DMBA401 Unit-05

DMBA401: Strategic Management & Business Policy Manipal University Jaipur (MUJ)
MASTER OF BUSINESS ADMINISTRATION

SEMESTER 4
DMBA401
STRATEGIC MANAGEMENT & BUSINESS
POLICY
Unit 5: Strategic Control and Evaluation 1

Unit 5
Strategic Control and Evaluation
Table of Contents
SL Topic Fig No / Table SAQ / Page No

No / Graph Activity
1 Introduction - -
3
1.1 Learning Objectives - -
2 Concept of Strategy Evaluation - -
2.1 Significance of Strategy Evaluation - -
2.2 Need for Strategy Evaluation - - 4-5
2.3 Basic Requirements of Strategy - -

Evaluation
3 Process of Strategy Evaluation 1, 2 1
6-9
3.1 Techniques of Strategy Evaluation - -
4 Strategy Control - 2
4.1 Types of Strategic Control - - 10 - 14
4.2 Process of Strategic Control - -
5 Operational Control 3 3
5.1 Difference between Strategic Control - - 15 - 16
and Operational Control
6 Concept of Synergy - 4 17 - 18
7 Key Stakeholders Expectations - 5 19 - 20
8 Summary - - 21
9 Glossary - - 22
10 Case Study - - 23
11 Terminal Questions - - 24
12 Answers - - 24 - 27
13 Suggested Books and E-References - - 27

1. INTRODUCTION
In the earlier chapters, you learnt about formulating an organizational strategy and
implementing the same. Now, how can an organization ensure that the strategy is working
and will continue to do so? This can be solved with the help of strategic evaluation.
The purpose of the strategic evaluation and control process is to test the effectiveness of a
strategy and take corrective action, when required, to keep the strategy effective. After
formulating and implementing a strategy, there has to be a way of finding out whether or not
the strategy is guiding the organization towards its intended objective. Strategic evaluation
and control process and it performs the crucial task of keeping an organization on the right
track. A strategist will be able to evaluate and assess any performance issues. In the absence
of such a mechanism, there would be no means to find out whether or not the strategy is
producing the desired output.
Evaluation of a strategy is a phase of the strategic management process, in which managers

try to ensure that the chosen strategy is properly implemented and is meeting the objectives
of the organization.
A control system is also required which will provide timely feedback to managers, so that
they can take appropriate measures. These measures to evaluate and control the strategic
process will ensure that the strategy works. You will now learn about the framework of
strategic evaluation and control, and related concepts.
1.1 Learning Objectives
After studying this chapter, you will be able to:
❖ Explain the nature and significance of strategic evaluation and control

❖ Describe the process of strategic evaluation
❖ Review various techniques for exercising strategic evaluation
❖ Describe four types of strategic control
❖ Understand the concept of synergy in strategic management

2. CONCEPT OF STRATEGY EVALUATION
Strategy evaluation is a process in which the effectiveness of a given strategy in achieving

the organizational objective is tested. Corrective action is taken wherever required. Here,
strategists assess how far strategy has worked in achieving the intended organizational
objectives. Senior management determines whether their selection of strategies has met the
business objectives. Thereafter, corrective actions are initiated, if necessary.
Again, to sum it up, strategic evaluation is a process in which the effectiveness of a strategy
is evaluated for its effectiveness in achieving objectives of an organization, and to take
corrective action if required.
2.1 Significance Of Strategy Evaluation
Strategy evaluation is required for various reasons:
• Getting Feedback: An organization needs to receive feedback on the current

performance of the strategist, so that good performance can be rewarded.
• Check Validity: Strategy evaluation helps to check the validity of a strategic choice
made by an organization. This is a continuous process. It provides feedback on the
relevance of the strategies chosen and implemented.
• Checking Decisions: During the course of strategy implementation, managers make
several decisions. Evaluation of the strategy helps to assess and check whether the
decisions are matching with the intended strategy.
• Concluding Implementation: Through its controls, feedback, rewards, and reviews,
the strategic evaluation process helps in a successful culmination of the strategic
management process.
• Creating Inputs: Lastly, the process of strategic evaluation provides important
information and experience to strategists that can be useful for new strategic planning.
2.2 Need Of Strategy Evaluation
• Strategy evaluation is required to keep a check on the validity of the strategy chosen
and implemented.

