strong and well functional for the future. The writer fails to acknowledge the best way between formal and informal way of strategy evaluation, it leaves organizations unaware of which way to follow in strategy evaluation. Evaluation should also fcus on achievement of other objectives of the organization rather than only on performance as outlined in the article. Conclusion of the article In his conclusion, Richard views strategy evaluation as a form of improving the firm’s performance. Most do not engage in formal strategy evaluation as it seen not be a task that involve much thinking and practice to achieve it. The ability of the firm to maintain its strongest position in the business world where competition is inevitable may be managed by managers who are competent and able to maintain strategy formulation and evaluation in line with the current levels of activity. The article focuses much on the strategy evaluation as the key for success in a competitive world; this does not focus on non-competitive organization. The article fails to look across the board and know how strategy evaluation applies to companies which are less concerned with competition and profit making. Strengths of the Authors research Rumelt’s book on strategic management is one of the must read book by the students of strategic management. The book presents its topics in a sequential way showing the uniqueness that exists in strategy for different firms; it draws down to the evaluation of business strategy, then the challenges and the principles of strategy evaluation (Galliers & Leidner 2014). The article explains clearly the principles stating the four possible principles that can be studied under strategic management. The article by rumelt is well explained and is long showing the capture of main details that are required in understanding the process and evaluation of strategic management. The article has explained clearly the advantage that exist s in the firm that is competitive and generic advantage, this opens the mind of the reader to knowing the reason behind the existence of large firms in the market. In terms of defining the word strategy, Rumelts score high as he explains it easy to be understood by many people. According to the article, managers should understand the structure of the strategy laid down before engaging it. This is one major strength that the article has especially on the real life corporate world. It opens the mind of the managers and the people in charge of structuring and evaluating business strategy of the firm. It tells the management about the advantage that exists depending on the position the firm holds in the market. A firm with unique product or lower prices is seen to have an advantage in the market; this shows the real business world where the firms outdo each other in terms of product differentials and different pricing. Weaknesses of the Authors research Good strategy is simple, though difficult in a competitive world. Rumelts work focuses more on bad strategy rather than looking at good strategy. To him elimination of bad strategy should be the focus of the management in the firm; the focus should be dealing with how to come up with good strategy and maintain it rather than how to eliminate bad strategy. The main weakness for the article is to give more points on bad strategy rather than having more points on good strategy. Another weakness for Rumelt comes in the way he explains bout the strategy. Good strategy as seen should be simple; Rumelt has given many examples about bad strategy which makes it difficult to formulate unique views that will allow the business to achieve its goals and objectives (Rosemann & Brocke 2015) . Good strategy should follow the example of science which tests its theories; strategy should test its assumptions in line with the operating environment in order to come up with the best guiding principle of operation. Another major weakness of the book is that rumelt does not shorten his concept for the reader to find it easy to go through. Instead Rumelt subject the readers to reading diverse concept just as a strategist would struggle with difficult situation in the business world. Nevertheless, the books does not suit all people well as it seems it best for the readers who are in the process of re-evaluating the firm’s strategy. In general, the article focuses on performance of the organization as a gauge to proper strategy evaluation. It goes against the goal of strategic planning of the organizations as it focuses on the general achievement of the long term set objectives. The article thus fails to consider the non-profit making organizations which exist in the market without threat of competition from other organizations. Practical implications to managers Strategic management involves more than making plans. Strategic planning involves leaders or managers being in front of the planning and execution process. The strategy to be used needs to be in line with the structure, objectives and goals of the organization in order for the planned strategy to be achieved. Managers have to work with the employees and perfectly line their interests in achieving the organizational set objectives to achieve the best as planned (Hair 2015). There sources required for the success implementation of the strategy has to be availed adequately by the management. Conflicts should be avoided in the firm when in due to a certain adopted strategy as this will to a good strategy becoming bad. According to the findings of the study, a successful strategy means shows successful manager in charge. Managers have to be at the forefront of ensuring success of the strategy adopted. References Saunders, M.N. and Lewis, P., 2014. Doing research in business and management: An essential guide to planning your project. Pearson Higher Ed. Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning. Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge. Grant, R.M., 2016. Contemporary strategy analysis: Text and cases edition. John Wiley & Sons. Bryman, A. and Bell, E., 2015. Business research methods. Oxford University Press, USA. Galliers, R.D. and Leidner, D.E., 2014. Strategic information management: challenges and strategies in managing information systems. Routledge. Eriksson, P. and Kovalainen, A., 2015. Qualitative Methods in Business Research: A Practical Guide to Social Research. Sage. Rosemann, M. and vom Brocke, J., 2015. The six core elements of business process management. In Handbook on Business Process Management 1(pp. 105-122). Springer Berlin Heidelberg. Hair, J.F., 2015. Essentials of business research methods. ME Sharpe. Read More