What is a strategic audit

If the findings are different and your current strategy is no longer in line with these, then it needs to be re-evaluated. In addition, data often come with limited historical reference and in a format that does not map to the previous one.

It takes sensitivity and diplomacy to raise such issues constructively, but sensitivity and diplomacy are attributes not all board members possess. A portfolio analysis allows companies to understand better which areas to highlight and which areas to phase out. Those who choose to violate the norms of boardroom debate by aggressively and persistently challenging corporate leadership, thereby invading the DMZ between board and executive—run the risk of finding themselves isolated and, in time, replaced.

Some of these can be owned e.

Strategic programming

Is the current information system capable of providing sufficient feedback on performance? A strategy may go sour long before the normal retirement date of the CEO responsible for choosing it. Net economic value added from year to year EVA. This obligation implies evaluating performance in financial terms. Although the actual disparity in performance between corn refining and consumer products was difficult to observe early on, it was impossible to conceal during the period from to , when there was a short-term decline in the profitability of the consumer foods line. By nature, the typical board of directors is poorly designed and ill equipped to provide hands-on product and market leadership. The robust egos that normally inhabit the boardroom are highly sensitive to actions that appear to challenge their authority. The committee should select the criteria for review of strategic performance, oversee the design of the database, and establish a review process. If the findings are different and your current strategy is no longer in line with these, then it needs to be re-evaluated. It should be used to direct internal audit resources to those aspects of the organisation that represent the greatest risk to the achievement of its objectives, and where internal audit can aid management of those risks.

What are the pros and cons of each? List five to ten strategic factors. With this in mind, boards will find that several criteria satisfy the basic requirements of a strategic review process. This ANA should be regularly updated and the IAS amended as necessary to reflect the changing assurance needs of the organisation.

strategic audit ppt

They can hardly be expected to have the detailed command of the issues and the requisite independent judgment necessary to make compelling proposals to counter those of management.

Proposals to strengthen that ability are among the most important to consider but are also the most difficult to gain consensus on and to implement.

At the bike shop, the physical layout should feature a special area for high-end mountain bikes.

The strategic audit harvard business review

Based on audit results, management adjusts operations to maximize progress toward the goals. At least initially, the board and its consultant would need a great deal of cooperation and assistance from management. An important objective of a strategic audit is to ensure that the business portfolio is strong and that business units requiring investment and management attention are highlighted. What all the measures I have presented share is an ability to capture significant and sustained trends, whether strong or weak, which then become the baseline from which to track strategic progress. Nevertheless, some events may justify a special meeting of the strategic audit committee. Absent such unique personal prerogatives, board members are expected to serve as supportive critics of the strategy in place. By nature, the typical board of directors is poorly designed and ill equipped to provide hands-on product and market leadership. In , it merged with Best Foods, which was a grocery products company with well-known brands. But you need to think past the obvious answer and take a closer look. In this context, the best standard of performance by which to motivate the organization is a relative one—to ask how the company is performing relative to previous strategies, relative to the results of last quarter or last year, relative to the best competitors in the same product markets. This enables you to allocate funds and resources more efficiently to the products or services that offer a larger return. Effective oversight depends on how these data are assembled and maintained in the short and long term and who does the job on behalf of the board. It has the advantage of being based on data familiar to shareholders and management.

A period of sustained success can lull the board into the belief that success is forever and that the company can do very nicely on automatic pilot.

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A New Tool for Boards: The Strategic Audit