The time required to develop resources is so extended, and the timescale of opportunities is so brief and fleeting, that a company which has not carefully delineated and appraised its strategy is adrift in white water. This underlines the importance of strategy evaluation. The adequacy of a strategy may be evaluated using the following criteria:

    1. Suitability Is there a sustainable advantage?
    2. Validity Are the assumptions realistic?
    3. Feasibility Do we have the skills, resources, and commitments?
    4. Internal consistency Does the strategy hang together?
    5. Vulnerability What are the risks and contingencies?
    6. Workability Can we retain our flexibility?
    7. Appropriate time horizon.

Suitability Strategy should offer some sort of competitive advantage. In other words, strategy should lead to a future advantage or an adaptation to forces eroding current competitive advantage. The following steps may be followed to judge the competitive advantage a strategy may provide: (a) review the potential threats and opportunities to the business, (b) assess each option in light of the capabilities of the business, (c) anticipate the likely competitive response to each option, and (d) modify or eliminate unsuitable options.

Validity (Consistent with the Environment) Strategy should be consistent with the assumptions about the external product/ market environment. At a time when more and more women are seeking jobs, a strategy assuming traditional roles for women (i.e., raising children and staying home) would be inconsistent with the environment.

Feasibility (Appropriateness in Light of Available Resources) Money, competence, and physical facilities are the critical resources a manager should be aware of in finalizing strategy. Aresource may be examined in two different ways: as a constraint limiting the achievement of goals and as an opportunity to be exploited as the basis for strategy. It is desirable for a strategist to make correct estimates of resources available without being excessively optimistic about them. Further, even if resources are available in the corporation, a particular product/market group may not be able to lay claim to them. Alternatively, resources currently available to a product/market group may be transferred to another group if the SBU strategy deems it necessary.

Interna Consistency Strategy should be in tune with the different policies of the corporation, the SBU, and the product/market arena. For example, if the corporation decided to limit the government business of any unit to 40 percent of total sales, a product/ market strategy emphasizing greater than 40 percent reliance on the government market would be internally inconsistent.

Vulnerability (Satisfactory Degree of Risk) The degree of risk may be determined on the basis of the perspectives of the strategy and available resources. A pertinent question here is: Will the resources be available as planned in appropriate quantities and for as long as it is necessary to implement the strategy? The overall proportion of resources committed to a venture becomes a factor to be reckoned with: the greater these quantities, the greater the degree of risk.

Workability The workability of a strategy should be realistically evaluated with quantitative data. Sometimes, however, it may be difficult to undertake such objective analysis. In that case, other indications may be used to assess the contributions of a strategy. One such indication could be the degree of consensus among key executives about the viability of the strategy. Identifying ahead of time alternate strategies for achieving the goal is another indication of the workability of a strategy. Finally, establishing resource requirements in advance, which eliminates the need to institute crash programs of cost reduction or to seek reduction in planned programs, also substantiates the workability of the strategy.

Appropriate Time Horizon A viable strategy has a time frame for its realization. The time horizon of a strategy should allow implementation without creating havoc in the organization or missing market availability. For example, in introducing a new product to the market, enough time should be allotted for market testing, training of salespeople, and so on. But the time frame should not be so long that a competitor can enter the market first and skim the cream off the top.

This article was devoted to strategy formulation for the SBU. A conceptual framework for developing SBU strategy was outlined. Strategy formulation at the SBU level requires, among different inputs, the perspectives of product/market strategies. For this reason, a procedure for developing product/market strategy was discussed first. Product/market strategy development requires predicting the momentum of current operations into the future (assuming constant conditions), modifying the momentum in the light of environmental changes, and reviewing the adjusted momentum against goals. If there is no gap between the set goal and the prediction, the present strategy may well be continued.

Usually, however, there is a gap between the goal and expectations from current operations. Thus, the gap must be filled. The following three-step process was suggested for filling the gap: (a) issue assessment (i.e., raising issues with the status quo vis-à-vis the future), (b) identification of key variables (i.e., isolating the key variables on which success in the industry depends) and development of alternative strategies, and (c) strategy selection (i.e., choosing the preferred strategy). The thrust of the preferred strategy is on one or more of the four variables in the marketing mix product, price, promotion, or distribution. The major emphasis of marketing strategy, the core strategy, is on this chosen variable. Strategies for the remaining variables are supporting strategies. Usually, the three core marketing strategies are operational excellence, product leadership, and customer intimacy. The SBU strategy is based on the three Cs (customer, competition, and company). SBUs were placed on a two-by-two matrix with industry maturity or attractiveness as one dimension and strategic competitive position as the other. Stages of industry maturity embryonic, growth, mature, and aging were identified.

Competitive position can be classified as dominant, strong, favorable, tenable, or weak. Classification by industry maturity and competitive position generates 20 different quadrants in the matrix. In each quadrant, an SBU requires a different strategic perspective. A compendium of strategies was provided to figure out the appropriate strategy in a particular case. The article concluded with a procedure for evaluating the selected strategy. This procedure consists of examining the following aspects of the strategy: suitability, validity, feasibility, internal consistency, vulnerability, workability, and appropriateness of time horizon.

Portfolio Analysis The previous articles dealt with strategy development for individual SBUs. Different SBU strategies must ultimately be judged from the viewpoint of the total organization before being implemented. In today’s environment, most companies operate with a variety of businesses. Even if a company is primarily involved in a single broad business area, it may actually be operating in multiple product/market segments. From a strategy angle, different products/markets may constitute different businesses of a company because they have different roles to play. This article is devoted to the analysis of the different businesses of an organization so that each may be assigned the unique role for which it is suited, thus maximizing long-term growth and earnings of the company. Years ago, Peter Drucker suggested classifying products into six categories that reveal the potential for future sales growth: tomorrow’s breadwinners, today’s breadwinners, products capable of becoming net contributors if something drastic is done, yesterday’s breadwinners, the “also rans,” and the failures. Drucker’s classification provides an interesting scheme for determining whether a company is developing enough new products to ensure future growth and profits. In the past few years, the emphasis has shifted from product to business.

Usually a company discovers that some of its business units are competitively well placed, whereas others are not. Because resources, particularly cash resources, are limited, not all SBUs can be treated alike. In this article, three different frameworks are presented to enable management to select the optimum combination of individual SBU strategies from a spectrum of possible alternatives and opportunities open to the company, still satisfying the resource limitations within which the company must operate. The frameworks may also be used at the SBU level to review the strategic perspective of its different product/market segments. The first framework to be discussed, the product life cycle, is a tool many marketers have traditionally used to formulate marketing strategies for different products. The second framework was developed by the Boston Consulting Group and is commonly called the product portfolio approach. The third, the multifactor portfolio approach, owes its development to the General Electric Company. The article concludes with the Porter’s generic strategies framework.