A Guide for Strategy Evaluation

I. The Evaluation of Business Strategy (Rumelt)

An important step in the formulation and execution of strategy is strategy evaluation.

Strategy Evaluation

Testing and probing the strategy for critical flaws.

(This procedure is in contrast to ...)

Performance Evaluation

Has the business been creating or destroying wealth for its owners?

II. Principles of Strategy Evaluation

Tests for a Sound Strategy

II. A. Consistency

The strategy must not entail mutually inconsistent goals and policies.

To evaluate the consistency of a strategy, you should ask ...

II. B. Consonance

The strategy must match and adapt the business to its environment (both its market and the broader non-market environment).

 To evaluate the current consonance of a strategy with its market environment, you should ask ...

To assess whether consonance with the market environment is likely to persist into the future you should ask ...

Consonance is critical, but often overlooked because companies typically focus on their key competitors. Threats to an established way of doing business often come from outside the business's immediate circle of rivals.  

II. C. Advantage

A good strategy must provide for the creation and sustainability of a competitive advantage. A firm with a competitive advantage will always capture some of the economic value it creates.

To assess whether a business's strategy leads to a competitive advantage, you should ask ...

To assess whether a business unit's competitive advantage is likely to persist over time, you should ask ...

II. D. Feasibility

The strategy must not overtax the business unit's available resources.

To evaluate feasibility, you should ask ...

 

[ŠProfessor Carl R. Gwin, 2000]