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What are the three key success criteria for strategy evaluation?
Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the strengths, weaknesses, opportunities and threats (both internal and external) of the entity in question. This may require to take certain precautionary measures or even to change the entire strategy.
In corporate strategy, strategic options are evaluated against three key success criteria:
· Suitability (would it work?)
· Feasibility (can it be made to work?)
· Acceptability (will they work it?)
Suitability
Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position.
Does it make economic sense?
Would the organisation obtain economies of scale, economies of scope or experience economy?
Would it be suitable in terms of environment and capabilities?
Feasibility
Feasibility is concerned with the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time and information.
Acceptability
Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder reactions.
Return deals with the benefits expected by the stakeholders (financial and non-financial). For example, shareholders would expect the increase of their wealth, employees would expect improvement in their careers and customers would expect better value for money.
Risk deals with the probability and consequences of failure of a strategy (financial and non-financial).
Stakeholder reactions deals with anticipating the likely reaction of stakeholders. Shareholders could oppose the issuing of new shares, employees and unions could oppose outsourcing for fear of losing their jobs, customers could have concerns over a merger with regards to quality and support.
To evaluate a strategy is to determine whether it achieved what it is supposed to perform. The following success criteria are key to detemrine how successful a strategy is:
1. All the goals defined in the strategy are consistent.
2. A principal function of strategy is to structure an ill structured situation - to separate the importnat from unimportant and to define the critical subproblems to be dealt with and conclude with solvable problems. This is anlogous to the distinction between effeceincy and effectiveness.
3. The proposed policies and actions worked together to produce the target results, In other words the prosed strategy is workable.
