Professional Documents
Culture Documents
Chapter 7 - Strategic Control
Chapter 7 - Strategic Control
EVALUATION AND
CONTROL
1
Strategic Management Model
Feedback/Learning
2
Driving along …
Mission /
Strategy
Past
Present
5
Strategy Evaluation and Control
6
Strategy Evaluation and Control
7
Operational Control Systems
To be effective, operational control must take four steps common to all post
action controls:
8
Establishing Strategic Controls
• Premises control
• Implementation control
• Strategic surveillance
9
Premises (Assumptions)Control
Key Premises
• Economic growth
• GNP
• Net disposal income • Cost and availability of inputs
• Prime interest rate
• Demand growth • Raw material price
• Domestic market • Regularity changes
• Overseas market • Environmental
• Competitive behavior • Free trade policies
• Price reduction
• Foreign competition
10
Special Alert Control
11
Implementation Control
12
Strategic Surveillance
• Monitoring events inside or outside the firm that are likely to affect the
strategy outcome. Examples are:
• New process engineering techniques
• Success in hiring people
• Decline in moral
• Growth of service sector
• Economic development
• Ecology issues
• Material shortages
13
Three Tools of Control
Budgets
Resource allocation plan that helps managers coordinate operation and
performance expectation
Revenue budget
Capital budget
Expenditure budget
Scheduling
scheduling is a planning tool to:
Allocate time -constrained resources
Sequence independent activities
14
Three Tools of Control
Key Success Factors
Performance areas that are of greatest importance in implementing
strategies. Key internal success factors that require continuous
monitoring involve:
Measurable Performance Indicator
Product quality 1. Performance data versus specification
2. Percentage of product returns
3. Number of customer complaints
Customer service 1. Delivery cycle in days
2. Percentage of orders shipped complete
3. Field service delay
Employee morale 1. Trends in employee attitude survey
2. Absenteeism versus plan
3. Employee turnover trends
Competition 1. Number of firms competing directly
2. Number of new product introduced
3. Percentage of bids awarded versus the standard 15
Guidelines for proper control
Control should involve only the minimum amount of information needed
to give a reliable picture of events (80/20)
70% of performance
management
implementations
fail: why ?
Hypothesis:
without changing the
behaviour of people in
the organisation,
performance
management is doomed ‘No, not me …him’
to fail !
17
Strategy Evaluation and Control
‘Uh ...
How does
that work,
a
scorecard
?’
18
FINANCIAL PERSPECTIVE
Target Results
INNOVATIVE PERSPECTIVE
(People perspective)
Target Results
How can we
continously improve ? 19
Balanced Scorecard
Financial perspective
Top line growth
0 NSV growth
0 Sales volume growth
Succesful new products
+ New product sales
21