STRATEGIC CONTROL AND EVALUATION

Dr Rajesh Tripathi
 Evaluation and Control

Evaluation and Control –

- Process that ensures that the company is

achieving what it set out to accomplish
- Compare performance with desire results and
provide feedback for management to take
corrective action
 Strategic Control Systems
• Premise Controls
• Implementation Control
– Assessing strategic thrust
– Milestone reviews
• Critical events
• Stage of major allocations
• Time Frame
• Strategic surveillance
• Special alert control
5 Step Model of Evaluation and Control
 Evaluation and Control
Measuring performance –
Performance = The end result of activity

–Traditional Financial Measures (after the fact)

–Return on investment (ROI)
– Gain from investment- cost of investment/cost of
investment X100
–Earnings per share (EPS)
–Net Income-dividend on preferred shares/no. of
outstanding shares
–Return on equity (ROE)
– Net Income/Shareholder's Equity
–Operating cash flow
–Steering Controls
–Goes beyond traditional measures
–Measures that predict likely (future) profitability
–Examples: Social Responsibility, Employee
Development, etc.
 Evaluation and Control

Types of Controls – Depending on the focus

–Output controls (Focus on actual
performance)
•What is to be accomplished; focus on end result
through performance targets
–Behavior controls (Focus on activities that
generate performance)
•How something is done through policies,
procedures, rules, SOP’s
–Input controls (Focus on resources used to
generate performance)
•Focus on Resources used to generate performance
– skills, abilities, values, motives
 Evaluation and Control

Other Types of Controls –

–Activity Based Costing (ABC)

•Accounting method to allocate indirect and
fixed costs to individual products or product
lines
•It is based on the value-added activities (VC
Analysis) going into the product, and it provides
a more accurate charge of costs
 Evaluation and Control

Guidelines for Proper Control –

1. Control should involve only the minimum
amount of information necessary (80-20 rule)
2. Monitor only meaningful activities and results
3. Control should be timely (Correct before it is
too late)
4. Balance Long and short-term orientation
5. Pinpointing exceptions (Take action only if falls
out the tolerance range)
6. Use to Reward meeting/exceeding standards
(avoid punishment)
THANK YOU