Strategic Evaluation

and Control
UNIT 7 LECTURE 16: STRATEGIC EVALUATION AND CONTROL
Presentation Outline
7.1 Lesson Objectives
7.2 Introduction
7.3 Concept of Strategic Evaluation
7.4 Nature of Strategic Evaluation
7.5 Importance of Strategic Evaluation
7.6 Process of Strategic Evaluation
7.7 Strategic Control
7.7.1 Types of Strategic Control
7.8 Techniques of Strategic Evaluation and Control
7.8.1 Performance Management System.
7.9 Conclusion
7.10 Model Questions
 Lesson Objectives

At the end of the lesson, you should be able to:

 Discuss nature and importance of strategic evaluation

 Discuss strategic control and its implementation process
 Describe strategic surveillance system
 Describe the measurements of performance, analysing variances, and taking
corrective actions of operational control
 Outline techniques of strategic evaluation.
 Introduction

Strategic evaluation and control is the process of determining the effectiveness of a

given strategy in achieving the organisational objectives and taking corrective
actions whenever required.
Strategic evaluation helps to assess whether the decisions taken match the intended
strategy requirements
Stahl and Grigsley defines Strategic evaluation and control as the process of
evaluating strategic plans and monitoring organisational performance so that
necessary corrective actions can be taken.
Richard Rumelt offered four criteria that could be used to evaluate strategy namely,
consistency, consonance, feasibility, and advantage. Consonance and advantage are
based on the firm’s external assessment while consistency and feasibility are largely
based on an internal assessment.
Concept of Strategic Evaluation
 Strategic evaluation refers to the measurement and testing the efficiency of strategic
decisions and the effective implementation of business strategy to achieve desired
business objectives.
 It is considered as the final step of the strategic management process. Strategic
management concentrates on formulating organisational objectives based on an
analysis of the business (internal and external) environment, formulating the plans
and policies, controlling and implementing the action plans to achieve the business
results.
 A continuous evaluation and monitoring is essential requirement of the strategic
management process. The evaluation process concentrates on three main aspects of
strategy namely appropriate strategy, consistent, and feasibility of strategy. Strategy
should be appropriate to achieve desired objectives of the organisation and it should
be formulated within the available resources and analyses of the internal and external
business environment. It should be feasible or easy to implement within the
constraints of available resources of the organisation.
Nature of Strategic Evaluation
The nature of strategic evaluation reflects its purpose and role in the strategic
management process. The key features of strategic evaluation includes the
following:
 Strategic evaluation is a systematic and continuous process that occurs
throughout the implementation of a strategic plan. It is an ongoing cycle that
involves regular assessments of progress and outcomes. It is a decision- support
tool for top management in resource allocation, and the setting of future
strategic priorities.
 Strategic evaluation is objective and data-driven. It relies on quantifiable data
and performance metrics to measure progress at all times.
 The evaluation process comprehensively covers all aspects of the strategic plan
from financial performance, operational efficiency, market share, customer
satisfaction to the achievement of specific strategic objectives.
Nature of Strategic Evaluation (Cont’d)
 Strategic evaluation is a multifaceted assessment which includes internal and
external factors. Internally, it assesses the organisation’s resources, capabilities,
and internal processes. The criteria for assessing the external business environment
are referred to as Consonance and Advantages. Consonance involves analysing and
examining trends in the external environment while Advantages considers the
number of opportunities available in the business environment. The criteria
Consistency and Feasibility are applied to the internal environment of the business.
The plans and policies should be consistent with the desired goals and the internal
environment should be favourable to support goals and objectives. Feasibility
indicates strategy should be at par with available resources. Strategic evaluation is
a strategic surveillance tool to identify emerging threats and opportunities that may
require strategic adjustments.
 Strategic evaluation is about comparing actual performance with planned or
expected performance. This may include benchmarking against industry standards,
competitors, or previous performance.
Nature of Strategic Evaluation (Cont’d)
 Strategic evaluation is a feedback mechanism to management regarding the
effectiveness of the employed strategies. The information is used to make
informed decisions, it prompts adjustments, revisions, or adaptations in the
plans. It fosters agility and adaptability to changing environment.
 Strategy evaluation is stakeholder-oriented as the assessment process
includes the perspectives and feedback of various stakeholders such as
employees, customers, suppliers, investors, and the community.
 Strategic evaluation ensures alignment with the organisation’s objectives,
long-term goals and that the strategies are aligned with its mission and vision.
Importance of Strategic Evaluation
Strategic evaluation is a critical phase in the strategic management process because
it fosters the following:
 Ensure Alignment with its mission, vision, and core values
 Facilitates agility and adaptation
 Enhances transparency and accountability to stakeholders
 Improves resource allocation, and performance appraisal system for reward &
recognition
 Drives competitive advantage due to timely adaptability and responsiveness.
 Promotes accountability when strategic objectives KPIs are established.
 Supports informed decision-making as progress and performance are assessed.
 Identifies successes and failures in the strategies employed.
Process of Strategic Evaluation
The process of strategic evaluation is critical for maintaining the alignment of an
organisation’s strategies with its mission and objectives, staying responsive to
changing circumstances, and continuously improving performance.
It typically involves the following steps:
 Establish clear objectives and performance metrics such as financial targets.
 Data collection and measurement related to the established metrics
 Benchmarking relative to industry standards and peers.
 A comprehensive internal and external analysis such as SWOT analysis
 Comparative analysis and performance measurement
 Environmental monitoring to identify emerging threats or opportunities
 Re-evaluation of assumptions for changes in underlying factors
Process of Strategic Evaluation (Cont’d)
 Ensure feedback and reporting to all stakeholders for transparency and
accountability
 Based on the evaluation results, make informed decisions.
 Adaptive Management to ensure that the organisation stays on course to
achieve its objectives.
 Strategic evaluation is an ongoing cycle which should be repeated at regular
intervals.
Process of Strategic Evaluation
Process of Strategic Evaluation
Process of Strategic Evaluation
Process of Strategic Evaluation

