LEARNING OBJECTIVES

1 You will be able to explore nature of strategic

evaluation and control and features of effective
evaluation system.

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Conceptual overview

The Environment - GOAL

Implementation Levers:
“Threats & Opportunities”
Organization structure
Systems and processes
People and rewards

Management’s values & Strategic Leadership:

STRATEGY
attitude toward risk
Lever and resource
allocation decisions
Develop support among
stakeholders

Organization’s resources
and capabilities -
“Strengths & Weaknesses” Performance
 Strategic Management Process

Environmental Strategy Strategy Evaluation &

Scanning Formulation Implementation Control
Strategic Evaluation & Control

• It is defined as the process of determining the effectiveness of a given

strategy in achieving the organizational objectives and taking
corrective action wherever required.

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Strategic Evaluation & Control

• Is the strategy guiding the organization towards its intended

objectives?

• Are the organization & its managers doing things which ought to be
done?

• Is there a need to change and reformulate the strategy?

• Are the resources been utilized properly?

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Requirements for Effective Evaluation

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Strategic Control

• It is an early warning system and differ from post-action controls that

evaluate only after the implementation has been completed.

• Note:
• Every strategy is based on certain assumptions about environmental
and organizational factors.
• Some of these factors are highly significant and any change in them
can affect the strategy to a large extent.

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Types of Strategic Controls

1. Premise Control
2. Implementation Control
3. Strategic Surveillance
4. Special Alert Control

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Premise Control

• It 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.

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News Article

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Implementation Control

• Implementation control is aimed at evaluating whether the plans,

programme and projects are actually guiding the organization
towards its predetermined objectives or not.

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• "Ayurvedic products market is growing at 16 per cent rate. The market
size is estimated to be about Rs. 16,000 crore which includes OTC
products, cosmetics and patented products.

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News Article

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Strategic Surveillance

• It is aimed at a more generalised and overarching control design to

monitor a broad range of events inside and outside the company that
are likely to threaten the course of a firm’s strategy.

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• “For a lot of people in the three-five (experience) bracket in
India, the value proposition in the past has been onsite
opportunities,” Rao told reporters at a press conference on
Friday. “Now, with visa restrictions that is not happening.
We have to create a new value proposition.”

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Special Alert Control

• It is based on a trigger mechanism for rapid response and immediate

reassessment of strategy in the light of sudden and unexpected events.
• It is can exercised through the formulation of contingency strategies
and assigning the responsibility of handling unforeseen events to
crisis management teams.

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Nestlé’s Response to the Maggi Noodles Crisis (2015)

• In 2015, Nestlé India faced a crisis when the Food Safety and Standards
Authority of India (FSSAI) banned its popular instant noodle brand, Maggi, due to
allegations that it contained excess levels of lead and monosodium glutamate
(MSG).
• The product was pulled off shelves nationwide, causing a significant loss in
revenue and brand trust.
• Special Alert Control: Nestlé India immediately activated its crisis management
team to handle the situation. The company’s special alert control approach
involved:
• Conducting extensive lab tests to refute the claims.
• Engaging with regulatory authorities to resolve the issue.
• Launching a public relations campaign to reassure customers about the safety of
the product.
• Strengthening quality control measures to avoid such incidents in the future

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Evaluation Process for Operational Control

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Process of Evaluation

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Evaluation Techniques for Operational Control

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BALANCED SCORECARD

At the highest level, the Balanced Scorecard is a

framework that helps organizations put strategy at the
center of the organization by Translating strategy into
operational objectives that drive both behavior and
performance.

The Balanced Scorecard is a tool that translates an

organization's mission and strategy into a comprehensive
set of performance measures that provides the framework
for a strategic measurement and management system.

