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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.
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
Profit-centre heads
Financial controllers
Company secretaries
External and Internal Auditors
Audit and Executive Committees
Corporate Planning Staff or Department
Middle-level managers
Techniques of Strategic Evaluation
1)Gap Analysis
The gap analysis is one strategic evaluation technique used to measure the gap between the
organizations current position and its desired position.
The gap analysis is used to evaluate a variety of aspects of business, from profit and
production to marketing, research and development and management information systems.
Typically, a variety of financial data is analyzed and compared to other businesses within the
same industry to evaluate the gap between the organization and its strongest competitors.
2) SWOT Analysis
The SWOT analysis is another common strategic evaluation technique used as a part of the
strategic management process. The SWOT analysis evaluates the organizations strengths,
weaknesses, opportunities and threats.
Strengths and weaknesses are internal factors, while opportunities and threats are external
factors.
This identification is essential in determining how best to focus resources to take advantage
of strengths and opportunities and combat weaknesses and threats.
3) PEST Analysis
Another common strategic evaluation technique is the PEST analysis, which identifies the
political, economic, social and technological factors that may impact the organizations ability
to achieve its objectives.
Political factors might include such aspects as impending legislation regarding wages and
benefits, financial regulations, etc
Economic factors include all shifts in the economy, while social factors may include
demographics and changing attitudes. Technological pressures are also inevitable as
technology becomes more advanced each day.
These are all external factors, which are outside of the organizations control but which must
be considered throughout the decision making process.
4) Benchmarking
Benchmarking is a strategic evaluation technique thats often used to evaluate how close the
organization has come to its final objectives, as well as how far it has left to go.
Organizations may benchmark themselves against other organizations within the same
industry, or they may benchmark themselves against their own prior situation.
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.
Most commentators would agree with the definition of strategic control offered by Schendel and Hofer:
"Strategic control focuses on the dual questions of whether: (1) the strategy is being
implemented as planned; and (2) the results produced by the strategy are those intended.
Types of Strategic Control
1) Premise Control
Premise control has been designed to check systematically and continuously whether or not
the premises set during the planning and implementation process are still valid.
It involves the checking of environmental conditions. Premises are primarily concerned with
two types of factors:
demographic/social changes).
b. Industry factors (for example, competitors, suppliers, substitutes, and barriers to entry)
2) Implementation Control
Implementing a strategy takes place as a series of steps, activities, investments and acts that
occur over a lengthy period.
a. Monitoring strategic thrusts (new or key strategic programs): Two approaches are useful in
enacting implementation controls focused on monitoring strategic thrusts: (1) one way is to agree
early in the planning process on which thrusts are critical factors in the success of the strategy or of
that thrust; (2) the second approach is to use stop/go assessments linked to a series of meaningful
thresholds (time, costs, research and development, success, etc.) associated with particular thrusts.
b. Milestone Reviews: Milestones are significant points in the development of a programme, such as
points where large commitments of resources must be made. A milestone review usually involves a
full-scale reassessment of the strategy and the advisability of continuing or refocusing the direction of
the company.
3) Strategic Surveillance
Strategic surveillance is designed to monitor a broad range of events inside and outside the
company that are likely to threaten the course of the firm's strategy.
The basic idea behind strategic surveillance is that some form of general monitoring of
multiple information sources should be encouraged, with the specific intent being the
opportunity to uncover important yet unanticipated information.
"A special alert control is the need to thoroughly, and often rapidly, reconsider the firm's basis
strategy based on a sudden, unexpected event."
The analysts of recent corporate history are full of such potentially high impact surprises (i.e.,
natural disasters, chemical spills, plane crashes, product defects, hostile takeovers etc.).
An example of such event is the acquisition of your competitor by an outsider. Such an event
will trigger an immediate and intense reassessment of the firm's strategy. Form crisis teams to
handle your company's initial response to the unforeseen events.
STRATEGIC EVALUATION PROCESS(A) Setting standards of performance It must focus on questions like:
The firm must identify the areas of operational efficiency in terms of people, processes,
productivity and pace. Standards set must be related to key management tasks. The
special requirement for performance of these task must be studied. It can be expresses
in terms of performance indicators.
The criteria for setting standards may be qualitative or quantitative. Therefore standards
can be set keeping in mind past achievements, compare performance with industry
average or major competitors. Factors such as capabilities of a firm, core competencies,
risk bearing ability, strategic clarity and flexibility and workability must also be
considered.
(B) Measurement of performance Standards of performance act as a benchmark in
evaluating the actual performance. Operationally it is done through accounting, reporting
and communication system. The key areas which must be kept in mind are difficulty in
measurement, timing of measurement (critical points) and periodicity in measurement
(task schedule).
(C) Analyzing variances The two main tasks are noting deviations and finding the
cause of deviations.
When actual performance is equal to budgeted performance tolerance limits must be
set.
When actual performance is greater than budgeted performance one must check the
validity of standards and efficiency of management.
When actual performance is less than budgeted performance we must pinpoint the
areas where performance is low and take corrective action,
The cause of deviations may be External or internal, Random or expected, Temporary or
permanent. The two main questions to focus upon are :
Are the strategies still valid?
Does the organization have the capacity to respond to the changes needed?
(D) Taking corrective actions It consists of the following Checking of performance It includes in-depth analysis and diagnosis of the factors
that might be responsible for bad performance.
Checking of standards It results in lowering or elevation of standards according to
the conditions.
Reformulate strategies,plans,objectives Giving a fresh start to the strategic
management process
IMPORTANCE OF STRATEGIC EVALUATION AND CONTROL
George Steiner summarized the role of the CEO in strategic management as follows:
1. The CEO must understand that strategic management is his responsibility. Parts
of this task, but certainly not all of it, can be delegated.
2. The CEO is responsible for establishing a climate in the organization that is
congenial to strategic management.
3. The CEO is responsible for ensuring that the design of the process is appropriate
to the unique characteristics of the company.
4. The CEO is responsible for determining whether there should be a corporate
planner. If so, the CEO generally should appoint the planner (or planners) and see
that the office is located as close to that of the CEO as practical.
5. The CEO must get involved in doing planning.
6. The CEO should have face-to-face meetings with executives for making plans and
should ensure that there is a proper evaluation of the plans and feedback to those
making them.
7. The CEO is responsible for reporting the results of the strategic management
process to the board of directors.
The chief executive officer (CEO) is responsible for the final decisions, but its decisions is
the culmination of the ideas, information, and analyses of others.
Other Managers And Staff Members
In many organizations, the job of strategic management can become so overwhelming,
that the chief executive must assign individuals, usually called planning staff
personnel, to help with the tasks. Recent theory and studies suggest that middle-level
managers attempt to influence business strategy and often initiate strategic proposals.
Board Of Directors
The business which exists in corporate form has a board of directors, elected by
stockholders and given ultimate authority and responsibility. Boards typically elect a
chairperson who is responsible for overseeing board business, and they form standing
committees which meet regularly to conduct their business. A strategy committee is a
board committee that works with CEO to develop strategic management process.
It is common practice for organizations to have boards of directors consisting of both
outsiders and insiders. One approach used to reconcile the differing roles of outside
directors and inside strategic decision makers is agency theory.
Agency theory defines as a nexus of contractual relationships among various
stakeholders, including shareholders, managers, employees, and customers, each
motivated by self-interest. In this view, a firm exists to exploit the potential advantages
of cooperative behavior among stakeholders, and strengthening the link between the
company and its environments.