• It provides feedback on the continued relevance of the strategy implemented.

• It helps managers assess whether or not the requirements are being met.
• The process of strategic evaluation helps improve a strategy, and gives feedback and
improves a strategy.
• Strategy evaluation provides information, feedback and experience to strategists that
can help in new strategic planning.
2.3 Basic Requirements Of Strategy Evaluation
To be effective, strategy evaluation needs to meet certain basic requirements, which are as
follows:
• The activities involved should be in line with the company's objectives.

• It should provide the necessary information in a timely manner.
• It should be done with normal controls.
• It should be designed to give a realistic picture of what is happening in the organization.
• The process should not precede strategic decisions; it should promote understanding,
trust, and action.

3. PROCESS OF STRATEGY EVALUATION
The process of strategy evaluation consists of the following steps:
Setting Performance Benchmarks
Process of Measurement of Performance

Strategic
Evaluation
Analysing Variance in the Performance
Taking Corrective Action
Fig 1: Process of Strategy Evaluation
Step1. Setting Performance Benchmark:
While setting benchmarks, or business standards, in an organization, strategists are faced

with questions, such as: what benchmarks should be set, how can they be set, and how should
they be presented. To determine the performance of the required benchmarks, it is
important to identify the specific requirements for performing the tasks which are required
to achieve the objective of the organization.
A performance indicator that identifies specific requirements may be determined and used
for testing and evaluation.
Step2. Measurement of Performance:
The actual performance of a strategy is measured against the standard performance which
is a benchmark. To measure performance, reporting and communication systems are used.
When the right methods of measuring performance are identified, and standards are set
correctly, strategic testing and evaluation becomes easier.

Step 3. Analyzing Variance in Performance:
While measuring actual performance, and comparing it to the standard performance,

variations may be found, which need to be analyzed. Strategists also have to state the level
of tolerance, - the extent where the difference between actual and standard performance can
be accepted.
Step 4. Taking Corrective Actions:
If a performance deviation is detected, it is important to plan a corrective action. If

performance is less than required performance, strategists should carry out a detailed
analysis of the factors that are affecting this performance. If strategists find that the
organizational capacity does not meet operational requirements, standards should be
lowered.
3.1 Techniques Of Strategy Evaluation
As you learn, to evaluate a strategy, its performance needs to be measured. This

measurement will help evaluate the effectiveness and efficiency of strategic decisions made
to achieve business objectives. To be followed by taking corrective actions if the
organizational goals have not been met.
Some of the most commonly used measurement tools and techniques are listed below:
SWOT Analysis
GAP Analysis
Techniques
of Strategic
Evaluation
PEST
Benchmarking Analysis
Fig 2: Techniques of Strategic Evaluation

A. Benchmarking:
The organization must set a standard performance as a measure of actual performance
measurement. Benchmarking is where the company’s success is measured against other
similar companies to discover if there is a gap in the performance. It is a standard against
which performance can be measured.
B. Gap Analysis:
As the name suggests, it identifies existing gaps between the actual achievement and
expected performance of an organization. It is an evaluation of the difference between a
business endeavor’s best possible outcome and the actual outcome. It aims to determine
what specific tasks an organization can take to achieve a particular objective.
C. SWOT Analysis:
The term SWOT stands for organizational strengths, weaknesses, opportunities, and threats.
This analysis reveals how and where a business stands in the marketplace. A business
environment contains internal and external areas. The analysis provides the internal
perspective -- with the organization’s strengths and weaknesses. It provides the external
perspective with the potential opportunities and threats present in the external
environment.
SWOT analysis examples is this one from The Coca Cola Company.
Source: https://mktoolboxsuite.com/swot-analysis-examples/

