1.

Strategic evaluation and control

Strategic evaluation and control is defined as a process of estimating the effectiveness
of a strategy in achieving the organizational objectives and taking corrective actions
whenever required.

Strategic evaluation is an important part of strategic management as it checks whether

the strategy implementation is going in the right direction or not.

 Strategic evaluation

Strategic evaluation is the last step of the strategic management process, and comes
after the formulation and implementation of strategy.

Strategic evaluation is defined as the process of assessing the efficacy of the strategy
in achieving the organizational objectives. In other words, strategic evaluation checks
that whether or not the strategy that was selected and implemented has met the
organizational objectives. It can be regarded as the performance appraisal of
organizational strategies.

Importance of Strategic Evaluation

Strategic evaluation helps an organization to progress in a particular direction of

success and growth. The importance of strategic evaluation is as follows:

 Getting Feedback, Appraisal, and Reward: Helps measure the performance of

employees in attaining organizational goals. In strategic evaluation, the
feedback of employees is taken to perform the appraisal and good performance
is rewarded to motivate them. If a gap is found in employees’ actual and
desired performance, training and development programs are provided.
 Verifying the Strategic Choice: Checks the validity of the strategic choice. The
strategic evaluation process ensures that the selected strategy is in line with the
objectives of an organization.
 Checking the Link between the Decisions and Strategy : Maps the decisions taken
by the strategists with the strategic requirements. The strategic evaluation
process ensures that the final decisions taken are coordinated with the strategies
to achieve organizational effectiveness.
Participants in the Strategic Evaluation Process

In an organization, strategic evaluation is done at all the levels to know whether or not
the results match with the defined organizational objectives. In general, all members
take part in the process of strategic evaluation; however, a major role is played by the
following participants:

 Directors: Enact the official role of reviewing and screening the executive
decisions.
 Chief Executives: Take the responsibility for all the administrative aspects of the
strategic evaluation and control process
 SBU heads: Facilitate strategic evaluation at their respective levels and
divisions.
 Financial Controllers: Help in the operational controls that involve budgeting,
reporting, and financial analysis.
 Executive Committees: Take the responsibility of regular screening of the
performances of the employees with the set standards.
 Middle Level Managers: Help in providing the information and feedback
regarding the performance of employees. These managers get the directions
from the top management for taking the corrective action.
 Strategic Control:

 Strategic control take into account the changing assumptions that determine a
strategy, continually evaluate the strategy as it is being implemented and take
necessary action and steps to adjust the strategy to the new requirement.
 Strategic control regularly monitors the changes occurring inside and outside an
organization to update the strategies as per the required changes.
 The time gap between the formulation and implementation of the strategy may
be substantial. It may be possible that the assumptions made while formulating
 the strategy change at the implementation level due to changing organizational
and environmental conditions.

These systems can be formed by performing the steps shown in Figure below.

Process of strategic control

Process of strategic control involves the following steps:

1. Establishing Sub-goals: Implies dividing the strategies into standards and targets,
so that a strategy can be evaluated easily
2. Creating Measurement Systems: Involves creating the procedures or techniques
for measuring the performance
3. Comparing the Actual Performance: Involves finding the gaps between actual
and desired performance,
4. Initiating the Corrective Action: Implies taking an action to cover the gaps

Types of strategic control

 Premise Control: Helps in recognizing the changes in the assumptions of a

strategy. Any change in an assumption of strategy may affect the organization’s
success. Thus, premise control helps in regularly testing the assumptions with
the changing environment and taking corrective actions if required. In other
words, it can be explained as a control that helps in identifying the key
assumptions of the plans and gathering the data to monitor the changes.
Premise control helps in testing the foundations of the strategy and determining
the validity of these foundations with respect to the present condition of the
organization.

 Implementation Control: Focuses on evaluating the plans, programs, and

projects that have been developed during the implementation stage. Plans,
programs, and projects are evaluated to check whether or not they are
contributing to the organization’s objectives. It analyzes the output to identify
the gaps between predefined standards and actual performance, and takes
corrective actions if needed. The two types of implementation control are as
follows:
  Monitoring Strategic Thrust: Involves controlling the projects that represent the
actions that need to be taken if the overall strategy is to be fulfilled. It helps an
organization to know whether continuing the strategy would be appropriate or
not.
 Milestone Review: Implies identifying the milestones that will be achieved
during the implementation of a strategy. Milestone reviews involve taking a
small pause in between a project to ensure that the work done till now is
completed successfully.

2. What is the BCG Matrix?

The BCG Matrix, also known as the Growth-Share Matrix, is a visual representation of a
company's portfolio of products or business units. It was developed by the Boston Consulting
Group in the 1970s and is widely used across industries to assess the strategic position of
different offerings.
By plotting products or units on a matrix based on their market growth rate and relative market
share, the BCG Matrix provides valuable insights into the potential and profitability of each
element in the portfolio.

Components of the BCG Matrix

Market Growth Rate
The market growth rate refers to the rate at which a particular market is growing. It is an
important factor to consider when analyzing a company's portfolio because high-growth markets
tend to offer greater opportunities for expansion and profitability. By assessing the market
growth rate, finance professionals can identify industries or sectors with significant growth
potential and allocate resources accordingly.
Relative Market Share
Relative market share is a measure of a company's market share compared to its competitors
in a specific market. It provides insights into a company's competitive position and its ability to
capture a significant portion of the market. A high relative market share indicates a strong market
presence, which can lead to economies of scale, pricing power, and competitive advantages.
Quadrants of the BCG Matrix

The BCG Matrix divides the portfolio into four quadrants, each representing a different strategic
outlook.
 Stars
Stars represent products or business units with a high market growth rate and a high
relative market share. These are the growth drivers of a company's portfolio. Stars require
substantial investment to sustain their growth trajectory and capture the market's potential. While
they generate revenue, they also consume resources to fuel their expansion. Companies should
develop strategies to support and maximize the potential of stars, as they can become future cash
cows.
For example Tesla's electric vehicles (EVs) in the early 2010s. With a high market growth rate
and a dominant market share in the electric vehicle industry, Tesla was considered a star. The
company invested heavily in expanding its manufacturing capacity and charging infrastructure to
capitalize on the growing demand for EVs.
 Cash Cows
Cash cows are products or business units with a low market growth rate but a high relative
market share. These offerings have reached maturity and generate significant cash flow for the
company. Cash cows typically have established customer bases and enjoy economies of scale,
resulting in healthy profit margins. Finance professionals should focus on sustaining and
extracting value from cash cows to fund other areas of the business.
Example Microsoft's Office Suite. Although the market growth rate for office productivity
software is relatively low, Microsoft's Office Suite dominates the market with a high relative
market share. This product line generates substantial revenue and profit, which supports the
company's investments in other emerging areas, such as cloud computing.
 Question Marks (Problem Children)
Question marks, also known as problem children or wildcards, are products or business units
with a high market growth rate but a low relative market share. They require careful
analysis and strategic decision-making due to the uncertainty surrounding their potential.
Question marks may either become stars or fail to gain market traction. Companies need to
assess the viability and potential of question marks and allocate resources accordingly.
Example: Uber's food delivery service, Uber Eats, during its early years. With the rapid growth
of the food delivery market, Uber Eats had a high market growth rate. However, it faced intense
competition from established players like DoorDash. Uber had to strategically invest in
marketing and partnerships to gain market share and compete effectively.
 Dogs
Dogs represent products or business units with both a low market growth rate and a low
relative market share. These offerings have limited potential and may not generate substantial
returns. Companies should evaluate dogs to determine if they can be revitalized or if divestment
is a more appropriate course of action.
Example: BlackBerry's smartphones in the mid-2010s. With declining market share and a lack of
innovation compared to competitors like Apple and Samsung, BlackBerry's smartphones became
dogs in the market. The company eventually shifted its focus to software and services.

3. What is the SPACE Analysis?

A SPACE Analysis makes it easier for upper management to make strategic choices and
decisions and create a plan. SPACE is an acronym of Strategy, Position, Action, and
Evaluation. Organisations’ external and internal environments play a major role in the
SPACE Analysis.
In general, the analysis is represented in a matrix. The top of the Y-axis says ‘Financial
Strength’ (FS), and the bottom of the Y-axis shows ‘Environmental Stability’ (ES).
The left of the X-axis shows the ‘Competitive Advantage’ (CA), and ‘Industry
Attractiveness’ (IA) is shown on the right. Combined this leads to four positions;
conservative, aggressive, defensive, and competitive.
The SPACE Analysis can then lead to creative ideas with an appropriate corporate
strategy.

Four Positions within the SPACE Analysis matrix

In order to determine a strategy, you first have to find out the position of the organisation.
Only then can you take actions that can be evaluated later.

There are four positions between the SPACE Analysis matrix’s Y-axis and X-axis. Each
end represents a sub-factor to which a value can be assigned between 0 and 6; for CA and
ES this is 0 to -6. The values of the individual factors are then noted on the axes in the
matrix.

There where the surface area is largest because of the value of these factors, is where the
best choice for a strategic plan will be. You can see the four strategic positions from the
SPACE analysis below. P(osition) and AC(tion) are also considered:
 Conservative strategy

The conservative strategy is located between the company’s financial strength and the
competitive advantage. This is usually a stable organisation, with low growth.

The following actions would be potential options for a company in this position:

 Focus on existing successful products and cherish these

 Also leave room to develop new products
 Potential product penetration through expansion
 Aggressive strategy

The aggressive strategy is located between financial strength and industry attractiveness.
This is a stable organisation that actively chooses to compete with similar businesses.

The following actions would be potential options for a company in this position:

 Focus on products that can really compete with other businesses

 A focused marketing campaign to gain a larger market share
 Focus on offering the lowest price compared to competitors
 Look for potential companies to take over and increase the market share
 Defensive strategy

The Defensive strategy of the SPACE Analysis is located between environmental

stability and competitive advantage. These are businesses that are being pushed out by
the competition. If they don’t take action, chances are they won’t make it.
The following actions would be potential options for a company in this position:

 Reduce costs to realise a stronger competitive position

 Reduce investments and manufacture at low cost
 Focus on core business and sell off ancillary activities

Competitive strategy

The competitive strategy of the SPACE Analysis is located between industry

attractiveness and environmental stability. These are companies that are competitive but
not stable.
The following actions would be potential options for a company in this position:

 Look for partnership opportunities with stable companies

 Increase productivity to make supply more reliable
 In addition to the core business, seek other products to boost sales
Reference
https://www.researchgate.net/publication/
327824433_SPACE_Analysis_as_a_Tool_for_Internal_Development_Factors_Measurement_within_Co
mpanies

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