Formulation: Evaluation:
Develop strategic plan Implementation: Evaluate how well the
to prepare for the Put plan into action plan is being
future implemented.

Strategic Control:
Evaluation and The information from
Control: an ongoing evaluation enables
Cycle at repeated better control and
regular intervals. better plans
The Concept of Strategic Control
 Strategic Control is the process of monitoring and checking the performance
of strategic decisions, ensuring the effective implementation of strategic
plans and policies, identifying the problems and taking corrective actions
whenever required for achieving the desired organisational objectives.
 Strategic control helps organisations stay on course, make necessary
adjustments, and respond to changes in the business environment.
 Schreyogg and Steinmann (1987) defines Strategic Control as the critical
evaluation of plans, activities, and results, thereby providing information for
the future.
 Robert J Mockler has divided the controlling process into six steps:
The Concept of Strategic Control (Cont’d)

1. To establish performance standards

2. To measure organisational performance
3. To measure the techniques
4. To compare the performance with standards
5. To evaluate deviations
6. To take corrective measures.
The Concept of Strategic Control
(Cont’d)
Types of Strategic Control
There are three types of strategic control:
1. Premise Control: This involves monitoring the assumptions and conditions on which
the strategic plan is based. It ensures that the fundamental assumptions such as
market conditions, and competitive dynamics remain valid. In the event of significant
variations, the organisation will need to adapt their strategies accordingly.
2. Implementation Control: This focuses on how well the organisation is executing its
strategic plan. It involves monitoring the day to day activities and processes to
ensure that they are aligned with the intended strategies. The key elements of
implementation control include:
 Setting Milestones and Objectives: Defining check points for progress, for example
revenue targets, product development deadlines, or market share goals.
 Resource Allocation: Ensuring that resources are allocated as planned to support the
execution of strategies.
Types of Strategic Control
(Cont’d)
 Performance Metrics: Establishing KPIs and metrics to measure progress and
performance.
 Monitoring and Reporting: Regular and scheduled monitoring and reporting on
the status of all initiatives is crucial to ensure early identification of
deviations and correction.
3. Strategic Surveillance: This is an ongoing process of monitoring the external
business environment for changes that could affect the organisation’s strategic
plan. Key aspects of strategic surveillance include, market and industry trends,
competitive analysis, regulatory and legal changes, and technological
developments (PESTEL analysis).
Types of Strategic Control
Techniques of Strategic Evaluation and
Control.
Organisational Systems & Techniques of Strategic
Evaluation
1. Gap Analysis
 The gap analysis is one strategic evaluation technique used to
measure the gap between the organisation’s current position and its
desired position.
 The gap analysis is used to evaluate a all aspects of the business,
from profit and production to marketing, research and development
and MIS.
 A variety of financial data is analysed and compared to other
businesses within the same industry to evaluate the gap between the
organization and its strongest competitors
Techniques of Strategic Evaluation (Cont’d)

2. SWOT Analysis
 The SWOT analysis – a common strategic evaluation technique used as
a part of strategic management process. The SWOT analysis evaluates
the organisation’s strengths, weaknesses, opportunities and threats.
 SW are internal factors while OTs are external factors.
 This analysis is essential in determining how best to focus resources
to take advantage of strengths and opportunities and to combat
weaknesses and threats
Techniques of Strategic Evaluation (Cont’d)

3. PEST Analysis
 A common strategic evaluation technique which identifies the
political, economic, social and technological factors that may impact
the organisation’s ability to achieve its objectives.
 Political factors might include impending legislation regarding for
example wages and benefits, financial regulations, etc.
 Economic factors which may include all shifts in the economy, while
social factors may include demographics and changing attitudes,
included are the ever changing technological pressures
 PEST analysis focuses on external factors outside the control of the
organisation.
Techniques of Strategic Evaluation (Cont’d)

