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Strategic Control

Strategic Control

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Published by Tedtenor
How strategic control links the internal business environment and the external environment.
How strategic control links the internal business environment and the external environment.

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Published by: Tedtenor on Nov 14, 2009
Copyright:Attribution Non-commercial


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Question Number TwoExplain how strategic control links the internal business environmentand the external environment. Give example in support of youranswer.
Corporates depend heavily upon their strategy to stay ahead of their competitors. Butthe effective ones are the Corporates who do not just stop with planning, but have aregular check to see if they are moving onward on the lines of the strategy planned. Inthis paper, I will be examining what strategic control is and how it is linked with theInternal & external environments of the businessDefinition:
 It is the process by which managers monitor the ongoing activities of anorganization and its members to evaluate whether activities are being performeefficiently and effectively and to take corrective action to improve performance if theyare not 
” -Sam Walton
Components of business environment
There are broadly two types of environment, the internal environment, i.e. factors internal to thefirm and the external environment i.e. factors external to the firm which have relevance to it.The internal factors are generally regarded as controllable factors while the external factors onthe other hand are, by and large, beyond the control of a company. Some of the external factorshave a direct and intimate impact on the firm like the suppliers and distributors of the firm. Thesefactors are classified as micro environment. There are other external factors which affect anindustry such as industrial policy, demographic factors etc. they constitute what is called macroenvironment.
Internal Environment:1 |
The important internal factors which have a bearing on the strategy .
Value system:
The value system of the founders and those at the helm of the affairs hasimportant bearing on the choice of business, the mission and objectives of the organisation, business policies and practices.
Mission and Objectives:
The directions of development, business philosophy, business policy etc., are guided by the mission and objectives of the company.
Management structure and Nature:
The organizational structure, the composition of theBoard of Directors, professionalisation of management etc., are important factors influencing business decisions..
Internal power relationship:
The support the top management enjoys from different levelsof employees, shareholders and Board of Directors have important influence on the decisionsand their implementation.
Human resources:
The characteristics of the human resource like skill, quality, morale,commitment, attitude etc also contribute to the strength and weaknesses of an organisation.
Company image and Brand equity:
The image of the company matters while raisingfinance, forming joint ventures or other alliances, entering purchase or sale contracts,launching new products etc.
Miscellaneous Factors:
There are a number of other internal factors which contribute to the business success/ failures or influence the decision-making which are1.Physical Assets and Facilities like the production capacity,2.R&D and technological capabilities3.Marketing Resources and distribution network.4.Financial factors like financial policies, financial position and capital structure
External Environment:
The external environment is made up of micro and macro environment.Micro EnvironmentThe micro environment consists of the actors in the company’s immediate environment thataffects the performance of the company which includes the suppliers, marketing intermediaries,competitors, customers and the public
 Macro Environment:
2 |
A company and the forces in its macro environment operate in a large macro environment of forces that shape opportunities and pose threats to the company. Important macro environmentfactors include economic environment, political and regulatory environment, social/ culturalenvironment, demographic environment, technological environment and global environment.
Strategic Control
Controls are an integral part of any organization's business policies and procedures.Protecting its resources against waste, fraud, and inefficiency
Controls are basicallygood business practices.
Ensuring accuracy and reliability in accounting and operating data
Securing compliance with the policies of the organization
Evaluating the level of performance in all organizational units of the organization4.It optimizes Organizational performance5.Ensures competitive advantage6.Keeps the organization on trac7.It helps anticipate events that might occur in future8.Allows the organization to respond to new opportunities that may present itself 
Organizational control is important because it determines the quality of goods & services10.Can make continuous improvements to quality over time and this gives them acompetitive advantage
Model of the Strategic Control Process
Strategic control involves the monitoring and evaluation of plans, activities, andresults with a view toward future action providing a "warning bell" through diagnosisof data. The clear intent of strategic control is the triggering of appropriate changes instrategy, be they either tactical adjustments or strategic reorientations
3 |

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