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 it’s
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 Institute’s Matrix
• Arthur D’Little Company’s Matrix
• Hofer’s 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
How will you achieve your
goals/objectives?
Strategies
What do you need to do
well?
Success Drivers
How will you measure
how well you are
Performance Measures doing?
Balanced Scorecard Approach
• The Balanced Scorecard translates an organization’s mission and
strategy into goals and measures, organized into four different
perspectives
» customer
» financial
» internal business process
» innovation and learning
Balanced Scorecard Approach (Cont’d)

• 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 (Cont’d)

• The best Balanced Scorecards will tell the story of the

organization’s strategy and cause the overall
performance to be managed such that the stated
mission is accomplished.