Unit VII:

Strategic Evaluation and

Control

Course Instructor
Amit Pradhan
1
Course Content (5 hrs)
• Difference between strategic and operational
control
• Strategic Control Tools- premise control, strategic
surveillance, implementation control and special
alert.

2
 STRATEGIC EVALUATION
 Strategic Evaluation is defined as the
process of determining the effectiveness of a
given strategy in achieving the organizational
objectives and taking corrective action
wherever required.
 It consists of the following issues:

- Whether organizational objectives are

attainable with given organizational
resources?
- Whether the policies and strategies are
matching corporate objectives?
- Whether the actual performance is in 3
accordance with the expected results?
STRATEGIC CONTROL
 Control is all about measuring the performance, curbing and correcting the
deviation at all organizational levels.
 Control measures not only the various parts of the organizational system
such as input, process and output but also the organizational system as a
whole.
 It takes into account the changing assumptions that determine a strategy,
continually evaluate the strategy as being implemented and take the
necessary steps to adjust the strategy to the new requirements.
 The chief executive has to control overall corporate activities, whereas the
lower level managers have to control the activities of their respective
divisions or units.
 It ensures proper direction of the strategy. 4
CONTD.
 Strategic control is concerned with tracking a strategy as it is being
implemented, detecting problems or changes in its underlying premises, and
making necessary adjustments.
– Pearce and Robinson
 Strategic control involves the monitoring and evaluating of plans, activities,
and results with a view towards future actions.
– Julian and Scrifres
 Strategic control is the process used by organizations to control the formation
and execution of strategic plans.
- Timothy and Sarrazin
 It is the process by which managers monitor the ongoing activities of an
organization and its members to evaluate whether activities are being
performed efficiently and effectively and to take corrective action to improve
performance if they are not.
-Sam Walton 5
 CONTD.
 Therefore, Strategic control is the process of
evaluating whether the selected strategy is
progressing in the right direction and
producing the desired results and taking
corrective actions based on requirement.
 Strategic control can also be defined as
process of monitoring as to whether to
various strategies adopted by the
organization are helping its internal
environment to be matched with the
external environment.
 Strategic control processes allow managers
to evaluate a company's program from a
critical long-term perspective.
 This involves a detailed and objective
analysis of a company's organization and its
ability to maximize its strengths and market
opportunities.
 It is the process to control the formulation 6
and implementation of strategic plans.
 CHARACTERISTICS OF STRATEGIC
EVALUATION/CONTROL
 Provides direction: It ensures that the organization is
moving in the right direction.
 Continuous activity: It is related to implantation of
strategy. Hence, it is a continuous activity.
 Top management activity: Since it is a sensitive activity,
top management is involved on this.
 Cost effective: It should be viable from cost benefits view.
 Focus on key performance: It focuses on key performance
area. It mainly emphasizes the external elements that affect
the strategy implementation directly.
 Future oriented: It guides strategy implementation over a
long period of time. Hence, it is future oriented. 7
PROCESS OF STRATEGIC CONTROL

8
 CONTD.
1) Determine what to control: The first step of strategy
evaluation and control process determining the major control
areas of an organization. The controls are based on the
organizational mission and objectives developed during the
strategic planning process.
2) Set control standards: After the determination of
measurement areas, another step of strategy evaluation and
control is to establishing control standards. A standard is a target
against which the subsequent performance is compared.
Standards enable managers to evaluate performance. Normally,
performance is measured in terms of quality, quantity, time, cost,
behaviour, competency, etc.
3) Measure performance: Once the standard is set, the next step
is measuring the actual performance. It involves continuous
measurement of performance. There must be a provision of
regular and systematic measurement of actual performance. It
helps to compare actual performance achieved with that of
standard performance. 9
 CONTD.
4) Compare the performance to the standards: After the
measurement of actual performance, it should be compared to the
standards. It determine the variation between actual
performance and the standards. If the performance matches the
standard, the process of strategic control stops. Otherwise,
attempts should be made to determine the reasons of the
deviation. The organization needs to identify the deviations. Are
the deviations due to internal shortcomings or due to external
changes beyond the control of the organization?
5) Take corrective action: The final step in the strategic control
process is to determine corrective action if any deficiency is found
in actual performance. The management must have a strategy to
remove limitations in the internal environment through system
modification and to adjust itself with the external environment.
External factors are beyond the control of the management.
Therefore, it has to develop the strategy to minimize losses due to
changes in the external environment.
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TYPES/TECHNIQUES OF STRATEGIC CONTROL
Types of Strategic

Premise Control
Control

Implementation Control

Strategic surveillance

Special alert control

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TYPES/TECHNIQUES OF STRATEGIC CONTROL
1. Premise control: It is the management process of
systematically and continuously checking to determine
whether premises/ assumptions upon which the strategy is
based are still valid.
Every strategy is based on certain planning premises or
predictions.
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:
a. Environmental factors (for example, inflation, technology,
interest rates, regulation, and demographic/social
changes).
b. Industry factors (for example, competitors, suppliers,
substitutes, and barriers to entry)
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TYPES/TECHNIQUES OF STRATEGIC CONTROL
2. Implementation control: It is the management efforts designed
to assess whether the overall strategy should be changed in light of
results associated with the incremental actions that implement the
overall strategy. It is focused on actual process of strategy
implementation which consists of programs, projects and actions.
The two basis types of implementation control are:
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. 13
TYPES/TECHNIQUES OF STRATEGIC CONTROL
3. Strategic surveillance: It is the management efforts to monitor a
broad range of events inside and more often outside the firm that are
likely to affect the course of its strategy over time. It monitors
organizational, industry and other environmental factors.
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.
Strategic surveillance appears to be similar in some way to
"environmental scanning." Strategic surveillance is designed to
safeguard the established strategy on a continuous basis.
It can be in the form of:
a. Selective surveillance (analysing and monitoring external
scenarios)
b. Organization surveillance (analysing and monitoring internal
scenarios) 14
TYPES/TECHNIQUES OF STRATEGIC CONTROL
4. Special alert control: It is the management actions
undertaken to thoroughly and often very rapidly reconsider a firm’s
strategy because of a sudden and unexpected events.
It is based on a trigger mechanism for rapid response and
immediate reassessment of strategy in the light of sudden and
unexpected events. Special alert control can be exercised through
the formulation of contingency strategies and assigning the
responsibility of handling unforeseen events to crises management
teams.
"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. 15
 CHARACTERISTICS OF THE FOUR TYPES OF STRATEGIC CONTROL

Basic Characteristics Premise Implementati Strategic Special Alert

Control on Control Surveillance Control

Objects of Control Planning Key Strategic Potential threats & Occurrence of

premises & trusts & opportunities related recognizable but
projections. milestones to the strategy unlikely events.

Degree of Focusing High High Low High

Data Acquisition:
Formalization Medium High Low High
Centralization Low Medium Low High

Use with:

Environmental factors Yes Seldom Yes Yes

Industry factors Yes Seldom Yes Yes

Strategy Specific factors No Yes Seldom Yes 16

Company Specific factors No Yes Seldom Seldom

OPERATIONAL CONTROL
 Operational control systems are designed to
ensure that day-to-day actions are consistent
with established plans and objectives. It focuses
on events in a recent period.
 Operational control systems are derived from the
requirements of the management control system.
Corrective action is taken where performance
does not meet standards.
 This action may involve training, motivation,
leadership, discipline, or termination.

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EVALUATION TECHNIQUES FOR OPERATIONAL
CONTROL

Value Chain Analysis

Techniques
Evaluation

Quantitative Performance
Measurement
Benchmarking
Key Factor Rating

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1. Value chain analysis: Firms employ value chain analysis to
identify and evaluate the competitive potential of resources and
capabilities. By studying their skills relative to those associated with
primary and support activities, firms are able to understand their cost
structure, and identify their activities through which they can create
value.
2. Quantitative performance measurements: Most firms prepare
formal reports of quantitative performance measurements (such as
sales growth, profit growth, economic value added, ration analysis
etc.) that manager’s review at regular intervals. These measurements
are generally linked to the standards set in the first step of the control
process. For example, if sales growth is a target, the firm should have
a means of gathering and exporting sales data. If the firm has
identified appropriate measurements, regular review of these reports
helps managers stay aware of whether the firm is doing what it should19
do.
3. Benchmarking: It is a process of learning how other firms do
exceptionally high-quality things. Some approaches to bench
marking are simple and straightforward. For example, Xerox
Corporation routinely buys copiers made by other firms and takes
them apart to see how they work. This helps the firms to stay
abreast of its competitors’ improvements and changes.
4. Key Factor Rating: It is based on a close examination of key
factors affecting performance (financial, marketing, operations and
human resource capabilities) and assessing overall organisational
capability based on the collected information.

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DIFFERENCE BETWEEN STRATEGIC AND OPERATING
CONTROL
• Strategic control: monitors the implementation of the
organization’s strategic plans.
• Operational control: monitors the use of existing
resources and progress towards existing plans. Will not
alter strategic direction.

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 DIFFERENCE BETWEEN STRATEGIC AND OPERATING
CONTROL
Basis Strategic Control Operational Control
Concept Strategic control is the process Operational control is the process
of continuous evaluation of of evaluating the day to day
strategy in the course of its performance of various business
implementation so that units and taking corrective
corrective action can be taken. actions.
Data Strategic control requires more Operational control requires day to
required data from external sources. day data from internal sources.
Focus Strategic control focuses on Operational control focuses on day
long term operations to day operations.
Direction Strategic control concentrates Operational control concentrates
on the organizations long term on the organizations short term
future direction and direction and achievements
achievements
Time It focuses on the long term If focuses on the short term
frame objectives and strategies of the objectives and strategies of the22
organization. organization.
DIFFERENCE BETWEEN STRATEGIC AND OPERATING
CONTROL
Basis Strategic Control Operational Control
Involvement Strategic control measures Operational control
are taken exclusively by top measures are taken by
level management by taking functional managers in
support from subordinate accordance with the
managers. guidance of the top level
manger.
Orientation Strategic control is oriented Operational control is
to the future. oriented to the present.
Tools used The main tools and The main tools and
techniques of strategic techniques of operational
control involve discussion, control are budgeting,
environmental scanning, scheduling, supervision,
information gathering, and interaction, etc.
sharing information, etc.
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24
GUIDELINES FOR PROPER EVALUATION
AND CONTROL

 Economical
 Timeliness

 Provide true picture

 Action oriented

 Foster mutual understanding, trust and common

sense
 Simple

 Convincing

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 Economical: Evaluation and control
activities must be economical. Too much
information distorts control evaluation.
 Timeliness: It should provide timely
information to the managers.
 Provide true picture: It should be
designed to provide a true picture of what
is happening.
 Action oriented: Information derived
from the evaluation and control process
should facilitate action. It should not
merely be information oriented. 26
 Foster mutual understanding, trust
and common sense: It should foster
mutual understanding, trust, and common
sense among the units or departments in
an organization.
 Simple: It should be simple. Complexities
create confusion.
 Convincing: Evaluation and control
should be able to convince the employees
that failure to accomplish certain
objectives within a prescribed time is not
necessarily a reflection of their 27
performance.
END OF UNIT
END OF COURSE CONTENT
BEST OF LUCK FOR YOUR PREBOARD, FINAL THE
EXAMINATION & FUTURE BUSINESS LIFE END