4 from the article how to evaluate corporate strategy

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4. From the article "How to Evaluate Corporate Strategy", define and describe the six steps for evaluating a strategy. What implication(s) do these steps have on Strategy? **Strategy must meet all the criteria**
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Internal consistency —this refers to cumulative impact of individual policies on corporate goals. If the strategy ‘works’, each policy fits into an integrated pattern. The policy should be judged in terms of itself, and how it relates to other policies and goals of the company. This criterion is important for evaluating strategy as it identifies areas where strategic choices will eventually have to be made. An inconsistent strategy doesn’t mean the company is in difficulty. But unless management keeps its eye on a specific area of operation, it may be forced to make a choice w/o enough time to search or prepare for attractive alternatives. Consistency with the environment —ex a firm with certain product, price and advertising policies says it chooses to relate itself to customers. Similarly, its policies wrt government contracts, collective bargaining, foreign investment are expressions of relationship with other groups/forces. So strategy must make sense wrt what’s going on outside. Consistency w environment has static and dynamic aspects. In static sense, efficacy of policies is judged as it exists now. In dynamic sense, efficacy of policies is judged as it appears to be changing. Since environment is constantly changing, management must constantly assess degree to which policies previously established are consistent with environment as it exists now; and whether they take into account environment as it will be in future. Appropriateness in light of available resources —company must ask: what are our critical resources? Is the proposed strategy appropriate for available resources? Resources can be critical in two ways: as factor limiting achievement of corporate goals and as that which company will exploit as basis for its strategy. So critical resources are what company has most of and least of. 3 resources often seen as critical are money, competence and physical facilities. The strategy decision involves deciding: how much of company’s resources to commit to opportunities currently perceived, and how much to keep uncommitted as reserve for unanticipated demand. Satisfactory degree of risk —strategy and resources determine degree of risk a company is taking. To evaluate degree of risk one can look at : amount of resources whose continued existence or value is not assured, length of time periods to which resources are committed, and proportion of resources committed to a single venture. The greater these quantities, the greater the risk. The strategy is based on resources, which may disappear before payoff is obtained. But the best strategy isn’t necessarily the one with the least risk.
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