D. PEST Analysis:
This technique is used for testing the strategic plan. A business environment is critical and
complex in nature. PEST stands for the political, economic, social, and technological aspects
that have a direct impact on business. These factors -- important in developing a strategy –
are also helpful in assessing the strategy’s performance. Political factors include laws and
regulations, legislatures, and environmental norms etc. Economic factors reflect the
economic conditions prevailing in the market – they help assess opportunities and threats.
Social factors show customer behavior and value patterns.
Self-Assessment Questions – 1
1. In a SWOT analysis, a manager considers a company’s _____________.
A. Weaknesses
B. Threats
C. Opportunities
D. All the above
2. What is the central purpose of strategic evaluation?
A. To evaluate the effectiveness of a strategy to achieve organisational
objectives.
B. To evaluate the effectiveness of control systems to measure
achievements.
C. To evaluate the effectiveness of a strategy to be implemented.
D. Evaluate the effectiveness of a strategy’s implementation.
3. Which of these is/are a basic activity of strategic evaluation?
A. Reviewing internal and external factors for the bases of current
strategies
B. Measuring organizational performance
C. Taking Corrective action
D. All of the above
E. Both B and C
4. Which of the following is not a technique of strategic evaluation?
A. GAP analysis
B. SWOT analysis
C. TOWS matrix
D. PEST analysis

4. STRATEGIC CONTROL
Strategic controls are intended to guide a company in a rapidly changing environment. In

this process, the strategy – already implemented and evaluated – needs to be assessed for
problems and deviations from intended objectives. Changes in structures and making
necessary adjustments and repairs may be required.
In contrast to post–control, strategic control is about controlling and directing efforts before
a strategy can be fully implemented. The controls are set up on the basis of many
assumptions. Such as the business environmental conditions, which are dynamic and
eventful. Strategic control is a forward-looking and preventive exercise.
4.1 Types Of Strategic Control
The four basic types of strategic control are:
A. Premise Control
Basically, all strategies are based on certain premises or assumptions about the
business environment and organization’s conditions. Changes in some of these
conditions can majorly affect a strategy. Strategic control is needed to identify key
assumptions and track them to assess their impact on strategies. Factors that may affect
a strategy are as follows:
• External environmental factors, such as favorable/unfavorable government

policies
• Industrial factors, such as changes in competition
• Organizational resources, such as expected research initiatives
B. Implementation Control
Strategic implementation leads to a series of plans, programss, and projects, requiring

significant resource allocation. Implementing programs aims to evaluate an
organization’s plans and projects that vis-a-vis its stated goals.

C. Strategic Surveillance
Strategic surveillance has a wider approach, designed to monitor broader events within
and outside a company that may threaten the company’s strategic course. Strategic
surveillance can be done through a number of observations, on the basis of selected
sources of information to identify events that may affect an organization's strategies.
D. Special Alert Control
The type of strategic control is based on alerting a rapid response and reassessing
strategies quickly due to sudden and unexpected events. Special monitoring controls
can be used to develop contingency strategies. Responsibilities can be delegated for
handling unforeseen events for crisis management. The events may be: a sudden
collapse of government, a fast change in the competitive environment, an unfortunate
industrial disaster, a breach of information security, or a natural disaster.
4.2 Process of Strategic Control

Strategic controls are the process of monitoring and reviewing the effectiveness of a strategy,
and ensure the strategy stays in control to meet the desired objectives of an organization.
The control process entails problem identification and remediation actions, whenever
needed. In other words, it describes the control system for efficient and effective
implementation.
The strategic process of controlling is as follows:
Step 1: Establish Performance Standards
Step 2: Measurement of Organizational Performance
Step 3: Analyzing Variance
Step 4: Evaluating the deviation
Step 5: Taking Corrective Action

Step 1. Establish Performance Standards:
This is the first step in the control process. The organization has to set performance
standards and levels against which actual performance can be assessed. The standards
should be set precisely, and these should be realistic and achievable. Some important
standards against which the performance could be measured are as follows:
• Time: Here it refers to the time taken to complete a goal, task, or objective of the
organization. It can be measured as production or sales per unit, or number of sales
made in a given time frame, etc.
• Cost: This refers to the expenditure involved per unit of activity. It can be the cost of
the material per unit, the cost of distribution, or the sales cost per measure of the sales
call.
• Revenue: This could be monthly sales, sales made by sales managers annually etc.
• Market Share: Emphasis is placed on increasing market share. For example, a company
wants to increase its market share by 5% over the next five years.
• Return on Investment: This indicator shows various business operations, such as
sales revenue, working capital, production costs, and operating costs, in comparison
with investments made. This will bring out the return on investment.
Step 2. Measurement of Organisational Performance:
After the goals or objectives of an organization are finalized, the next step in the controlling
process is of measuring the actual achieved performance vis-a-vis the intended goals or
objectives of the organization.
It is one of the most difficult tasks to measure the actual performance of a strategy. There are
various ways to measure efficiency and effectiveness of a strategy. Strategists need to decide
what to measure, how to measure, when to measure, or whether to measure continuously or
periodically, etc. Some of the techniques of measurement are as follows:
• Financial Measures: Shows the financial position of a business organization. It includes

