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MGT603 - Strategic Management - Lecture Handout 42

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STRATEGY EVALUATION

Learning objectives

This topic covers various aspects concerning with the strategy evaluation and enables you to understand the process of strategy evaluation.

Four Criteria (Richard Rummelt): He explains four criteria for strategy valuation. These four criteria are as follow

  • Consistency
  • Consonance
  • Feasibility
  • Advantage

Consistency
Strategy should not present inconsistent goals and policies.

  • Conflict and interdepartmental bickering symptomatic of managerial disorder and strategic inconsistency

Consonance
Need for strategies to examine sets of trends

  • Adaptive response to external environment
  • Trends are results of interactions among other trends

Feasibility
Neither overtaxes resources nor creates unsolvable sub problems

  • Organizations must demonstrate the abilities, competencies, skills and talents to carry out a given strategy

Advantage
Creation or maintenance of competitive advantage

MGT603 - Strategic Management - Lecture Handout 39

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RESEARCH AND DEVELOPMENT ISSUES

Learning objectives

The main objective of this chapter to enable to students about research and development issue relating to strategy implementation.
Going public means selling off a specific percentage of the business to others in order to raise capital; consequently, it shifts the owners' control of the firm. Going public is not recommended for companies that initial costs can be too high for the firm to generate sufficient amount of cash inflows to make going public worthwhile. The firm must have sufficient amount of capital to bear out lawyer, underwriter and other documentation cost in order to form the business. In addition to initial costs involved with a stock offering, there are costs and obligations associated with reporting and management in a publicly held firm. For firms with more than $10 million in sales, going public can provide major advantages:

  1. It can allow the firm to raise capital to develop new products,
  2. To build plants,
  3. Expand, grow, and market products and services more effectively.

Before going public, a firm must have quality management with a proven track record for achieving quality earnings and positive cash flow. The company also should enjoy growing demand for its products. Sales growth of about 5 or 6 percent a year is good for a private firm, but shareholders expect public companies to grow around 10 to 15 percent per year.

Research and Development (R&D) Issues

Research and development (R&D) management can plays part in strategy implementation.
“New products and improvement of existing products that allow for effective strategy implementation”

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