McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Strategic Control
Chapter 13
Learning Objectives

1. Describe and illustrate four types of strategic

control.
2. Summarize the balanced scorecard approach and
how it integrates strategic and operational control.
3. Illustrate the use of controls to guide and monitor
strategy implementation.

13-3
Strategic Control

▪ Management efforts to track a strategy as it

is being implemented, detect problems or
changes in its underlying premises, and
make necessary adjustments.

13-4
Questions That Drive Strategic Control
1. Are we moving in the proper direction?
2. How are we performing?

13-5
Types of Strategic Control
▪ Premise control
▪ Strategic surveillance
▪ Special alert control
▪ Implementation control

13-6
Ex. 13.1 Four Types of Strategic Control

13-7
Ex. 13.1 (contd.) Characteristics of the Four Types of Strategic
Control

13-8
Premise Control
▪ Premise control is designed to check
systematically and continuously whether the
premises on which the strategy is based are
still valid
▪ Primarily concerned with
▪ Environmental factors
▪ Industry factors

13-9
Strategic Surveillance

▪ Strategic surveillance is designed to monitor a

broad range of events inside and outside the firm
that are likely to affect the course of its strategy
▪ Strategic surveillance must be kept as unfocused
as possible
▪ Despite its looseness, strategic surveillance
provides an ongoing, broad-based vigilance in all
daily operations

13-10
Special Alert Control

▪ A special alert control is the thorough, and often

rapid, reconsideration of the firm’s strategy because
of a sudden, unexpected event
▪ A drastic event should trigger an immediate and
intense reassessment of the firm’s strategy and its
current strategic situation
▪ Crisis teams
▪ Contingency plans

13-11
Implementation Control
▪ Implementation control is designed to assess
whether the overall strategy should be changed in
light of the results associated with the
incremental actions that implement the overall
strategy

13-12
Implementation Control (contd.)
▪ The two basic types of implementation
control are:
▪ Monitoring strategic thrusts
▪ Milestone reviews

13-13
Strategic Thrusts or Projects
▪ Special efforts that are early steps in executing
a broader strategy, usually involving significant
resource commitments yet where
predetermined feedback will help management
determine whether continuing to pursue the
strategy is appropriate or whether it needs
adjustment or major change.

13-14
Milestone Reviews
▪ Points in time, or at the completion of major
parts of a bigger strategy, where managers
have predetermined they will undertake a go-
no go type of review regarding the underlying
strategy associated with the bigger strategy.

13-15
Operational Control Systems
▪ To be effective, operational control systems must
take four steps common to all postaction controls:
▪ Set standards of performance
▪ Measure actual performance
▪ Identify deviations from standards set
▪ Initiate corrective action

13-16
The Balanced Scorecard Methodology
▪ An alternative approach linking operational and
strategic control, developed by Harvard Business
School professors Robert Kaplan and David
Norton, is a system they named the balanced
scorecard

13-17
Balanced Scorecard
▪ A management control system that enables
companies to clarify their strategies, translate
them into action, and provide quantitative
feedback as to whether the strategy is creating
value, leveraging core competencies, satisfying
the company’s customers, and generating a
financial reward to its shareholders.

13-18
Kaplan and Norton on the Balanced Scorecard
▪ “The balanced scorecard retains traditional financial measures.
But financial measures tell the story of past events, an
adequate story for industrial age companies for which
investments in long-term capabilities and customer
relationships were not critical for success. These financial
measures are inadequate, however, for guiding and evaluating
the journey that information age companies must make to
create future value through investment in customers, suppliers,
employees, processes, technology, and innovation.”

13-19
Ex. 13.5 Integrating Shareholder Value and Organizational Activities
across Organizational Levels

13-20
Balanced Scorecard
Four perspectives:
1. The learning and growth perspective: How well
are we continuously improving and creating
value?
2. The business process perspective: What are our
core competencies and areas of operational
excellence?

13-21
Balanced Scorecard Perspectives (contd.)
1. The customer perspective: How satisfied are
our customers?
2. The financial perspective: How are we doing
for our shareholders?

13-22
Ex. 13.6 ExxonMobil’s NAM&R Balanced Scorecard

13-23
Ex. 13.6 ExxonMobil’s NAM&R Balanced Scorecard
(contd.)

Strategic Objectives Strategic Measures

13-24
Ex. 13.6 ExxonMobil’s NAM&R Balanced Scorecard
(contd.)
Strategic Objectives Strategic Measures

13-25
Ex. 13.6 ExxonMobil’s NAM&R Balanced Scorecard
(contd.)
Strategic Objectives Strategic Measures

13-26
Dashboard
▪ A user interface that organizes and presents
information from multiple digital sources
simultaneously in a user-designed format on
the computer screen

13-27
Dashboard Uses
▪ Key management tool for timely strategic and
operational control
▪ Users can decide the key indicators that tell
them about the unfolding success of their
strategies

13-28
Summing Up Strategic Control
▪ Strategic control and comprehensive control
programs like the balanced scorecard bring the
entire management task into focus.
▪ Organizational leaders can adjust or radically
change their firm’s strategy based on feedback
from a balanced scorecard approach as well as
other strategic controls.

13-29
Key Terms
▪ Balanced scorecard ▪ Special alert control
▪ Dashboard ▪ Strategic control
▪ Implementation control ▪ Strategic surveillance
▪ Milestone reviews ▪ Strategic thrusts or projects
▪ Premise control

13-30