various scales, and the relationship of business variables with each other.

• Production Methods: This refers to the effect of operations on production. It includes

pre controls, simultaneous controls, and post control measures.
• Marketing Measures: There are five categories to measure marketing performance:
➢ Sales analysis
➢ Market share analysis
➢ Marketing expenses to sales ratio
➢ Customer attitude tracking
➢ Efficiency analysis
Step 3: Analyzing Variance:
In this step the variation in the performance is being realized. Organization tends to find out
how the organization has performed or is there any gap between the actual and expected
performance. Also, the reasons and causes of variations are being identified.
Step 4. Evaluating Deviations:
It is important to take immediate action to correct identified deviations. The reasons should
be investigated. The aim is to find the cause of the errors or problems to prevent these from
reoccurring in future.
Deviations can be positive or negative. The positive deviations can be the achievement of
targets before schedule or on lesser budgets than planned. Negative deviations can be of
products or services turning out to be of lower quality or quantity than standards, missing
schedules of production, which may have increased estimated costs.
Step 5. Taking Corrective Action:
After analysis and investigation, final steps need to be taken for corrective actions or a
remedy of the problem. The corrective action should consider the internal and external
environment of the business. It should be as per the corporate culture, philosophy, trade
unions, rules and regulations, etc.

5. This technique of control enables strategists to take corrective action at the
right time.
A. Implementation control
B. Special alert control
C. Premise control
D. Strategic surveillance control
6. The expanded form of ROI is:
A. Return on Investment
B. Rate of Interest
C. Revision of Interest
D. All the above
7. Strategies are_____________, and they are based on the assumptions of
management on many unplanned events.
A. Forward Looking
B. Backward Looking
8. Operational control is also referred as______________
A. Planning control
B. Task Control
C. Corrective Control
D. Risk control
9. It is used extensively in an organisation, and is concerned with action and
performance. This type of control is known as _________.
A. Operational Control
B. Production Control
C. Quality Control
D. All the above
10. There are three types of control: feed forward control, concurrent control
and feedback control. (True/False)

5. OPERATIONAL CONTROL
Evaluation and assessment work on two levels: strategic and operational. Now, let’s explore
operational control. Operational control involves control over daily operations and
processes --but not business strategies.
Operational performance indicates the performance of organizational units, such as

divisions, strategic business entities, etc., in terms of their contribution to achieving the
organization's goals. Therefore, an operational control system is designed to ensure daily
operations, or tasks, are consistent with established plans and objectives. It focuses mainly
on recent events. It is based on the requirements of the management control system.
Unlike strategic control, operational efficiency focuses more on internal sources of

information and affects smaller units or organizational features, such as production
standards or equipment selection. Errors in operational control may mean failure to
complete projects in time. For example, if retailers are not trained in time, sales revenue
could fall.
5.1. Difference Between Strategic Control And Operational Control

Bases of Difference Strategic Control Operational Control
Meaning Strategic control is the processOperational control or task
of regularly evaluating a control is the process of
strategy as it is implemented, evaluating and adjusting
and taking the necessary the performance of various
remedial measures. organizational units to
evaluate their contribution
to the achievement of
organizational goals.
Basic Concern Are we moving in the right How are we performing?
direction?
Main Concern Steering an organization’s Action control
future direction.
Focus External organizational Internal organizational
environment environment
Time Horizon Long term Short term
Exercise of Control Exclusively by top Mainly by mid-level
management. They may take management on the
the lower-level support. direction of the top
management.

