To assess the existing strategy, it is necessary to return to the concept of strategy. First of all, it is necessary to assess the main directions of the company’s competition: by costs or by differentiating its goods, serving a wide group of consumers or a narrow niche of the market. The strategy is also influenced by the range of competition of the company in the industry, i.e. the number of levels of the production chain – distribution, at which it operates (one, several, all); geography of activity; size and composition of the customer base. In addition, an important part of the company’s strategy is the occasional competitive action taken (lowering prices, activating the advertising company, entering a new geographical market, merging with a competitor) aimed at improving the competitive position. The current strategy can be improved.
This is the so-called qualitative assessment of the strategy, which characterizes the completeness, internal consistency, validity, adequacy of the situation. It has its advantages, however, it is more reliable to use quantitative indicators describing the strategic and financial position of the company. For an empirical assessment of the strategic and financial position of the company, two parameters can be studied: the achievement of the company’s stated strategic goals and the compliance of its indicators with the industry average. Problems in achieving the set goals and low performance indicate significant shortcomings in the development or implementation of the strategy, and perhaps at both stages simultaneously. It happens that the company’s goals are formulated too generally and cannot be compared with specific performance results. Yet strategy can almost always be measured by the following: the company’s sales growth relative to the industry’s sales growth; increasing (decreasing) market share, attracting new consumers in sufficient quantities while maintaining the same ones, changing the company’s profit and comparing it with the profit of competitors, the dynamics of such indicators as net profit, return on investment, added economic value; their comparison with similar indicators of the main competitors. In addition, changes in the financial condition of the company and its credit rating, improvement (deterioration) of such internal indicators as the unit cost of production, the percentage of defects, the share of waste, the motivation and morale of the staff, the number of product returns, the turnover of stocks, etc., the dynamics of the company’s stock price and the ratio of the market and nominal value of shares in the assessment of shareholders (when compared with the same indicators of other companies in the industry), the reputation and image of the company in the eyes of consumers, the company’s leadership in technology, innovation, e-commerce, product quality, speed of order fulfillment, price level, speed of bringing new products to the market and other parameters on the basis of which consumers choose a brand.
The better the overall position of the company, the less reason for a radical change of course. The weaker the financial and market position of the company, the more important is a comprehensive analysis of the strategy. An unstable position is a sure sign of a weak strategy, poor implementation, or both.