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BSC-CREATES BALANCE

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ORGANIZATIONS OFTEN HAVE A GAP BETWEEN STRATEGY AND ACTION

Strategy Is a Step In a Continuum

MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan

STRATEGIC OUTCOMES

Satisfied Delighted Efficient and Effective Motivated & Prepared

SHAREHOLDERS CUSTOMERS PROCESSES WORKFORCE
THE BALANCED SCORECARD IS A BRIDGE TO CLOSE THAT GAP

Strategy Is a Step In a Continuum

MISSION
Why we exist
VALUES
What’s important to us
VISION
What we want to be
STRATEGY
Our game plan
BALANCED SCORECARD
Implementation & Focus
STRATEGIC INITIATIVES
What we need to do

STRATEGIC OUTCOMES

Satisfied Delighted Efficient and Effective Motivated & Prepared

SHAREHOLDERS CUSTOMERS PROCESSES WORKFORCE
MEASUREMENT SYSTEM

Translates mission, vision and strategy through objectives

and measures

Provides a framework to describe the key elements in the

achievement of the strategy

Measures four perspectives

- Customer Relations
- Financial
- Internal Service Process
- Learning, Innovation and Growth

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MODEL BALANCED SCORECARD

Each Balanced Scorecard should be customized to match organizational

structure, strategy, and situation.

Still, all Balanced Scorecards should contain these components:

Perspectives – Groupings of organization's high-level focus areas (should take

all key "stakeholders" into account).

Objectives – Critical top-level goals derived from current strategic plan (phrased
in short, verb-noun statements, e.g. "improve customer satisfaction.")

Measures – The best indication(s) that co is on track to achieve each objective

(should have no more than 1-3 per objective).

Initiatives – Time-specific projects (e.g. with defined start- and end-dates) that
are separate from, but aligned to, strategic objectives and measures.

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EXAMPLES OF MEASUREMENTS BY PERSPECTIVE

Stakeholder / Customer Internal Processes

• Current customer satisfaction level • Number of unscheduled maintenance calls
• Improvement in customer satisfaction • Production time lost because of maintenance
• Customer retention rate problems
• Frequency of customer contact by • Percentage of equipment maintained on
customer service schedule
• Average time to resolve a customer • Average number of monthly unscheduled
inquiry outages
• Number of customer complaints • Mean time between failures

Learning and Growth Investments

• Percentage employee absenteeism • % of facility assets fully funded for
• Hours of absenteeism upgrading
• Job posting response rate • % of IT infrastructure investments
• approved
Personnel turnover rate
• # of new hire positions authorized for
• Ratio of acceptances to offers
filling
• Time to fill vacancy
• % of required contracts awarded and in
place

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SOUTHWEST AIRLINES

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HOW SOUTHWEST AIRLINES DEVELOPED ITS BALANCED SCORECARD ANALYSIS

Strategic Theme: ‘operating efficiency’

The four perspectives

Financial: What will drive operating efficiency?
Answer: More customers on fewer planes.
Customer: How will we get more customers on fewer planes?
Answer: Attract targeted segments of customers who value price and on-time arrivals.
Internal: What must our internal focus be?
Answer: Fast aircraft turnaround time.
Learning: How will our people accomplish fast turnaround?
Answer: Educate and compensate the ground crew regarding how they contribute to the
firm’s success.

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CREDIT CARD COMPANY EXAMPLE

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STRATEGY MAPS HELP LINK ALL PERFORMANCE METRICS TO STRATEGY

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 EXTEND THE MAP INTO MEASUREMENTS, TARGETS AND INITIATIVES

Strategy Map
Customers

Detailed statement How success in The level of Key action

Faster Service Access of what is critical achieving the performance programs
to successfully strategy will be or rate of required to
achieving the measured and improvement achieve
strategy tracked needed objectives
Self Service
Internal Process

Applications

Objective
Measure Target Initiative
Lean Processes Description
Eliminate waste, Number of Reworks 2 per setup per Lean / Six
reworks, and other month each Sigma
Process and Value errors in our Outlet Office
Map Analysis processes
L&G

Web Enable
Technologies
Financials

Invest in IT
ALIGNMENT OF SCORECARD COMPONENTS

Make sure the components of scorecard fit together. Create a tight model for
driving execution of strategy.