Main Techniques Environmental scanning, Budgets, schedules and

information gathering, Management by Objective.
questioning, and review.
Fig 3: Differences between Strategic Control and Operational Control
11. This technique of control enables strategists to take corrective action at the
right time.
A. Implementation control
B. Special alert control
C. Premise control
D. Strategic surveillance control
12. The expanded form of ROI is:
A. Return on Investment
B. Rate of Interest
C. Revision of Interest
D. All the above
13. Strategies are_____________, and they are based on the assumptions of
management on many unplanned events.
A. Forward Looking
B. Backward Looking

6. CONCEPT OF SYNERGY
Synergy defines the benefits for a business through organized planning to increase
collaboration and innovation. In simple terms, a collaborative organization gains more as a
group as compared to individually. Increasing collaboration requires a careful analysis of an
organization's current strategies, to identify the best ways to do business.
Partnerships are carried out by many businesses around the world. Boardrooms are full of
ideas about how to work together effectively. Groups of affiliated businesses are set up to
improve important account systems, coordinate product development, and expand best
practices. Synergy is the idea that the value and performance of two combined companies
will be greater than the sum of the individual parts. Synergy is a term widely used in the
context of mergers, acquisitions, strategic partnerships, joint ventures, franchise, etc. The
reason for forming a strategic alliance is often given that two different companies together
make a higher value compared to each one on its own.
Synergy is also defined as 1 + 1 = 3 or it could be even more. Synergy is when the total amount
is more than sum of its individual components. It is broadly of three types:
A. Operating Synergy:
This is when the combined value of two firms is greater than the total number of
contributions of individual firms. When the combined firm allows individual firms to
increase their operating revenue and achieve higher growth, it is called Operating
Synergy. Operating synergies that are acquired through mergers, acquisitions, or
takeovers. A company is acquired, especially when it has higher competencies in any or
more than one of the various fields such as manufacturing, research and development,
or marketing and finance – and can help achieve operational efficiency.
B. Financial Synergy:
Financial co-operation is often the driving force behind mergers and acquisitions, and
strategic partnerships. These types of synergies stem out of improvements in the
financial metrics of a combined business, such as income, credit potential, financial
costs, profits, etc. Examples of good financial engagement include increased revenue on

a large customer base, lower costs through consistent performance, and compatibility
of talent and technology.
C. Marketing Synergy:
Marketing synergy means that integration of the markets of the companies involved
creates new opportunities, increase in revenue or other benefits. For example, by
taking advantage of the opportunity to maximize the use of existing marketing and
distribution resources, it is possible to increase sales revenue without making
extensive investments. Hero Honda Ltd. was a joint venture between India's Hero
Cycles and Japan's Honda Motor. Hero Cycle's long experience with Indian road
conditions, including Indian and urban customers, is fully integrated with Honda
Motor's high technology capabilities. This resulted in producing the most economical
and durable motorcycle for Indian customers in 1985. The partnership lasted for 26
years.
14. Which of the following sentences best explains a synergy?
A. A synergy exists if the whole is greater than the sum of its parts.
B. A synergy exists if two or more groups or individuals are combined.
C. A synergy exists if companies merge.
D. A synergy exists if the whole is less than sum of its parts.
15. How can you represent the idea of synergy mathematically?
A. 2 + 2 = 3
B. 2 + 2 = 4
C. 2 + 2 = 5
D. 2 + 2 = 0

7. KEY STAKEHOLDER EXPECTATIONS

In any business, stakeholders are most concerned with two key aspects: profit generated and
capital invested.
• Profit:
Profit serves as oxygen to any organization. The increase in profit percentage is

reflected in the company's continued growth. Profit usually means annual profits in
rupees to annual accounts and company reports in its end-of-year data. Another
important type of benefit is economic gain. Economic profitability refers to the returns
to a company.
• Capital:
The core capital usually comes from two sources: lenders and shareholders. The first
source of capital funds comes from lenders like financial institutions and banks. This
has a fixed interest or return, so there are no risks involved.
The other source of capital funds comes from investments from preference
shareholders and equity shareholders. The shareholders are the owners of the
company. Preference shareholders receive a pre-determined dividend before
allocating the dividend to equity shareholders.
Expectations of Shareholders
Stakeholders not only expect growth of their investments in a company but also expect the
following from the company:
• Change of strategies as market changes

