Strategy evaluation

Content…,
Strategy evaluation and control- operational control –
overview of management control – focus on key
result areas.
 Strategy evaluation and control

Strategy evaluation means to “ monitor and

evaluate progress towards organization’s
objectives and to guide or correct the process or
to change the strategic plan to better accord
with current conditions and purposes.”
 Importance of strategic evaluation
Organization is a set of different activities and
departments. Each department is expected to
perform a different activity.
Under the light of corporate strategy, each
department is expected to formulate their
respective strategies.
Each functional area must align their policies
and strategies with that of the overall strategy of
the organization.
If any one of these functional areas suffer due to
weak strategy, the entire organization will be put
to trouble.
 Strategy evaluation is important for the
following reasons
Feedback
Future planning
Motivation of employees
Strategic evaluation helps the managers at
various levels to verify whether the decision
taken by them in line with the strategic
requirements of the company.
 Criteria for evaluating strategy
1. Internal consistency: at the time of evaluating of
strategy, it must be evaluated to know whether the
strategy formulated is consistent with organizational
objectives or not. Strategy must fit into the pattern of
the organization.
2. Consistency with environment: policies formulated
must suit the prevailing environment. It is known that
the policies are formulated to utilize the existing
environment for the best advantage of the organization.
3. Appropriate use of organization’s resources: strategy
must be formulated in such a manner that the available
organizational resources is properly used. There must
not be any resources kept idle.
4. Time horizon: corporate level strategy broadly
outlines what the organization is meant for. To
accomplish these broad objectives, each
organizational units is required to formulate the
respective strategies. They are expected to prepare
short term and long term strategies.
5. Degree of risk: strategy should help organization to
minimize the risk.
6. Workability: finally, the strategy must also be
evaluated to see whether the strategy is really
workable and is it really contributing to the basic
objectives of the organization
 Evaluation and control process
Determine what to measure: organization is group
of many complex activities which are interrelated and
interdependent. Top mgt and operational mgt need to
specify what to be evaluated.
Establish standards: strategic evaluation is
concerned with comparison of actual performance
with predetermined standards. Therefore fixing
standards for each activity is must.
Measure performance: actual performance must ne
measured periodically. These performances must be
recorded properly. Time should also be fixed for
evaluation of performance.
Compare actual performance with the standard:
recorded performance should be compared with the
desired results.
variation in the performance may occur in the following
ways:
1. Actual performance matches the planned one
2. Actual performance is better then the standard one
3. Actual performance varies generally than the planned
level.
Take corrective action: if actual performance is
outside the acceptable tolerance limit, action must be
taken to correct the deviation. Performance may be
adversely affected due to number of factors such as:
1. Wrong allocation of resources
2. Inefficient leadership
3. Faculty organization structure
4. Lack of motivation
5. Absence of proper information system
6. Improper and inefficient communication system.
 Operational control/strategic control

A strategy is built on several assumptions. These

assumptions are made based on the environmental and
organizational factors which are constantly changing.
Once the strategy is formulated usually it takes some
time for implementation. During this interval of
formulation and implementation of strategy, changes
might have occurred which may affect the strategy
formulated.
Therefore strategy evaluation and control plays a major
role in strategic mgt.
 Strategic control can be studied under the
following categories:
Premise control
Implementation control
Strategic surveillance
Strategic alert and control
 Features of an effective control system
Suitable
Simple
Selective
Economical
Flexible
Reasonable
Forward looking
Responsibility
objective
 Evaluation technique for operational
control
Value chain analysis
Bench-marking
Balanced score card( customer perspective,
internal business perspective, innovation and
learning, financial perspective)
Quantitative performance measures
Qualitative performance measures
Key factor rating
 Overview of management control
Control is an important function of management.
Management is ensuring accomplishment of work
according to plans. It is a process that guides activities
towards predetermined goals.
According to Henry Fayol management control
consists of “ verifying whether everything occurs in
conforming with the plans adopted, the instruction
used and the principles established. Its object is to
point out the weakness and errors in order to rectify
them and prevent recurrence.”
 Characteristics of mgt control

It is an essential function of every manager

Planning and management control are closely
related
Management control is a continuous activity
Management control is forward looking
It is people oriented
Management control is dynamic
 Scope of management control
Management control over policies
Control over organization
Control over personnel
Control over costs
Control over methods
Control over wages and salaries
Control over capital expenditure
Control over production
Etc ….
 Significance of management control
Management control reduces the chances of
mistakes
It helps in decision making
It points out the shortcomings of the
organization
It helps in the co-ordination of the activities of
various departments
It has positive impact on behavior of the
employees.
 Limitations of management control
Cannot control external factors
It is an expensive process
Curtails(shorten) freedom
Losses efficiency
 Key result areas ( KRA )
“KRAs refer to general areas of outcomes or
outputs for which a role is responsible.
KRAs are also known as Key work outputs.
(KWOs)
KRAs are defined in order to give direction to
ones function as a professional, help one
distinguish between ‘routine’ and ‘important’
milestones, achieve organizational goals,
create a more transparent platform for
assessing individual performance and
competencies.
 Identifying of KRAs helps individual to:
Clarify their goal
Align their roles to the organization’s business
strategic plan
Focus on result rather than activities
Communicate their roles purposes to others
Set goals and objectives
Prioritize their activities