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  • October 2016 (Revised December 2016)
  • Module Note

Strategy Execution Module 6: Evaluating Strategic Profit Performance

By: Robert Simons
  • Format:Print
  • | Language:English
  • | Pages:29
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Abstract

This module reading demonstrates how to calculate and analyze the profit generated by different business strategies. Formulas and examples are provided to calculate profit generated by changes in market share, revenue growth, efficiency improvements, and support costs. The discussion illustrates how managers can use this information to unlock insights about competitive effectiveness and operating efficiencies, test their profit plan assumptions, and validate their business strategy. The module also discusses how strategic profitability analysis can be used for early warning and corrective action, performance evaluation, and strategic learning. With this information in hand, managers can redesign organizational processes or adjust the business strategy to take advantage of changes in competitive markets. While this module is designed to be used alone, it is part of the Strategy Execution series. Taken together, the series forms a complete course that teaches the latest techniques for using performance measurement and control systems to implement strategy. Modules 1 - 4 set out the foundations for strategy implementation. Modules 5 - 10 teach quantitative tools for performance measurement and control. Modules 11 - 15 illustrate the use of these techniques by managers to achieve profit goals and strategies.

Keywords

Management Control Systems; Implementing Strategy; Execution; Evaluating Business Performance; Profitability Analysis; Variance Analysis; Measuring Effectiveness; Measuring Efficiency; Activity-Based Costing; Flexible Budget; Accounting; Strategy

Citation

Simons, Robert. "Strategy Execution Module 6: Evaluating Strategic Profit Performance." Harvard Business School Module Note 117-106, October 2016. (Revised December 2016.)
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About The Author

Robert Simons

Accounting and Management
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Related Work

    • October 2016 (Revised December 2016)
    • Faculty Research

    Strategy Execution Module 6: Evaluating Strategic Profit Performance

    By: Robert Simons
    • March 2017 (Revised May 2017)
    • Faculty Research

    The Strategy Execution Series

    By: Robert Simons and Jennifer Packard
Related Work
  • Strategy Execution Module 6: Evaluating Strategic Profit Performance By: Robert Simons
  • The Strategy Execution Series By: Robert Simons and Jennifer Packard
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