• Transparency of functioning
• Good management practices across all levels
• Fair market practices
• A healthy and consistent bottom line
• Positive reputation, goodwill and product image

• Appropriate testing, measurements and management controls

• Following of social and environmental responsibilities
16. Which of the following is not a stakeholder?
A. Competitor
B. Supplier
C. Customer
D. Employees
17. Business capital usually comes from the following source/s.
A. Funds provided by long term lenders
B. Preference and equity shareholders
C. Both A and B
D. None of these
18. Stakeholders expect long-term value creation for both the organisation and for
themselves. (True/False)

8. SUMMARY
• To conduct strategy evaluation, strategists and managers should follow the following
steps sequentially: Setting Benchmark, measuring performance, analyzing variance in
performance, and taking corrective action
• There are various techniques available for the evaluation of a strategy. Some commonly
used are: GAP analysis, SWOT analysis, PEST analysis, and Benchmarking.
• Evaluation and assessment work on two levels: strategic and operational. Strategic
control is aimed at continuous assessment of the changing environment to check that a
strategy is working as planned. It can be implemented through premise control,
implementation control, strategic surveillance control and special alert control.
• Operational control is focused on real-time action testing. The control process consists
of four steps: First, establishing standards against which the performance will be
measured. Second, measuring organizational performance. Next, selecting the
technique for analyzing variances. Lastly, comparing current performance with
strategy, by comparing actual performance with standards; (d) Evaluate the deviation
and (d) taking corrective action by evaluating normal performance and performance
and reorganizing strategies, plans and objectives.
• Synergy defines the benefits a business gain through organized planning, innovation,
and more importantly, by increasing collaboration with another firm. In simple terms,
a collaborative organization gains more as a group as compared to individually.
Increasing collaboration requires a careful analysis of an organization's current
strategies to identify the best ways to do business with another organization to create
synergy.

9. GLOSSARY
Earnings per share: Earnings per share (EPS) is calculated as the profits of a company
divided into outstanding shares in its common stock. The emerging number serves as an
indicator of the company's profitability.
Market Share: The market share is the percentage of total sales in the industry made by a
particular company. It is calculated by taking the company's sales over a period of time and
then dividing them by total industry sales at the same time.
Operations: Operations refer to business practices and activities that create the highest
level of efficiency within an organization. All these activities are involved in converting raw
material into the final product for customers.
Return on Investment: Return on investment (ROI), is a method used to assess the

effectiveness and profitability of an investment made into a business process or project. It
may also be used to compare the efficiency of a number of investments. An ROI attempts to
accurately measure the amount of financial return on a particular investment, in relation to
the investment made.
Stakeholders: A person or a group that has an interest in the company and may be affected
by or can affect a business. The main stakeholders in a typical organization are its investors,
employees, customers, and suppliers.
Working Capital Management: Working capital management is a business strategy

designed to ensure that a company operates efficiently by monitoring and using its current
assets and liabilities to the best effect.

10. CASE STUDY

Clean Head Limited: Pricing Strategy
Companies today strive to make their products affordable to consumers enmasse, as part of
their growth strategy. Two years ago, Clean Head Limited, a shampoo manufacturer, started
selling their shampoo with a new small-sized bottleat an affordable price of Rupees 10 for a
40 ml bottle. The price of 100 ml and 200 ml bottles were retained at rupees 45 and 80,
respectively. The product was aggressively used in small and mofussil towns.
However, the company expected existing customers to continue buying their bigger bottles.
Finding these to be convenient. Contrary to their expectations, big cities also witnessed a
shift towards smaller sized bottles. There was some increase in the sales volumes, but the
profit margins went low, and the overall profits reduced tremendously. Moreover, the
turnover did not increase as forecasted.
Management Dilemma: The chairman of the company called meeting of all the functional
heads and made following observations:
"We have to chart out long-term strategies for our company. At this moment, sustainable
but profitable growth is sacrosanct for us. But may prove to be elusive. We are not in a
position to offer lower-priced shampoos with declining profits. If we continue like this,
gradually, the company may start incurring losses. Our competitors have also followed us by
reducing their prices. My dilemma is, if we roll back our prices, our competitors may not do
so."
Source-Strategic Management, The Institute of Chartered Accountant of India

Discussion Questions:
1. What went wrong? Give your assessment of the situation.