Goal Objective Measurement Target Initiative

Achieve Reduce Cost per Outlet 5% - Year 1 Activity Based
Agency Operational Office, Cost per 10% - Year 2 Costing /
operational Service Costs by Region Management
15% - Year 3
efficiencies 50% over the next
with best 5 years
practices in
the private Reduce identified Waste Volume Waste stream Lean / Six
sector re-activities within Charts, Rework reductions of 5% Sigma
primary processes Tracking, Cycle each year,
by 80% over the Time End to Start Reworks cut in
next 3 years half for next 3
years, cycle time
cut by 75%
Digitalisation-Disruption Management

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New Age Business Models

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New age business models

1. Platform Business Model

•This model connects producers and consumers on a digital platform, facilitating interactions
and transactions. Examples include e-commerce platforms, social media networks, and ride-
sharing apps.
•Amazon, Uber, Airbnb, Facebook.
•Key Features:
• Two-sided marketplace.
• Network effects: The value of the platform increases as more users join.
• Revenue from transaction fees, advertising, or subscriptions.
2. Subscription-Based Model
• Businesses offer products or services for a recurring fee (monthly, quarterly, or yearly).
The focus is on building long-term customer relationships rather than one-time sales.
•Netflix, Spotify, Adobe.
•Key Features:
• Recurring revenue streams.
• High customer retention and lifetime value.
• Emphasis on customer experience and continuous engagement.

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New age business models

3. Freemium Model
• Companies offer a basic version of their product or service for free while charging for
premium features, advanced functionality, or added services.
• LinkedIn, Dropbox, Spotify, Zoom.
•Key Features:
• Large user base acquisition via the free tier.
• Monetization through a small percentage of premium users.
• Focus on converting free users to paying customers through feature upgrades.

4.Sharing Economy / Collaborative Consumption

• This model allows consumers to access goods or services without ownership, by sharing
or renting assets through digital platforms.
• Ola Cabs, Airbnb
•Key Features:
• Peer-to-peer (P2P) transactions.
• Resource optimization by leveraging underutilized assets.
• Trust-building mechanisms such as ratings and reviews.

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New age business models

5. On-Demand Economy
• Businesses provide products and services instantly or in a short time frame, tailored to
customer convenience. The model is powered by mobile apps and digital platforms.
• Zomato, Blinkit
•Key Features:
• Flexibility and convenience.
• Real-time fulfillment based on customer needs.
• Scalable operations leveraging a decentralized workforce.

6. Direct-to-Consumer (D2C)
• Brands sell their products directly to consumers, bypassing traditional retail channels.
This model allows companies to control their branding, marketing, and customer
interactions.
• Mama earth, Lenskart
•Key Features:
• Strong customer relationships and personalized marketing.
• Lower costs by cutting out intermediaries.
• Data-driven decisions based on direct feedback from customers.

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New age business models

7. Circular Economy Model

• The circular economy model is based on sustainability, where companies focus on reducing
waste by reusing, recycling, or refurbishing products. The aim is to create a closed-loop
system.

• Patagonia (recycled clothing), IKEA (recycling furniture)

•Key Features:
• Environmental sustainability.
• Extended product lifecycles.
• Reduced resource consumption through recycling or remanufacturing.
8. Marketplace Aggregator Model
•Aggregators bring together various providers or service providers in a single category
under one platform to offer standardized services or products.
• Zomato, Swiggy (food delivery), OYO (hotel bookings).
•Key Features:
• Focus on providing a seamless customer experience.
• Aggregator owns the customer relationship while individual providers fulfill services.
• Revenue from commissions or service fees.
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New age business models

9. Pay-as-you-go (Usage-Based) Model

•Customers are charged based on their actual usage of a product or service, rather than a flat
fee.
•Amazon Web Services (AWS), Google Cloud Platform, Microsoft Azure.
•Key Features:
• Flexible pricing aligned with customer consumption.
• Scalability for businesses as usage grows.
• Data analytics-driven to predict and optimize consumption.
10. Data-Driven Model
• Businesses collect and analyze customer data to provide personalized services or improve
operational efficiency. Data becomes the primary driver of business decisions.
•Google, Facebook
•Key Features:
• Focus on collecting, analyzing, and monetizing data.
• Revenue streams from advertising or data-based services.
• Enhanced personalization and targeting for better customer engagement.

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Responsible Production and Consumption

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