4. Benchmarking
 Benchmarking is used to evaluate how close or how far the
organisation has come to its final objectives.
 Organisations may benchmark themselves against other
organisations within the same industry, or they may
benchmark themselves against their own prior situation.
 A variety of performance measures, as well as policies and
procedures, may be evaluated regularly to identify where
the adjustments are necessary to maintain the sustainable
competitive advantage
Techniques of Strategic Evaluation
(Cont’d)
5. Product Portfolio Analysis
 Product portfolio analysis is the task of assessing all the
products your business sells for performance, growth
potential, and market share. Portfolio analyses are
conducted to help businesses understand how their various
products are contributing to cash flow.
Product Portfolio Analysis (SWOT Analysis)
Product Portfolio Analysis (SWOT Analysis)

Star:
 This depicts a favourable external environment (high
growth rate) and a favourable internal position (strong
market share).
 It reflects a company with capability in a market with
opportunities
 The company must invest heavily to keep up with the
high market growth and fight off competitor attack.
Product Portfolio Analysis (SWOT Analysis)

Question Mark:
This depicts a situation in which there are opportunities for
growth characterized by high growth rate, but a firm is in a
weak position because it does not have capacity.
The company must target growth and may therefore require
capability, such as a lot of cash to spend money on plant and
machinery, personnel to keep up with the fast- growing
market.
Product Portfolio Analysis (SWOT Analysis)

Cash Cow:
 This depicts a company that has capability, such as a lot of
cash but it is faced with a situation in which the market
growth rate has slowed down.
 The company is a market leader, it enjoys economies of
scale and higher profit margins but must look for an
opportunity to use its resources. The options may be
through market diversification or seeking expansion
elsewhere.
Product Portfolio Analysis (SWOT Analysis)

A Dog:
 This is a situation in which a company faces an
unfavourable market growth rate and is additionally weak
because it has no capacity
 An appropriate strategy is to quit the market (voluntary
liquidation).
Techniques of Strategic Evaluation
(Cont’d)
6. Four Corners Analysis
 The four corners analysis is a tool designed by Michael Porter that
helps company strategists assess a competitor’s intent and objectives.
The tool is divided into four corners namely: Drivers, Assumptions,
Capabilities, and Strategy.
 It is a valuable tool for evaluating competitors and generating insights
on expected competitor strategy changes. It helps understand how
competitors react to environmental changes and industry
adjustments. The four corners analysis is illustrated below.
Four Corners Analysis:
Techniques of Strategic Evaluation (Cont’d)

7. Performance Management System.

The performance management process is used to communicate organisational
goals and objectives, reinforce individual accountability for meeting those goals,
and track and evaluate individual and organisational performance results.

There are 3 common types of organisational performance management system:

 The Balanced Scorecard
 Management by objectives
 Budget – driven Business Plans
Definition of performance Management
system
4 Stages of Performance Management System.

Setting
SMART
GOALS

Rating Monitoring
Employees Performance through
and Management check - ins
Rewarding and
them System feedback

Reviewing
goal
completion
at the end
of the cycle
Elements for Efficient Performance
Management
An efficient management system needs to include the following:
 Fairness and accuracy
 Efficiency
 Should be a basis for a personal development plan
 Improve performance
 Must incorporate feedback from multiple data sources
 Guide on compensation
 Should be a basis for coaching skills development.
 Set expectations
 Allow for monitoring
Management by Objectives (MBO)
Importance of Management by Objectives

 Management by objectives (MBO) is a framework designed to manage

businesses based on their needs and goals.
 MBO usually defines the top company objectives and the individual objectives
are derived from the Company objectives
 The MBO approach has several advantages:
• Teamwork – Business focused objectives lead to improved communication.
• Clarity – tends to set out a clear set of tasks
• Empowerment – staff at all levels of the organization feel involved and
empowered.
• Customization – Each employees set of objectives is aligned to individual
skills, role, career goals etc.
Management By Objectives Process
MBO process consists of five steps:
 Set company objectives
 Cascade objectives to employees
 Monitor
 Evaluate performance.
 Reward performance
Importance of Management by Objectives
on Strategy
 Management by objectives helps employees appreciate their on-the-job-roles
and responsibilities.
 The key result areas (KRAs) planned are specific to each to each employee.
 Promotes teamwork and communication in the workplace.
 Motivates employees as they have better clarity of .
 Aligns all subordinate objectives throughout the organisation with the overall
goals that management has set.
 Creates a state of employee motivation, satisfaction, commitment, loyalty
which culminates into performance culture in an organisation
 Increased organisational performance
Techniques of Strategic Evaluation
(Cont’d)
8. Other techniques for strategic evaluation include:
 Key Performance Indicators (KPIs)
 Balanced Scorecard – evaluates performance from multiple perspectives,
including Financial, internal processes, customer, and learning and growth.
 Customer feedback and surveys.
 Employee surveys and engagement metrics
 Scenario planning
 Cost-benefit analysis
 Financial Ratios
THINK & SHARE……
CONCLUSION
Model QUESTIONS

 Explain the nature and importance of strategic evaluation?

 Discuss the importance of strategic evaluation
 Discuss the different steps of strategic control process
 Explain the different types of Strategic Control
 Explain the Techniques of Strategic Evaluation and Control