Business Strategy Evaluation

Strategy evaluation is an attempt to look beyond the obvious facts regarding the short-term health of a business and appraise instead those more fundamental factors and trends that govern success in the chosen field of endeavor. Strategy can also be defined as a set of objectives, policies and plans that, taken together, define the scope of the enterprise and its approach to survival and success. Alternatively, we could say that the particular policies, plans, and objectives of a business express its strategy for coping with a complex competitive environment. A good business strategy can be broadly categorized into functions like consistency, consonance, advantage, and feasibility.

A strategy that fails to meet one or more of these criteria is strongly in suspect. It fails to perform at least one of the key functions that are necessary for the survival of the business. Inconsistency in business is not simply a flaw in logic. A key function of strategy is to provide coherence to organizational action. A clear and explicit concept of strategy can foster a climate of tacit coordination that is more efficient than most administrative mechanisms. Organizational conflict and interdepartmental bickering are often symptoms of managerial disorder, but may also indicate problems of strategic inconsistency.

It is no exaggeration that to say that competitive strategy is the art of creating or exploiting those advantages that are most telling, enduring, most difficult to duplicate. Competitive strategy, in contrast with generic strategy, focuses on the differences among firms rather than their common missions. Competitive advantages can normally be traced to one of the three roots: (1) superior skills, (2) superior resources, and (3) superior position. Positional advantage is of two types, first mover advantages and reinforcers. First movers may also gain advantages in building distribution channels, in trying up specialized suppliers, or in gaining the attention of customers. Reinforcers are policies and practices acting to strengthen or preserve a strong market position and which are easier to carry because of the position. Other position-based advantages include the ownership of special raw material sources or advantageous long-term supply contracts; being geographically located near key customers in a business involving significant fixed investment and high transportation costs; being a leader in a service field that permits or requires the building of a unique experience base while serving clients; being a full-line producer in a market with heavy trade-up phenomena; having a wide reputation for providing a needed for providing a needed product or service trait reliably and dependably.