Professor Richard Rumelt came out with a brilliant
idea on business strategy evaluation by using just four criteria that can
dissect how it is working well at present and in the future too. He recommends
that consistency, consonance, competitive advantage and feasibility as the four
criteria:
Consistency: Primary
search option under consistency is to appraise whether internal and external
goals are aligned with each other. For example, how the marketing department
sets targets for its team and how these are in consistent with the broader
market depth the firm seeks. Rumelt especially is concerned with a situation
where sudden surge of demand of a particular product consequent to an
aggressive sales campaign bringing out strain in the production department
resulting in organization-wide conflict. Therefore, the main focus of strategy
evaluation must be to remove situations where mutually inconsistent goals are set
by either marketing or production departments.
Consonance:
A vital ingredient in any business strategy is the ability of adapting to the
external environment with short notice. There may be events that are critical
or ground shaking occurring in economic, political and social fabric that could
directly impact industry. Good example is how lifestyle and fashion, change the
demand stature of goods that are used by young people in the market. The
changes that happen in the market must be immediately taken upon by the firm so
that necessary alterations are done in both marketing & production areas.
Competitive
advantage: In the key activities of the business model there
must be a provision to create and continually maintain competitive advantage
amongst competitors especially in the case of homogeneous products. Rumelt suggests
the firm on continued basis, must assess how it is placed in terms of innovation
and technology. Being in the top three is essential and to make it there, the
firm needs superior resources, superior skills, and superior marketing position.
Feasibility: Ascertaining
the feasibility of overall business strategy is the fourth and final criteria.
The focus of this aspect of strategy evaluation is to find out the neither
ideal position where neither there is over-taxing nor under-utilization of key
resources. Besides, implementation of strategy must be seen as fair and
objective by all personnel in the entire organization.
In the production department the skills development
and training must be of the state-of-the-art type. To ensure that condition
firm must allocate sufficient resources for skills development. Equally
important is to allocate funds for the marketing department to undertake
training of their staff in improving skill sets in sales and distribution. In
such an ideal balance, value proposition by way of products and customer
service by way of sales & after-sales go in harmony with the expectations
of the target market.
Cheers!
Muthu
Ashraff Rajulu
Business Strategist
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Business
Strategist