2. How do competitors affect internal decisions?
3. What is the strategy used by Clean Head Limited?
SWOT analysis refers to the analysis of the organization’s ___.
a) Strength, Weakness, Opportunities, Threats

11. TERMINAL QUESTIONS

SHORT ANSWER QUESTIONS
Q1. Define the significance of strategic evaluation.
Q2. Describe strategic control.
Q3. How can strategists initiate corrective action?
LONG ANSWER QUESTIONS
Q1. Elaborate the process of strategic evaluation.
Q2. Discuss the different types of techniques for strategic evaluation.
Q3. Differentiate between strategic control and operational control.
12. ANSWERS
SELF ASSESSMENT QUESTIONS
1. C. Die Slowly
2. A. Strategists
3. True
4. D. All the above
5. A. Evaluate effectiveness of strategy to achieve organizational objectives.
6. E. Both B and C
7. C. TOWS matrix
8. C. Premise Control
9. A. Return on Investment
10. Forward looking
11. B. Task Control
12. A. Operational Control
13. True
14. A. Synergy exists if the whole is greater than the sum of its parts
15. A. 2+2=3

16. A. Competitor
17. C. Both A and B
18. True
TERMINAL QUESTIONS
SHORT ANSWER QUESTIONS
Answer 1: Strategic evaluation is significant because it can coordinate activities conducted

by managers, teams, departments, etc., through performance management. Strategic
evaluation is important because of the following reasons: developing input into new
strategic planning, accountability interest, evaluation and reward, improvement of strategic
management process, validity of strategic choice.
Answer 2: Strategic control is the process of monitoring and reviewing the effectiveness of
a strategy, and ensuring the strategy stays in control to meet the desired objectives of an
organization. Strategic control is about tracking a strategy as it is implemented, identifying
problems or changes in structures, and making necessary repairs where required. In
contrast to post-control, strategic control is about controlling and directing in advance.
Answer 3: The final stage of the control process occurs when managers have to decide what
action to take to correct performance when a deviation arises. Corrective action depends on
the discovery of errors and the ability to take necessary action.
LONG ANSWER QUESTIONS
Answer 1: The Strategic Testing Process contains the following steps-
1. Setting Benchmarks: During the benchmarking process, strategists are faced with
questions such as -- what values should be set, how they can be set, and how they are
presented.
2. Measurement of Performance: When appropriate measurement methods are found,
the standards are set correctly, strategic evaluation becomes easier.
3. Analyzing Variance in Performance: While measuring actual performance and
comparing it to a standard performance, there may be variations to be evaluated.

Strategists must state the level of tolerance where the difference between actual and
normal performances can be accepted.
4. Taking Corrective Action: Once a performance deviation is identified, it is important
to schedule a corrective action. If performance is less than the required performance,
strategists should analyze the factors that affected the performance.
Answer 2: Different techniques of strategic evaluation are as follows:
1. GAP Analysis: This technique of strategic evaluation is used to measure the gap
between an organization’s current position and its desired position.
2. SWOT Analysis: The SWOT analysis is used to evaluate an organization’s strengths,
weaknesses, opportunities, and threats. This technique helps to understand how to
focus resources to take advantage of strengths and opportunities and curb weaknesses
and threats.
3. PEST Analysis: It is the technique used to find out the political, economic, social, and
technological factors that affect an organization’s ability to achieve its objectives.
4. Benchmarking: It is a strategic evaluation technique that is often used to evaluate how
far has organization reached to meet its objective and what more needs to be done to
reach its objective.
Answer 3: Strategic Control
Definition: Strategic control is the process of continuously evaluating a strategy as it is

implemented, and taking the necessary remedial measures.
Basic Question Addressed: Track of the company
Key Concerns: Directing an organization
Focus: External environment
Time: Long term
Key Techniques: Environmental scanning, data collection, queries, and reviews.

