Strategic Control

 The process of Strategic Control

 Measure or organizational Performance
 The Strategic Audit
 Strategic Audit Measurement Methods

The process of Strategic Control

Three distinct but related steps must we taken to carry out the strategic control process with in an
organization. Because they constitute a special type of organizational control. These steps are closely
related to the more gernal control model presented earlier. They are measuring organizational
performance. Comparing performance to goals and standers and taking necessary corrective action.

Measuring organizational performance

The managers can determine what must be done to make the strategic management process more
affective, they must taken measures that reflect current organizational performance. In order to
understand what strategic control performance measurements are and how a manager can take such
measurements we need to introduce two important topics

1. Strategic audits
2. Strategic audit measurement methods.

Strategic Audits

A strategic Audit is an examination and evaluation of airs affected by the operation of a strategic
management’s process within an organization. Such an Audit may be very comprehensive, emphasizing
all facets of a strategic management process, or very focused, emphasizing only a single part of the
process. In addition the strategic audit can be quite formal strictly adhering to established organizational
rules can be quite informal allowing managers wide discretion in deciding what organizational
measurements should be taken and when.

The methods can be prescribed for performing a strategic audit and each organization must design and
implement its own Audits to meet its own unique needs the worthwhile set of general guidelines on
how to conduct a strategic Audit.
Strategic audit measurement methods
There are several generally accepted methods for measuring organizational; performance. One way of
categorizing these methods divvies them into two distinct types: Qualitative and Quantitative. Although
this scheme is useful for developing an understanding of strategic audit measurement methods a few
methods do not fall neatly into one or the other of these categories both rather are a combination of
both types

Qualitative organizational measurement.

These measurements are organizational assessments resulting in data that are subjectively summarized
and organized before any conclusions are drawn on which to base strategic control action. Many
managers believe that qualitative organizational measurements are best arrived at simply by answering
a series of critical question designed to reflect important facets of organizational operations. There is no
universally endorsed list of such Questions but several that might be useful to the practicing managers
are presented.

Quantitative Organizational measurement:

ROI (Returns on Investments)
This most commonly used measure of organizational performance divides net income by total assets
.the result indicates the relationship between the amount of income generated and the amount of
assets needed to operate the organization. Naturally a Rio value fror one year alone may not provide the
manager with much useful information. Comparing ROI values to those of similar companies to
competitors usually generates a more complete picture of organizational performance in this area.

Zscore
This common quantitative measure results from an analysis that numerically weights and sums five
measures to arrive at an over all score. The score becomes a basis for classifying firms as healthy ones
that are not likely to go bankrupt or as sick ones that are likely to go bankrupt. The formula itself is

Z + 1.2x1 + 1.4x2 + 3.3x3 + o.6x4 + 1.0x5