Strategy Evaluation and Control

Strategic Control Process

Quantitative Qualitative In both cases process consists of three phases 1. Evaluation Criteria . 2. Performance Evaluation 3. Feedback

Quantitative
To compare the performance of the organization over different time periods To compare the performance with its competitors in the industry To compare the performance against industry averages

Financial Ratios
ROI Return on Equity Profit Margin Market Share Debt to Equity EPS Sales Growth Asset Growth

Methods of Control
DuPont Chart Budgets Audits

Time Related Control

Critical Path Method PERT MBO

Problems of Control System

Reporting data validity Criteria for measurement in question Performance standards may be set with inherent contradictions Over emphasis on short term measures

Evaluation of Strategy
Strategy Formulation Strategy Implementation Strategy Evaluation

Business Portfolio Analysis

BCG Matrix McKinsey Matrix Strategic Planning Institutes Matrix Arthur DLittle Companys Matrix Hofers Product / Evolution Matrix

Qualitative Factors
Balanced Score Card by Norton and Kaplan

The Basic Performance Pyramid

What are we in business for?
Mission

Where are we going? Vision What do we want to achieve? Goals/Objectives Strategies How will you achieve your goals/objectives? What do you need to do well? How will you measure how well you are doing?

Success Drivers Performance Measures

Balanced Scorecard Approach

The Balanced Scorecard translates an organizations mission and strategy into goals and measures, organized into four different perspectives customer financial internal business process

innovation and learning

Balanced Scorecard Approach (Contd)

The Balanced Scorecard helps an organization to:

determine progress towards its goals/objectives

communicate strategic direction determine success or failure of its

strategies/initiatives
define future strategies establish benchmarks

demonstrate value-added

Balanced Scorecard Approach (Contd)

The best Balanced Scorecards will tell the story of

the organizations strategy and cause the overall

performance to be managed such that the stated mission is accomplished.