Strategy Evaluation and Control

The final stage in strategic management is strategy evaluation and control. All strategies are
subject to future modification because internal and external factors are constantly changing. In
the strategy evaluation and control process managers determine whether the chosen strategy is
achieving the organization's objectives. The fundamental strategy evaluation and control
activities are: reviewing internal and external factors that are the bases for current strategies,
measuring performance, and taking corrective actions.
Strategic Evaluation and Control
Strategic evaluation and control constitutes the final phase of strategic management.
Strategic evaluation operates at two levels:

Strategic level - wherein we are concerned more with the consistency of strategy
with the environment.

Operational level wherein the effort is directed at assessing how well the
organisation is pursuing a given strategy.

Purpose of Strategic Evaluation

The purpose of strategic evaluation is to evaluate the effectiveness of strategy in
achieving organisational objectives
Nature of Strategic Evaluation
Nature of the strategic evaluation and control process is to test the effectiveness of
strategy.
During the two proceedings phases of the strategic management process, the strategists
formulate the strategy to achieve a set of objectives and then implement the strategy.
There has to be a way of finding out whether the strategy being implemented will guide
the organisation towards its intended objectives.
Strategic evaluation and control, therefore, performs the crucial task of keeping the
organisation on the right track.
In the absence of such a mechanism, there would be no means for strategists to find out
whether or not the strategy is producing the desired effect.
Through the process of strategic evaluation and control, the strategists attempt to answer
set of questions, as below.

Are the premises made during strategy formulation proving to be correct?

Is the strategy guiding the organisation towards its intended objectives?

Are the organisation and its managers doing things which ought to be done?

Is there a need to change and reformulate the strategy?

How is the organisation performing?

Are the time schedules being adhered to?

Are the resources being utilised properly?

What needs to be done to ensure that resources are utilised properly and
objectives met?

Importance of Strategic Evaluation

Strategic evaluation helps to keep a check on the validity of a strategic choice.
An ongoing process of evaluation would, in fact, provide feedback on the continued
relevance of the strategic choice made during the formulation phase. This is due to the
efficacy of strategic evaluation to determine the effectiveness of strategy.
Importance of Strategic Evaluation
During the course of strategy implementation managers are required to take scores of
decisions.
Strategic evaluation can help to assess whether the decisions match the intended strategy
requirements.
In the absence of such evaluation, managers would not know explicitly how to exercise
such discretion.
Strategic evaluation, through its process of control, feedback, rewards, and review, helps
in a successful culmination of the strategic management process.
The process of strategic evaluation provides a considerable amount of information and
experience to strategists that can be useful in new strategic planning.
Participants in Strategic Evaluation
Shareholders
Board of Directors
Chief executives

 Profit-centre heads
Financial controllers
Company secretaries
External and Internal Auditors
Audit and Executive Committees
Corporate Planning Staff or Department
Middle-level managers
Barriers in Evaluation
Limits of control
Difficulties in measurement
Resistance to evaluation
Rely on short-term implications of activities
Requirements for Effective Evaluation
The effective control must be:

Control should involve only the minimum amount of information as too much
information tends to clutter up the control system and creates confusion.

Control should monitor only managerial activities and results even if the
evaluation is difficult to perform.

Controls should be timely so that corrective action can be taken quickly.

Long-term and short-term controls should be used so that a balanced approach to

evaluation can be adopted.

Controls should aim at pinpointing exceptions as nitpicking does not result in effective
evaluation.
The 80:20 principle, where 20 per cent of the activities result in 80 per cent of
achievement, needs to be emphasised.
Getting bogged down with the activities that do not really count for achievement makes
the evaluation ineffective.

 Rewards for meeting or exceeding standards should be emphasised so that managers are
motivated to perform.
Unnecessary emphasis on penalties tend to pressurise the managers to rely on efficiency
rather than effectiveness
STRATEGIC CONTROL
Strategic controls take into account the changing assumptions that determine a strategy,
continually evaluate the strategy as it is being implemented, and take the necessary steps
to adjust the strategy to the new requirements.

In this manner, strategic controls are early warning systems and differ from post-action
controls which evaluate only after the implementation has been completed.
The types of strategic controls are:

Premise control

Implementation control

Strategic surveillance

Special alert control

Premise Control
Premise control is necessary to identify the key assumptions, and keep track of any
change in them so as to assess their impact on strategy and its implementation.
Premise control serves the purpose of continually testing the assumptions to find out
whether they are still valid or not.
This enables the strategists to take corrective action at the right time rather than
continuing with a strategy which is based on erroneous assumptions.
The responsibility for premise control can be assigned to the corporate planning staff who
can identify key asumptions and keep a regular check on their validity.
Implementation Control
Implementation control may be put into practice through the identification and
monitoring of strategic thrusts such as an assessment of the marketing success of a new
product after pre-testing, or checking the feasibility of a diversification programme after
making initial attempts at seeking technological collaboration.
Strategic Surveillance

Strategic surveillance can be done through a broad-based, general monitoring on the basis
of selected information sources to uncover events that are likely to affect the strategy of
an organisation.
Special Alert Control
Special alert control is based on trigger mechanism for rapid response and immediate
reassessment of strategy in the light of sudden and unexpected events.
Crises are critical situations that occur unexpectedly and threaten the course of a strategy.
Organisations that hope for the best and prepare for the worst are in a vantage position to
handle any crisis.
Crisis management follows certain steps:
Signal detection
Preparation/prevention,
Damage limitation,
Recovery leading to organisational learning.
The first step of signal detection can be performed by the special alert control systems.