You are on page 1of 23

Strategic Performance Control

P. GURU PRASAD
FACULTY
INC GUNTUR
Strategy and control
• Significant change in the business environment
may make it difficult for an organization to
survive in the market place.
Strategic change takes place the form of
• changing competitor moves,
• changing customer value-price perceptions,
• changing technology conditions,
• changing competitor profile , and
• changing supplier equations.
Vision and Mission
• The vision and mission statements
together provide the growth directions for
the organizations and control the
allocation of resources.
• For ex, a theater complex might define its
mission as exhibiting movies. On the other
hand a theater complex might define its
vision as providing entertainment.
Vision and Mission
• Entertainment is broader than movie exhibition
and will permit the organization to have business
activates like video game consoles and dining
outlets built into the premises of the complex
that exhibits movies.
• Such an organization , in order to grow, will not
engage in business activates like cement
manufacturing, retailing apparel, or selling
computers
Vision and Mission
• Dabur India the fourth largest FMCG company’s
vision is “ Dedicated to the health and well-being
of every household”
• Strategies that an organization adopts control its
strategic positioning, which translates into
customer perception of the organization’s
products and services. The resources and
strengths available with the organization and the
strategic gaps existing in the marketplace play a
key role in the choice of strategy that controls it
performance.
Critical success factors and
controls (CSF)
• The strategy crafted by an organization
aims at leveraging on its resources or
strengths and aligns them with the
environment in which it operates. Its ability
to do so depends on how well it addresses
its critical success factors.
• If the critical success factors are ignored,
then the organization will fail sooner or
later
Critical success factors and
controls (CSF)
• For example, in domino’s pizza, the critical
success factors are related to four broad areas,
customer’s preference fro pizza as a food item ,
its ability to prepare a pizza within a short time,
to deliver it within 30 minutes of recording the
order, and the store location.
• Since domino’s business model is based on
home delivery, the speed of preparing the pizza
and delivering it are the critical success fetors.
Critical success factors and
controls (CSF)
• Each industry will have a different set of
critical success factors. For instance, in
the case of grocery chains such as
reliance Fresh, one of the critical success
factors would be to source farm fresh
vegetables at low prices which will
translate into building sustainable supplier
relationships
Critical success factors and controls
• For each organization the critical success factors
may be different, depending on its mission and
strategic goals. The strategic controls ensure
that there is an alignment between the mission
and strategic goals.
• For example the mission of a television
manufacturing organization may be to be
recognized as a top end organization in its
industry. The strategic goal would be to
frequently introduce state of the art products in
the electronics industry. The critical success
factor for the organization would be the research
and development activity and speed to the
market with new versions
Critical success factors and
controls (CSF)
• Once the organization has decided on the
critical success factors , it becomes
necessary to track the activates that lead
to their achievements and to monitor the
performance of each of these activates.
• Performance measures are required for
the organization to know whether the
approach it is taking to address the critical
success factors
Performance Measurement
• Performance measures can be of three
types
• Performance indicators
• Key performance indicators
• Key result indicators
Performance indicators
• An organization may have a variety of
performance indicators indifferent areas.
• Marketing performance indicator
• HR performance indicator
• Production performance indicator
• Performance indicators may be lead
indicators or lag indicators
lead indicators or lag indicators

• In the Domino pizza example, consider the


performance indicator, late delivery of
pizzas. This may be considered as an lag
indicator (focus is on late) as well as a
performance lead indicator (focus is on
delivery).
• Good performance indicators are specific,
measurable, attainable, realistic, and a
have time perspective
Key Performance Indicators
• Occupancy levels would be a key performance
indicator for Pizza Hut for the following reasons
• The restaurants ability to succeed depends on
the critical success factors of location ,menu
offering, the ambience, and the dining
experience.
• The success of the restaurant in terms of the
occupancy levels would be high only if the
restaurant is able to address most of the listed
critical success factors effectively.
Key result indicators
• Return on capital employed, (ROI) and
profitability are two examples of key result
indicators that are relevant for many
organizations.
CFS for Airlines
• A full service airline in this market typically
provide more services to passengers than
a no-frills (low-cost) airline. Full service
airline tend to attract business travelers an
other frequent flyers who expect such
services, along with guaranteed
connectivity of flights, punctuality, etc.,
Under normal circumstances, full service
airlines charge a premium for the seats as
compared to a no-frills airline.
CFS for Airlines
• A suggested set of critical success factors are
listed below
• Timely departure and arrival of aircraft
• Retaining key employees
• Time slots of departure and arrival
• Parking bays at the airport
• Safety
• Seamless travel experience (Alliance with
hotels, tourism, portals, transportation
companies)
KPI for Airlines
• Passenger load factor
• On time flight performance index
• Number of incidents affecting safety or
security per day
PI for Airlines
• Training hours per employee per month
• Promotion expenses / ticket sales
• Number of flying hours per aircraft per
month
• Tickets booked online / by the call center
employees
• Customer loyalty
• Referral booking
KRI for Airlines
• Net profit before tax
• Customer satisfaction
• Debt-service coverage ratio
• Average service period of key employees
• Safety measures
IT&S
• If the operations of the organization are
geographically widespread, and cut across
multiple industries, or the nature of
industry is such that it requires global
sourcing to be successful. IT&S becomes
crucial to control the diverse operation of
the organization
IT&S
• For example , a diversified conglomerate might have
operations in the steel industry in China,
• the software industry in India,
• electronic chips in Taiwan,
• and coffee in Brazil with headquarters in India.
• The steel produced in China may be exported to
Bangladesh and Nepal;
• software services and support may be provided to clients
in Europe and North America,
• electronics chips may be sold in India and Russia ,
• and coffee may be exported to the Middle East
countries,
• in the case of such organizations , IT&S becomes a
critical success factor.
Thanking you
• Cherish your visions and your dreams, as they
are the children of your soul, the blueprints of
your ultimate achievements.
- Napoleon Hill

• Ambition, fueled by compassion, wisdom and


integrity, is a powerful force for good that will
turn the wheels of industry and open the doors
of opportunity for you and countless others.

- Zig Ziglar is an American author, salesperson,
and motivational speaker.