Session 02

SECTION A
Strategic Control

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Strategy  Structure
•In M 7s Framework,
Strategy  Structure

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Strategic Control
• Management efforts to track a strategy as it is being
implemented, detect problems or changes in its underlying
premises, and make necessary adjustments.

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4
Questions That Drive Strategic Control
1. Are we moving in the proper direction?
2. How are we performing?

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Types of Strategic Control
• Premise control
• Strategic surveillance
• Special alert control
• Implementation control

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Ex. 13.1 Four Types of Strategic Control

Chapter 13 exhibit 1.CLP

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 Characteristics of the Four Types of
Ex. 13.1 (contd.)
Strategic Control

Chapter 13 exhibit 2.CLP

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Premise Control
• Premise control is designed to check systematically and
continuously whether the premises on which the strategy is based
are still valid
• Primarily concerned with
• Environmental factors – External – PESTEL –
• Create an Excel
• Columns – 1)Political, 2) Economic, 3) Social, 4) Tech, 5) Environmental, 6) Legal, 7) BP
of Sup, 8) BP of Buyers, 9) Th of New Ent, 10) Th of Subs, 11) Competition
• Rows – Time 1, Time 2, Time 2
• Industry factors – Porter’s 5 Forces

Excel (Formula)
R programming – Free open source R Studio
SPSS , Stata, …

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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

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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

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Implementation Control
• 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

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Implementation Control (contd.)

• The two basic types of implementation control are:

• Monitoring strategic thrusts
• Milestone reviews

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Strategic Thrusts or Projects

• Special efforts that are early steps in executing a broader strategy,

usually involving significant resource commitments yet where
predetermined feedback will help management determine whether
continuing to pursue the strategy is appropriate or whether it needs
adjustment or major change.

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Milestone Reviews

• Points in time, or at the completion of major parts of a bigger

strategy, where managers have predetermined they will undertake a
go-no go type of review regarding the underlying strategy associated
with the bigger strategy.

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Operational Control Systems

• To be effective, operational control systems must

take four steps common to all postaction controls:
• Set standards of performance
• Measure actual performance
• Identify deviations from standards set
• Initiate corrective action

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The Balanced Scorecard Methodology
• An alternative approach linking operational and
strategic control, developed by Harvard Business
School professors Robert Kaplan and David
Norton, is a system they named the balanced
scorecard

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Balanced Scorecard

• A management control system that enables companies to clarify their

strategies, translate them into action, and provide quantitative
feedback as to whether the strategy is creating value, leveraging core
competencies, satisfying the company’s customers, and generating a
financial reward to its shareholders.

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Kaplan and Norton on the Balanced
Scorecard
• “The balanced scorecard retains traditional financial measures. But
financial measures tell the story of past events, an adequate story for
industrial age companies for which investments in long-term
capabilities and customer relationships were not critical for success.
These financial measures are inadequate, however, for guiding and
evaluating the journey that information age companies must make to
create future value through investment in customers, suppliers,
employees, processes, technology, and innovation.”

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20
Ex. 13.5 Integrating Shareholder Value and Organizational Activities
across Organizational Levels

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Balanced Scorecard
Four perspectives:
1. The learning and growth perspective: How well
are we continuously improving and creating
value?
2. The business process perspective: What are our
core competencies and areas of operational
excellence?

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Balanced Scorecard Perspectives (contd.)

1. The customer perspective: How satisfied are our customers?

2. The financial perspective: How are we doing for our
shareholders?

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Ex. 13.6 Exxon’s NAM&R Division’s Balanced
Scorecard

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Ex. 13.6 (contd.)

Strategic Objectives Strategic Measures

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Ex. 13.6 (contd.)

Strategic Objectives Strategic Measures

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Ex. 13.6 (contd.)

Strategic Objectives Strategic Measures

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Dashboard
• A user interface that organizes and presents information from
multiple digital sources simultaneously in a user-designed format on
the computer screen

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Dashboard Uses

• Key management tool for timely strategic and operational control

• Users can decide the key indicators that tell them about the
unfolding success of their strategies

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Summing Up Strategic Control

• Strategic control and comprehensive control programs like the

balanced scorecard bring the entire management task into focus.
• Organizational leaders can adjust or radically change their firm’s
strategy based on feedback from a balanced scorecard approach as
well as other strategic controls.

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Thank You

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