STRATEGIC MANAGEMENT

UNIT -5
GUIDED BY:-
BY SHUKLA SIR

PREPARED BY:-Siddharth
BY Shah
Rakesh Taile
Keyuri Khunt
Mayursingh Parmar
Mira Patel
OPERATION CONTROL AND
STRATEGIC CONTROL

PREPARED BY:-
SIDDHARTH SHAH
 Strategic Control
 Strategic control is concerned with tracking a strategy as
it is being implemented, detecting problems or changes in
its underlying premises, and making necessary
adjustments.
 Strategic is formulated on the basis of several assumption.
 Relate to the environmental and organisational factors that
are dynamic and eventful.
 Continually evaluate the strategy as it is being
implemented and take the necessary steps to adjust the
strategy to the new requirements.
 Four Basic Types Of Strategy
Controls

1.Premise control
2.Implementation control
3.Strategy surveillance
4.Special alert control
 1.Premise Control
To identify the key assumptions and keep track of any
change in them.
Related to environmental factors(e.g. favourable
government policies) industrial factors(e.g. changing
nature of competition) and organisational factors (e.g.
expected breakthrough in R&D)
Purpose is to continually testing the assumption whether
they are still valid or not
Take corrective action at the right time rather than
continuing based on erroneous assumptions.
Responsibility can be assigned to corporate planning
 2.Implementation Control
Allocation of resource is done by plans,programmes
and project.
Strategy implementation takes place as series of
steps, programs, investments, and moves that occur
over an extended time.
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.
 3.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.
 4.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
Characteristics of the Four Types
of Strategic Control
 OPERATION CONTROL
Operation Control is aimed at allocation and use of
organisational resources through evaluation of the
performance of organisational units such as divisions,SBU etc

It concerned with action or performance of organisation.

 DIFFERENCE
Strategic control operation
control
• Are we moving to right • How are we performing?
direction ?
• External environment • internal organisation
• Long term • Short term
• Exclusively by top • Mainly by executive or middle-
management, may be through level management on the direction
lower-level support of the top management
• Environment scanning • Budgets,schedules and MBO.
,information gathering,
questioning and review.
 Evaluation process for operational control

Setting Management
Strategy/plan/ standards of Actual
of
objectives performance perfomance
performance

C C
h h
r e e
c c
e k k Analysing
f s variance
o t p
r a e
n r
m d f
ul a o
a r r
d m
t s a
e n
c
e

Feed back
PERFORMANCE MEASUREMENT
AND MANAGEMENT

PREPARED BY:-TAILE RAKESH

 Performance measurement
• The regular systematic collection, analysis, and
reporting of data that tracks resources used, work
produced, and whether specific outcomes were
achieved by an organization
• Customers
• Suppliers
• Shareholders.
• Employees
• Society
As operations managers we need to address five key
performance areas or objectives
 Performance Measurement
Each of the five performance objectives (quality, speed,
dependability, flexibility and cost) are in reality a whole
bundle of separate things.
The significance of performance measurement lies in its
ability to compare the performance of the operation
with the requirements of the market it is serving.
What we have called ‘performance objectives’ are in
reality a translation device which allows operations
managers to understand the language of the market and
translate that into what the operation must achieve.
 1. Quality

The external affect of good quality within in operations is that

the customers who ‘consume’ the operations products and
services will have less (or nothing) to complain about.

Internally, if conformance quality is high in all the operations

processes and activities very few mistakes will be being made.
 2. Speed

Externally speed is important because it helps to respond

quickly to customers.

The internal affects of speed have much to do with cost

reduction.
 3. Dependability

The external affects of this performance objective are to

increase the chances of customers returning with more
business.

Internally dependability has an affect on cost - by saving time

(and therefore money), by saving money directly, and by
giving an organisation the stability which allows it to improve
its efficiencies.
 4. Flexibility

Externally the different types of flexibility (MIX,

PRODUCT/SERVICE & VOLUME) allow an operation
to fit its products and services to its customers in some
way.

There are several internal affects associated with this

performance objective- three most important, namely
flexibility speeds up response, flexibility saves time (and
therefore money), and flexibility helps maintain
dependability.
 5. Cost

Firstly, the cost structure of different organisations can

vary greatly.

Secondly, and most importantly, the other four

performance objectives all contribute, internally, to
reducing cost.

