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Strategic Control

● Type of “steering control”.


● Track the strategy as it is being implemented, detect any problems or changes in
the predictions made, and make necessary adjustments.
● implementation process itself takes a long time before achieve the results.

Types of Strategic Control

1. Premise Control Strategy

● built around several assumptions or predictions, called planning premises.


● checks systematically and continuously whether the assumptions on which the
strategy is based are still valid.
● vital premise is no longer valid, the strategy may have to be changed.
● sooner invalid assumptions detected & rejected, better chances changing
strategy.

Two types of factors:

1 Environmental Factors:
● rate of inflation, change in technology, government regulations, demographic and
social changes
● Has little or no control over environmental factors
● still have considerable influence over the success of the strategy
● because strategies are generally based on key assumptions about them.

Example:
● Firm may assume massive increase in demand, embark on an expansion plan.
● If suddenly there is recession and demand for the products of the firm fall down,
● have to change its strategic direction.

2. Industry Factors:
● Competitors, suppliers, buyers, substitutes, new entrants

Strategic Surveillance
● broad-based vigilance activity in all daily operations both inside & outside
● events that are likely to threaten the course of a firm’s strategy can be tracked.
● Business journals, trade conferences, conversations, observations
.
Special Alert Control

● Sudden, unexpected events can drastically alter the course of the firm’s strategy.
● trigger an immediate and intense reconsideration of the firm’s strategy.

Example:

● The tragic events of September 11, 2001, created havoc in US companies,


especially the airline and hotel industry.
● Sudden acquisition of a leading competitor or an unexpected product difficulty
(like defective tyres of Firestone)
● may shatter a firm’s strategy and require a rapid reconsideration of the strategy.
● firms develop contingency plans long with crisis teams to respond

Implementation Control

● takes place as a series of steps, programmes, investments and moves that occur
over an extended period of time.
● Resources are allocated, essential people are put in place, special programmes
are undertaken and functional areas initiate strategy related activities.
● assessing whether the plans, programmes and policies are actually guiding the
organisation towards the predetermined objectives or not.
● assesses whether the overall strategy should be changed in the light of the
results of
● specific units and individuals involved in implementation of the strategy.

Two important methods to achieve

1. Monitoring Strategic Thrusts:


● Small critical projects that need to be done if overall strategy to be accomplished.
● critical factors in the success of strategy.
● agree early in the planning process on which thrusts are critical factors in the
success of the strategy.
● single them out from other activities and observe them frequently.
● use stop/go assessments that are- linked to a series of these thresholds
● time, costs, success associated with a particular thrust.
The Balanced Scorecard method

● conceptual framework for translating an organization's vision into set of


performance indicators with four perspectives:
● Financial, Customer, Internal Business Processes, and Learning and Growth. I
● maintained to measure an organization's progress toward achieving its vision.
● Other indicators are maintained to measure the long term drivers of success.
● monitors current performance (finances, customer satisfaction, and business
process results)
● efforts to improve processes, motivate and educate employees, and enhance
information systems - its ability to learn and improve.
● measure how we have been doing, and how well we are doing
● “current indicators" and can expect to do in the future ("leading indicators").
● clear picture of reality.

1. Measuring organizational, business unit's or department's success


2. Balancing long-term and short-term actions
3. Balancing different measures of success
(a) Financial (b) Customer (c) Internal Operations (d) Human Resource System &
Development (learning and growth

Four Kinds of Measures

1. Financial perspective:
● Measures reflecting financial performance,
● number of debtors, cash flow or return on investment.
● financial performance of an organization is fundamental to its success.
● Even non-profit organisations must make the books balance.

2. Customer perspective:
● captures the ability of the organization to provide quality G&S, effective delivery,
and overall customer satisfaction for both Internal & External customers.
● For example, time taken to process a phone call, results of customer surveys,
number of complaints or competitive rankings.

3. Business Process perspective:


● provides data regarding the internal business results against measures that lead
to financial success and satisfied customers.
● To meet the organizational objectives and customers expectations
● organizations must identify the key business processes at which they must excel.
● Key processes are monitored to ensure that outcomes are satisfactory.
● Internal business processes are the mechanisms through which performance
expectations are achieved.
● For example, the time spent prospecting new customers, number of units that
required rework or process cost.
● Balanced Scorecard continues to emphasise on the financial performance
measure
● Highlights future performance drivers,key initiatives to be taken & provide
framework
● financial perspective is always important.
● healthy revenue growth, proper utilisation of assets and investment strategy
● superior value to customer, build customer loyalty bring superior financial results.
● looks at the value proposition that the organisation will deliver to the customer in
target market segment.
● building better understanding and leveraging relationship with customers.