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Strategic Evaluation and Control

 Strategic evaluation and control


constitutes the final phase of strategic
management.
Strategic Evaluation and Control
 Strategic evaluation and control
constitutes the final phase of strategic
management.
Strategic Evaluation and Control
 Strategic evaluation operates at two
levels:
• Strategic level - wherein we are concerned
more with the consistency of strategy with the
environment.
• Operational level – wherein the effort is
directed at assessing how well the
organisation is pursuing a given strategy.
Purpose of Strategic Evaluation
 The purpose of strategic evaluation is to
evaluate the effectiveness of strategy in
achieving organisational objectives.
Definition
 Strategic evaluation and control could be
defined as the process of determining
the effectiveness of a given strategy in
achieving the organisational objectives
and taking corrective action wherever
required.
Nature of Strategic Evaluation
 Nature of the strategic evaluation and control process is to test
the effectiveness of strategy.
 During the two proceedings phases of the strategic
management process, the strategists formulate the strategy to
achieve a set of objectives and then implement the strategy.
 There has to be a way of finding out whether the strategy being
implemented will guide the organisation towards its intended
objectives.
 Strategic evaluation and control, therefore, performs the crucial
task of keeping the organisation on the right track.
 In the absence of such a mechanism, there would be no means
for strategists to find out whether or not the strategy is
producing the desired effect.
Nature of Strategic Evaluation
 Through the process of strategic evaluation and control,
the strategists attempt to answer set of questions, as
below.
• Are the premises made during strategy formulation
proving to be correct?
• Is the strategy guiding the organisation towards its
intended objectives?
• Are the organisation and its managers doing things which
ought to be done?
• Is there a need to change and reformulate the strategy?
• How is the organisation performing?
• Are the time schedules being adhered to?
• Are the resources being utilised properly?
• What needs to be done to ensure that resources are
utilised properly and objectives met?
Importance of Strategic
Evaluation
 Strategic evaluation helps to keep a check on
the validity of a strategic choice.
 An ongoing process of evaluation would, in
fact, provide feedback on the continued
relevance of the strategic choice made during
the formulation phase. This is due to the
efficacy of strategic evaluation to determine
the effectiveness of strategy.
Importance of Strategic
Evaluation
 During the course of strategy implementation
managers are required to take scores of
decisions.
 Strategic evaluation can help to assess
whether the decisions match the intended
strategy requirements.
 In the absence of such evaluation, managers
would not know explicitly how to exercise such
discretion.
 Strategic evaluation, through its process
of control, feedback, rewards, and
review, helps in a successful culmination
of the strategic management process.
 The process of strategic evaluation
provides a considerable amount of
information and experience to strategists
that can be useful in new strategic
planning.
Participants in Strategic
Evaluation
 Shareholders
 Board of Directors
 Chief executives
 Profit-centre heads
 Financial controllers
 Company secretaries
 External and Internal Auditors
 Audit and Executive Committees
 Corporate Planning Staff or Department
 Middle-level managers
Barriers in Evaluation
 Limits of control
 Difficulties in measurement
 Resistance to evaluation
 Rely on short-term implications of
activities
Requirements for Effective
Evaluation
 The effective control must be:
• Control should involve only the minimum amount of
information as too much information tends to clutter up
the control system and creates confusion.
• Control should monitor only managerial activities and
results even if the evaluation is difficult to perform.
• Controls should be timely so that corrective action can
be taken quickly.
• Long-term and short-term controls should be used so
that a balanced approach to evaluation can be
adopted.
continued…………..
Requirements for Effective
Evaluation
 Controls should aim at pinpointing exceptions as
nitpicking does not result in effective evaluation.
 The 80:20 principle, where 20 per cent of the activities
result in 80 per cent of achievement, needs to be
emphasised.
 Getting bogged down with the activities that do not really
count for achievement makes the evaluation ineffective.
 Rewards for meeting or exceeding standards should be
emphasised so that managers are motivated to perform.

Unnecessary emphasis on penalties tend to pressurise
the managers to rely on efficiency rather than
effectiveness
STRATEGIC CONTROL
 Strategic controls take into account the
changing assumptions that determine a
strategy, continually evaluate the strategy as it
is being implemented, and take the necessary
steps to adjust the strategy to the new
requirements.
 In this manner, strategic controls are early
warning systems and differ from post-action
controls which evaluate only after the
implementation has been completed.
STRATEGIC CONTROL
 The types of strategic controls are:
• Premise control
• Implementation control
• Strategic surveillance
• Special alert control
Premise Control
 Premise control is necessary to identify the key
assumptions, and keep track of any change in them so as to
assess their impact on strategy and its implementation.
 Premise control serves the purpose of continually testing the
assumptions to find out whether they are still valid or not.
 This enables the strategists to take corrective action at the
right time rather than continuing with a strategy which is
based on erroneous assumptions.
 The responsibility for premise control can be assigned to the
corporate planning staff who can identify key asumptions
and keep a regular check on their validity.
Implementation Control
 Implementation control may be put into
practice through the identification and
monitoring of strategic thrusts such as an
assessment of the marketing success of
a new product after pre-testing, or
checking the feasibility of a diversification
programme after making initial attempts
at seeking technological collaboration.
Strategic Surveillance
 Strategic surveillance can be done
through a broad-based, general
monitoring on the basis of selected
information sources to uncover events
that are likely to affect the strategy of an
organisation.
Special Alert Control
 Special alert control is based on trigger
mechanism for rapid response and
immediate reassessment of strategy in
the light of sudden and unexpected
events.
Special Alert Control
 Crises are critical situations that occur unexpectedly and
threaten the course of a strategy.
 Organisations that hope for the best and prepare for the
worst are in a vantage position to handle any crisis.
 Crisis management follows certain steps:
• Signal detection
• Preparation/prevention,
• Damage limitation,
• Recovery leading to organisational learning.
 The first step of signal detection can be performed by the
special alert control systems.
Techniques of Startegic Control

1. Strategic Momentum Control


2. Strategic Leap Control
Strategic Control

Strategic Momentum Control is suitable for the


organizations operating in relative stable environment.
Strategic Leap Control is suitable for organizations
functioning in a relative turbulent environment
Techniques of Strategic
Momentum Control
• Responsibility Control Centres (revenues, expense, profit
and investment centres)
• Key Success Factors
• Generic Strategies
Techniques of Strategic Leap
Control
• Strategic Issue Management
• Strategic Field Analysis
• System Modelling
• Scenarios
Techniques for Operational
Control
Activity Based Control
Budgetary Control
Return on Investment
Shareholders Value
Ratio Analysis
MBO (Management by Objectives)
Network Techniques (PERT & CPM)
Key Success Factors
Social Audit
Environment Audit