This has been one of the major revelations within

operations management over the last twenty years.
 Key Performance
Indicators(KPI)
For Example,

A city centre pizza restaurant needs to serve its customers

promptly and efficiently to meet its overheads and make a
good profit. Major performance indicators are

 Input
 Output
 Efficiency
 Service Quality
 Outcome
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 Example of performance
measures

Performance objective Example of measure

QUALITY Number of customer complaints
Customer satisfaction scores
SPEED Customer query time
Order lead time
DEPENDABILITY Average lateness of orders
Percentage of orders delivered late
FLEXIBILITY Range of products/services
Time needed to develop new products/services
COST Variance against budget
Cost per operation hour
A model of hotel management

O
W R
O G
R Asset A
Employee Productivity
K Protection N
Performance
F I
O S
R Quality
A
C T
E Service Income I
O
Customer N
Demand

CUSTOMERS

26
 Filling the Gaps
• Gap 1 is the gap between what the customer expects and what the
company’s management thinks customers expect.
• Gap 2 is the gap that occurs when management fails to design service
standards that meet customer expectations.
• Gap 3 occurs when the company’s service delivery systems – people,
technology and processes – fail to deliver to the specified standard
• Gap 4 occurs when the company’s communications with customers
promise a level of service performance that people, technology and
processes cannot deliver.
 Benchmarking
• This idea of judging your own performance by deciding who to compare yourself with,
is taken further in the idea of benchmarking.
• It requires
• Openness
• Trust
• Commitment

 Kaplan and Norton (1992) devised a mechanism to draw together

disparate key performance indicators and subsequently review and
revamp the organisation’s strategy.
 Four key areas
 Finance

 Customer

 Learning and Growth

 Internal business processes

Continuous Improvement Cycles
Deming - PDCA Six Sigma - DMAIC

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 Challenges of
Performance Measurement
Three main challenges are:

1 People – different behaviours, values and beliefs

2 Communication – lack of, fault in systems and

lack of training or knowledge

3 Resources – time, money, equipment or space

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THE BALANCED SCORECARD

PREPARED BY :-KEYURI KHUNT

 The Balanced Scorecard
• Performance measurement and guidance tool
• Balance between
– Measures of current performance and long-
term competitive abilities
– Feedback and guidance
– Financial and non-financial measures
• Four aspects of firm performance
– Financial
– Internal business processes
– Customer
– Innovation and learning

• Some entities may use more or less than four

perspectives depending on their unique
situations
• Financial perspective
– How is the company doing financially?
• Traditional financial measures
– Operating income
– Cash flow
– Revenue growth
– Stock price
– Etc.
 Internal business perspective

 At what must the company excel currently?

▪ Manufacturing or service excellence
▪ Backlogs
▪ Cycle time
▪ Quality
▪ New product or service introductions
▪ Etc.
 Customer perspective

 How do our customers view the company?

▪ Responsiveness to customer desires
▪ Market share
▪ Customer satisfaction
▪ Customer retention
▪ Customer’s perception of the company and its products
▪ Etc.
 Innovation and learning perspective

 Can the company continue to create value?

▪ Technological leadership
▪ Research and development
▪ Employee training
▪ Employee satisfaction
▪ Investments in new technologies
▪ Etc.
Designing a Balanced Scorecard
• Step 1: Develop company strategy
– Measures must relate to the strategy
• Reflecting the critical success factors
– Measures must be interrelated
• Must understand how the perspectives
influence each other
• Organization-wide view replaces local
focus
• Step 2: Determine critical success factors (goals)
– What must be achieved to survive, or what will
cause the company to fail if it is not achieved?
– Determine success factors for each of the four
perspectives
• Limit the number to items that are critical,
not just interesting
• Step 3: Determine the activities that drive the
achievement of the critical goals
– Must understand the linkages between the activities
and the goals
• Will this activity help us achieve the desired goal?
• Step 4: Develop metrics to evaluate performance
– Provide feedback and also indicate problem areas
– Metrics may be financial, non-financial, trends,
surrogates, internally or externally gathered, etc.
• Should include leading and lagging measures
• May not be “exact”
• Not a quick process
– May take months to accomplish
• Thought and analysis of strategy, critical
success factors, activities, metrics
–How do the pieces fit together?
• Requires teamwork and collaboration
– Different perspectives and expertise are required
• No one individual has a complete view of the
organization
– Greater participation produces greater “buy-in”
• Employees have a sense of ownership in the
resulting scorecard
• More likely to use the scorecard to guide their
decisions
 The Scorecard as a Change Agent
• The scorecard should be used to guide future
operations and decisions
• Four steps
– Translate the strategy into action
– Communicating and linking
– Business planning
– Feedback and learning
• Translating the strategy into action
– Strategy must be reduced to a set of quantifiable
goals and measures that can be operationalized
• “We want to be the best” will not do
• Communicating and linking
– Strategy must be communicated to all levels
• Lower levels are the foundation on which the
rest of the organization is built
 Business planning
 Integrate the financial plan with the business plan
▪ Use the scorecard to allocate resources to critical
activities
▪ Assures critical activities receive adequate resources
▪ Avoids the short-term spending mentality
 Feedback and learning
 Monitor short-term results to determine if progress is
being made toward long-term goals
▪ May need to refine the scorecard
 ETHICS

PREPARED BY:-MAYUR PARMAR

 The Nature of Ethics
Ethics – The inner-guiding moral principles,
values, and beliefs that people use to analyze
or interpret a situation and then decide what is
the “right” or appropriate way to behave
Ethical Dilemma –
quandary people find themselves in
when they have to decide if they should
act in a way that might help another
person even though doing so might go
against their own self-interest
Ethics And The Law

Neither laws nor

ethics are fixed
principles
 Stakeholders And Ethics
Stakeholders –
The people and groups that supply a company
with its productive resources and have a claim
on its resources
 Stockholders
• Want to ensure that managers are behaving
ethically and not risking investors’ capital by
engaging in actions that could hurt the
company’s reputation
• Want to maximize their return on investment
 Managers
• Responsible for using a company’s financial
capital and human resources to increase its
performance
• Have the right to expect a good return or
reward by investing their human capital to
improve a company’s performance
• Frequently juggle multiple interests
 Employees
Companies can act ethically toward
employees by creating an occupational
structure that fairly and equitably rewards
employees for their contributions
 Suppliers and Distributors
• Suppliers expect to be paid fairly and
promptly for their inputs

• Distributors expect to receive quality products

at agreed-upon prices
 Customers
• Most critical stakeholder
• Company must work to increase efficiency and
effectiveness in order to create loyal customers
and attract new ones
 Ethical Decision Models
Utilitarian Rule
• Decision that produces the greatest good for
the greatest number

– How do you measure the benefits and harms that

will be done to each stakeholder group?
– How do you evaluate the rights and importance of
each group?
• Moral Rights rule
– Decision that best maintains and protects the
fundamental or inalienable rights and privileges of
the people affected by it
• Justice rule
– Decision that distributes benefits and harms among
people and groups in a fair, equitable, or impartial
way
Practical rule
- Decision that a manager has no hesitation
about communicating to people outside the
company because the typical person would
think it is acceptable
 Practical Decision Model
1. Does my decision fall within the acceptable
standards that apply in business today?
2. Am I willing to see the decision
communicated to all people and groups
affected by it?
3. Would the people with whom I have a
significant personal relationship approve of
the decision?
Why should managers behave ethically?

The relentless pursuit of self-interest can lead to

a collective disaster when one or more people
start to profit from being unethical because
this encourages other people to act in the same
way
 Trust and Reputation
Trust – person’s Reputation – esteem or
confidence and high repute that
faith in another individuals or
person’s goodwill organizations gain
when they behave
ethically
 Societal Ethics
Standards that govern how members of a
society should deal with one another in
matters involving issues such as fairness,
justice, poverty, and the rights of the
individual
People behave ethically because they have
internalized certain values, beliefs, and norms
 Occupational Ethics
Standards that govern how members of a
profession, trade, or craft should conduct
themselves when performing work-related
activities

– Medical & legal ethics

 Individual Ethics
Personal standards and values that determine
how people view their responsibilities to other
people and groups
– How they should act in situations when
their own self-interests are at stake
 Organizational Ethics
Guiding practices and beliefs through which a
particular company and its managers view
their responsibility toward their stakeholders
– Top managers play a crucial role in determining a
company’s ethics
 Social Responsibility
Way a company views its duty or obligation to
make decisions that protect, enhance, and
promote the welfare and well-being of
stakeholders and society as a whole
Approaches to Social
Responsibility
 Role of Organizational Culture
Ethical values and norms help organizational
members:
– Resist self-interested action
– Realize they are part of something bigger than
themselves
 Ethics Ombudsman
Manager responsible for communicating and
teaching ethical standards to all employees and
monitoring their conformity to those standards