Operational Control
Definition: The process of evaluating and adjusting the performance of the various
organizations of the various units of the organization to assess their contribution to
achieving the goals of the organization.
Basic Question Addressed: Organizational performance
Focus: Internal organization
Time: Short term
Key Techniques: Budgets, Schedules and Management by Objectives.
13. SUGGESTED BOOKS AND E-REFERENCES
BOOKS:
• Kazmi, A., Kazmi, A. (2015). Strategic Management, 4th Ed. : McGraw-Hill Education
(India) Pvt. Ltd.
• Lawrence R. Jauch, Rajiv Gupta & William F Glueck., (2004). Business Policy and
Strategic Management: Frank Bros. & Co. Ltd.
REFERENCES:
• Strategic Control Process viewed on 25April 2021,

<https://www.mbaknol.com/strategic-management/strategic-control-process/
• Strategic Control, viewed on 24 February 2021,
<https://www.yourarticlelibrary.com/strategic-management/strategic-
control/99745>

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DMBA401: Strategic Management & Business Policy Manipal University Jaipur (MUJ)

MASTER OF BUSINESS ADMINISTRATION

Unit 5: Strategic Control and Evaluation 1

SL Topic Fig No / Table SAQ / Page No

2.3 Basic Requirements of Strategy - -

Unit 5: Strategic Control and Evaluation 2

Evaluation of a strategy is a phase of the strategic management process, in which managers

1.1 Learning Objectives

After studying this chapter, you will be able to:

❖ Explain the nature and significance of strategic evaluation and control

Unit 5: Strategic Control and Evaluation 3

2. CONCEPT OF STRATEGY EVALUATION

Strategy evaluation is a process in which the effectiveness of a given strategy in achieving

2.1 Significance Of Strategy Evaluation

Strategy evaluation is required for various reasons:

• Getting Feedback: An organization needs to receive feedback on the current

2.2 Need Of Strategy Evaluation

Unit 5: Strategic Control and Evaluation 4

• It provides feedback on the continued relevance of the strategy implemented.

2.3 Basic Requirements Of Strategy Evaluation

• The activities involved should be in line with the company's objectives.

Unit 5: Strategic Control and Evaluation 5

3. PROCESS OF STRATEGY EVALUATION

The process of strategy evaluation consists of the following steps:

Setting Performance Benchmarks

Process of Measurement of Performance

Taking Corrective Action

Fig 1: Process of Strategy Evaluation

Step1. Setting Performance Benchmark:

While setting benchmarks, or business standards, in an organization, strategists are faced

Step2. Measurement of Performance:

Unit 5: Strategic Control and Evaluation 6

Step 3. Analyzing Variance in Performance:

While measuring actual performance, and comparing it to the standard performance,

Step 4. Taking Corrective Actions:

If a performance deviation is detected, it is important to plan a corrective action. If

3.1 Techniques Of Strategy Evaluation

As you learn, to evaluate a strategy, its performance needs to be measured. This

Fig 2: Techniques of Strategic Evaluation

Unit 5: Strategic Control and Evaluation 7

Unit 5: Strategic Control and Evaluation 8

Unit 5: Strategic Control and Evaluation 9

Strategic controls are intended to guide a company in a rapidly changing environment. In

4.1 Types Of Strategic Control

The four basic types of strategic control are:

• External environmental factors, such as favorable/unfavorable government

Strategic implementation leads to a series of plans, programss, and projects, requiring

Unit 5: Strategic Control and Evaluation 10

D. Special Alert Control

4.2 Process of Strategic Control

The strategic process of controlling is as follows:

Step 1: Establish Performance Standards

Step 2: Measurement of Organizational Performance

Step 3: Analyzing Variance

Step 4: Evaluating the deviation

Step 5: Taking Corrective Action

Unit 5: Strategic Control and Evaluation 11

Step 1. Establish Performance Standards:

Step 2. Measurement of Organisational Performance:

• Financial Measures: Shows the financial position of a business organization. It includes

Unit 5: Strategic Control and Evaluation 12

• Production Methods: This refers to the effect of operations on production. It includes

Step 3: Analyzing Variance:

Step 4. Evaluating Deviations: