Importance of Evaluation and Control

Submitted by
KRISHNA SUDHA R
3122218001058

MASTER
OF
BUSINESS ADMINISTRATION
MBA (2021-2023)

SSN SCHOOL OF MANAGEMENT

Sri Sivasubramaniya Nadar College of Engineering
(An Autonomous Institution, affiliated to Anna University, Chennai)
Rajiv Gandhi Salai (OMR), Kalavakkam– 603110

October 2022

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 TABLE OF CONTENTS

SL.NO. TITLE PAGE NO.

1 Introduction 3
1.1 Importance of Evaluation and Control 3
2 Evaluation and Control Process 4
2.1 Terms and Relationship 4
2.2 Benefits of Evaluation and Control 5
2.3 Basic Requirements of 5
Evaluation and Control Process
2.4 Process of Evaluation and Control 5
2.5 Questioning the Strategy 6
2.6 Popular Criteria By Authors 7
2.7 Choosing the Right Evaluation Approach 7
3 Case Study and Conclusion 8
3.1 Failure Strategies to live by 8
3.2 Conclusion 8
4 References 9

LIST OF FIGURES
FIGURE NO. TITLE PAGE NO.
1.1 Strategic Management Model 3
2.1 Relationship of Evaluation and Control 4
2.2 Process of Strategic Evaluation and Control 5
2.3 Evaluation Strategy I and II 7
2.4 Twitter Blue Tick Strategy 8

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 1. INTRODUCTION:

Strategic Evaluation and control is the final module of the Strategic Management. Its
importance is vital hence it is placed in the fag end of the strategic management process.
Referring to the strategic management model below, we see that the function of evaluation
and control closes the loop like feedback which had started with the planning function.

FIG 1.1 STRATEGIC MANAGEMENT MODEL

1.1 IMPORTANCE OF EVALUTION AND CONTROL

These are the primary framework on which organizations set up evaluation models which we shall
discuss are:

1, To measure evaluation and control as a process

2, To evaluate the effectiveness and validity of a strategy implemented, to correct the course of
action when required, if they are not aligned with the former analysis in the model.

3, To assess why the implementation of the strategic model is a failure.

The above processes are discussed in the same order in a detailed manner below, to understand the
final module of the strategic management model.

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2.EVALUTION AND CONTROL PROCESS

2.1 TERMS AND RELATIONSHIP

According to Rumelt (1980), evaluation of strategy for an organization is not the simple appraisal
of the business growth rate and its rate of profit. The strategy evaluation should look ahead the
short-term state of the organization and examine the fundamental factors that govern the business
success.

The terms ‘evaluation’ and ‘control’, always appear in tandem, are not necessarily the same
thing. In the words of Professor William F. Glueck and Lawrence R. Jauch, “Evaluation of strategy
is that phase of strategic management process in which the top managers determine whether their
strategic choice as implemented is meeting the objectives of the enterprise.” Therefore, if one talks
of strategic evaluation and control, they are talking about whether a particular strategy contributes
to the organizational objectives or not.

A simple relationship between evaluation and control and the role they play in strategic
management model is shown in the Figure 2.1 , which is defined HRC group by around 1989.

FIG 2.1 RELATIONSHIP OF EVALUATION AND CONTROL

We can see that as strategic managers, we must be able to exercise proper control over the strategic
management process; which is, we must know how well our strategic plans are formulated and
implemented, and wherever necessary corrective action must be taken to improve performance.

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2.2 BENEFITS OF EVALUTION AND CONTROL PROCESS

• They provide direction.

• They provide guidance to everybody.
• They inspire confidence.
These are simple benefits but which link the stakeholders to reward the right strategy fitted
outcome which is rewarding the people and how, when and by what means which needs the process
flow defined.

2.3 BASIC REQUIREMENTS FOR EVALUTION AND CONTROL

PROCESS

1. The activities for the organization should be economical.

2. The activities should not provide too much information but provide required information at
right time.
3. The activities must be done with average control but avoid too many controls.
4.The activities must pertain specifically to the firm’s objectives.
5. The overall process should not dominate strategic decisions, and it should foster mutual
understanding, trust and common sense.

2.4 PROCESS OF STRATEGIC EVALUATION AND CONTROL

The system that the evaluation and control process works is quite up-front: set objectives,
evaluate actual performance against the objectives, and, based on the evaluation, take whatever
action is necessary (see below Figure 2.2).

FIGURE 2.2 PROCESS OF STRATEGIC EVALUATION AND CONTROL

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Firstly, to set objectives properly we have to establish the areas which require performance
objectives. So, start with the big picture, then narrow down to the most essential, which is,
1. What specific things must be done to ensure the success of the strategic plan?
2. Of these, which are the most important?

Good performance objectives should always be SMART. That is, they should be: Specific,
Measurable, Assignable, Realistic and Time-related,

Once the appropriate objectives are set, the next step is to carry out the evaluation. This
involves (a) determining the types and sources of information required to compare actuals
against the standard, (b) collecting the information, and (c) based on the information collected,
doing a comparative analysis. Once done, the final step is to determine what action is necessary.
If not, then corrective action must be taken to ensure things go back on track.

2.5 QUESTIONING THE STRATEGY

Strategic evaluation and control doesn’t mean unsighted adherence to techniques; its
effectiveness lies more in the ability to ask the right questions, it is just as important to question
how good the strategic plan is.

Montanari et al (1990) have allowed us to answer a number of important questions about the
strategic control process. Here are some of the more important questions;
1 What is strategic control and what is its purpose?
2 Describe the nature of strategic control.
3 What are the two main types of controls that can be used to ensure that an organisation does
not drift off course?
4 How can an organisation institute steering controls?
5 Stripped of all the details, what are the key responsibility indicators within an organisation
that can be used for evaluation purposes?
6 Explain why budgets are the quantitative representations of strategic goals and objectives,
and which evaluation technique could be used as a result.
7 Explain why it is important to differentiate between operational and strategic budgets.
8 What techniques would you use to evaluate the validity of the strategic plan and whether it
was on course or not?
9 Which of the above techniques is the best one to use?

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2.6 POPULAR CRITERIA FOR STRATEGY EVALUTION AND
CONTROL

The criteria Suggested by Richard Rumelt and Seymour Belt for Strategy
Evaluation:

i. Consistency – Alignment with policies and broad plans.

ii. Consonance - Is to understand the existence of business
iii. Advantage – Business fitness to environment and competitive advantage amongst others.
iv. Feasibility – Sustenance, co-ordination and integration of the implementation.

2.7 CHOOSING THE RIGHT EVALUATION APPROACH

FIGURE 2.3 EVALUATION STRATEGY I, AND II.

The difference between the above two approaches in strategy is that, the first assumes the strategic
plan is valid and focuses on areas that require attention. While the second first examines whether
the plan is valid and then proceeds from there. This second approach is more wide-ranging, but is
time consuming and hence more expensive. Your choice of approach should depend on the
resources of the organization for evaluation and control and mainly the requirements of the
organisation.

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3. CASE STUDY AND CONCLUSION

3.1 FAILURE STRATEGY LESSONS TO LIVE BY

There is no better way of stressing the importance of evaluation and control than by leaving you
with some sobering lessons on failure. The literature on strategic management contains many
stories of failure. Not that all these are due to a lack of evaluation and control. However, it is
probable that had proper evaluation and control systems been set in place, glitches could have been
sensed earlier, and perhaps fixed before they could have done any grave damage. For an example
case, glance the below picture. (Fig2.4)

FIGURE 2.4 TWITTER BLUE TICK STRATEGY

This is the recent famous twitter blue tick; That was introduced to increase its profitability as a
strategy which backfired due to trick messages by anonymous users to pay a lesser amount and
gain the same feature, these kinds of strategies must be revised with an evaluation and control
process. For a sample solution, the above situational strategy was Quantitative evaluation and
control strategy which involves financial ratios like the profit margin, debt equity ratio, sales
growth etc., but the focus was not on Qualitative evaluation and control strategy, like acceptable
degree of risk, the internal consistency with the policies etc.,

3.2 CONCLUSION

Evaluation and control perform a vital role in the strategic management process to weigh how well
things are going at every stage of the process and to take whatsoever action is necessary to improve
performance. We assess to know how good our strategic plans are and how well they are
implemented. The information we get from evaluation is an enabler to exercise better control in
the strategic management process.

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4. REFERNECES

1) David, F R (2001). Chapter 7 ‘Implementing strategies: Management issues’. Strategic

Management Concepts. 8th edition. New Jersey: Prentice Hall.
2) Hawkins, J (1993). Strategic Management Study Guide. Tasmania: Australian Maritime
College.
3) HRC Group (1989). ‘The role of evaluation and control in strategic management’. Strategic
management briefing papers.
4) Montanari, J R; Morgan, C P and Bracker, J (1990). ‘The choice perspective of strategic
management’. In Strategic Management: A Choice Approach. Chicago: The Dryden Press.
5) Thompson, A and Strickland, A (1998). Strategic Management. 10th edition. McGraw-
Hill: USA.
6) Wetherbe, J C (1996). ‘The world on time’. Vision Book Summaries, no.156.
7) Wheelen T L & Hunger J D (2000). Strategic Management Business Policy. 7th edition.
USA: Prentice Hall.