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Evaluate

Johnson Controls evaluates its strategies on an ongoing basis through a three step process: 1. Review the underlying bases of its strategies by re-examining internal and external factors and comparing to previous assessments. 2. Measure organizational performance by comparing planned versus actual results on objectives. Key metrics include financial ratios and judgments of performance by division, product, region and other measures. 3. Take corrective actions as needed such as revising strategies, goals, policies, hiring/firing staff, opening/closing facilities to realign competitively for the future if significant differences are found in steps 1 or 2. Contingency planning is also important.

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48 views17 pages

Evaluate

Johnson Controls evaluates its strategies on an ongoing basis through a three step process: 1. Review the underlying bases of its strategies by re-examining internal and external factors and comparing to previous assessments. 2. Measure organizational performance by comparing planned versus actual results on objectives. Key metrics include financial ratios and judgments of performance by division, product, region and other measures. 3. Take corrective actions as needed such as revising strategies, goals, policies, hiring/firing staff, opening/closing facilities to realign competitively for the future if significant differences are found in steps 1 or 2. Contingency planning is also important.

Uploaded by

Mansi Sharma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Johnson Controls

• Our commitment to exceed the expectations of


customers is the engine for our growth, and is at the
core of our success.
• Technology adds value to our products and services,
giving customers additional reasons to choose
Johnson Controls.
• Our goal is to enhance shareholder’s value.
• Employee dedication to our customers is key to
continued, profitable growth.
• Outsourcing is the largest source of growth for
our company, benefiting our automotive, plastics,
,batteries and controls businesses. Whether it’s
doing more within an automobile or a building, it
adds up to a multi-billion dollar opportunity for
Johnson Controls.
• Our customers expect Johnson Controls to be
responsive to their needs anywhere in the world.
Expanding our reach into emerging international
markets like the Asia-Pacific region, Eastern
Europe and South America is creating new
opportunities for growth.
Chapter
Chapter 99

Strategy
Strategy Review,
Review,
Evaluation,
Evaluation, and
and Control
Control
Nature of Strategy Evaluation
• Examining the underlying bases of a firm’s
strategies
• Comparing forecasted results with actual
results
• Taking corrective actions to ensure that
performance conforms to plans.
• Adequate, accurate, and timely feedback is the
cornerstone.
Importance of Strategy
Evaluation
• Organizations face dynamic environments
– External and internal factors changing quickly
• Successful organizations should never be
lulled into complacency.
Strategy Evaluation is Difficult
• Instability in world economies
• Shorter product development and product
life cycles
• Constant technological advancements
• More competitors; fewer regulated
industries
• International competition
The Process of Evaluating
Strategies
• Necessary for all sizes and kinds of
organizations.
• Should be performed on a continuing basis.
• Successful strategies may take years, so
strategists need to combine patience with a
willingness to take corrective action
Strategy Evaluation Framework
Strategy Evaluation Framework
A Strategy-Evaluation Framework (Figure 9-2)
Activity One: Review Underlying Bases of Strategy
Evaluate internal situation Evaluate external situation
Compare revised versus existing Internal Compare revised versus existing External
Audit Information Audit Information

Do significant Yes
differences occur?
Activity
Three:
No

Activity Two: Measure Organizational Performance:


Compare planned versus actual progress toward meeting Take
stated objectives
Corrective

Do significant Actions
Yes
differences occur?

No

Continue present course


Activity One:
Reviewing Bases of Strategy
• Re-examine external
– How have competitors reacted to our strategies?
– How could we more effectively cooperate with
competitors?
• Re-examine internal
– Have we added strengths and/or corrected
weaknesses?
• Very important to continually be monitoring
Measure Organizational Performance
Compare
Compare Past
Past
Periods
Periods and
and
By
By Product
Product
to
to Industry
Industry
Averages
Averages for
for By
By Division
Division
the
the Company
Company By
By Department
Department
By
By Geographic
GeographicArea
Area
Compare to Pro
Forma Projections By
By Salesperson
Salesperson
By
By Strategic
Strategic Business
Business
Annual Objectives Unit
Unit
Long Term Obj.
Activity Two:
Measuring Organizational
Performance
• Quantitative measures
– most commonly used are financial ratios
• Return on investment; return of equity; profit
margin; market share; debt to equity; earnings per
share; sales growth; asset growth.
• Intuitive judgments of performance
• Internal consistency of strategies
• Acceptable level of risk
Activity Three:
Taking Corrective Actions
• Making changes to reposition a firm
competitively for the future.
Take
Take Corrective
CorrectiveAction
Action

Revise Mission
Alter Goals and Objectives
Establish New Goals and Objectives
Alter Strategies
Establish New Policies
Hire New Employees or Managers
Close or Open New Facilities
Take
Take Corrective
CorrectiveAction
Action (cont.)
(cont.)

Expand or Diversify
Institute Advertising Campaign
Purchase New Equipment
Allocate resources differently
Countless Other Actions May Be Needed
Contingency Planning
• Alternative plans that can be put into effect
if certain key events do not occur as
expected.
– Acquisitions: BT and MCI
• Alternative strategies not selected can serve
as contingency plans.
• Sometimes unexpected opportunities occur.
The End

and

The Beginning

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