Strategic Evaluation & Control

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Nature of Strategic Evaluation

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Participant in strategic evaluation

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Control should be timely..

Long term and short term control should be used.

Control should monitor only managerial activities and results.

Requirement of Effective evaluation

Control should aim at pinpointing exceptions.

Control should involve only the minimum amount of information.

Rewards for meeting or exceeding standards should be emphasized.

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Strategic Control

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Four Types of Strategic Controls

Premise Control Implementation Control Strategic Surveillance Special alert control
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Premise Control
Necessary to identify the key assumptions and its implementation. Serves the purpose of continually testing the assumptions to find out whether they are still valid or not. Which enables the strategists to take corrective action at the right time rather than continuing with a strategy which is based on erroneous assumptions.
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Implementation Control

Implementation control is aimed at evaluating whether the plans, programs, and projects are actually guiding the organization towards its predetermined objectives or not.

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Strategic Surveillance

Strategic surveillance aimed at a more generalized and overarching control designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of a firms strategy.

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Special Alert Control

Special alert control, which is based on a trigger mechanism for rapid response and immediate reassessment of strategy in the light of sudden and unexpected events

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Operational Control

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Operational Control

Aimed at the allocation and use of organizational resources Concerned with action or performance

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How do Strategic Control and Operational Control Differ ?

Attribute 1. Basic question 2. Aim Strategic Control Operational Control Are we moving in the right How are we performing? direction? Proactive, continuous questioning of the basic direction of strategy Steering the organizations future direction External environment Allocation and use of organizational resources Action control

3. Main Concern

4. Focus 5. Time Horizon 6. Main Techniques

Internal organization

Long- term LongShort- term ShortBudgets, schedules, and Environmental scanning, MBO information gathering, Free Powerpoint Templates questioning and review Page 15

Process of Evaluation
Setting standards of performance Measurement of performance Analyzing variances Taking corrective action

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Setting of Standards
Quantitative Criteria  It has performed as compared to its past achievement.  Its performance with the industry average or that of major competitors Qualitative Criteria Criteria for capabilities, core competencies, risk bearing capacity, strategic clarity, flexibility, and workability

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Measurement of Performance
The evaluation process operates at the performance level as action takes place. Standards of performance act as the benchmark against which the actual performance is to be compared. It is important, however, to understand how the measurement of performance can take place.

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Analyzing Variances
The measurement of actual performance and its comparison with standard or budgeted performance leads to an analysis of variances. There may arise three situations: The actual performance matches the budgeted performance The actual performance deviates positively over the budget performance The actual performance deviates negatively from the budgeted

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Taking Corrective Actions

There are three courses for corrective action: Checking of performance, Checking of standards, and Reformulating strategies, plans, and objectives.

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Techniques of Strategic Evaluation and Operational Control

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Evaluation Techniques for Strategic Control

Techniques for strategic control could be classified into two groups:Strategic momentum control :Used by the organization that operate in a relative stable environment. Strategic leap control:Used by organizations those which face a relatively turbulent environment.
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Evaluation Techniques for Operational Control

Operational control is aimed at the allocation and use of organizational Resources. The evaluation techniques are classified into three parts: Internal analysis Comparative analysis Comprehensive analysis.
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Role of Organizational Systems In Evaluation

Role of Information System Helps managers to keep the track of performance through control reports. Role of Control System Used for setting standards, measuring performance, analyzing variances , & taking corrective action. Role of Appraisal System Helps to measure the actual performance and provides for the control system to work.
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