Strategic Evaluation and Strategic Evaluation and ControlControl

ByByYashpal DeswalYashpal DeswalAyandev ShahAyandev Shah

Nature of Strategic EvaluationNature of Strategic Evaluation

Evaluate effectiveness of organisational Evaluate effectiveness of organisational strategy in achieving organisational strategy in achieving organisational objectivesobjectives

Perform the task of keeping organisation Perform the task of keeping organisation on trackon track

Importance of Strategic EvaluationImportance of Strategic Evaluation

The need for feedback The need for feedback

Appraisal and reward Appraisal and reward

Check on the validity of strategic choice Check on the validity of strategic choice

Congruence between decisions and intended Congruence between decisions and intended strategy strategy

Successful culmination of the strategic Successful culmination of the strategic management process management process

Creating inputs for new strategic planning Creating inputs for new strategic planning

Ability to coordinate the tasks performed Ability to coordinate the tasks performed

Barriers in EvaluationBarriers in Evaluation

Limits of Controls Limits of Controls

Difficulties in measurement Difficulties in measurement

Resistance to evaluation Resistance to evaluation

Short-termism Short-termism

Relying on efficiency versus effectiveness Relying on efficiency versus effectiveness

Requirements of Effective EvaluationRequirements of Effective Evaluation

Control should involve only the minimum amount Control should involve only the minimum amount of information of information

Control should monitor only managerial activities Control should monitor only managerial activities and resultsand results

Control should be timely Control should be timely

Long term and short term control should be usedLong term and short term control should be used

Control should aim at pinpointing exceptions Control should aim at pinpointing exceptions

Rewards for meeting or exceeding standards Rewards for meeting or exceeding standards should be emphasized should be emphasized

Strategic ControlStrategic Control

Four Types of Strategic Controls Four Types of Strategic Controls

Premise ControlPremise Control

Implementation ControlImplementation Control

Strategic SurveillanceStrategic Surveillance

Special alert controlSpecial alert control

Premise ControlPremise Control

Premises control is necessary to identify the Premises control is necessary to identify the key assumptions and its implementation. key assumptions and its implementation. Premises control serves the purpose of Premises control serves the purpose of continually testing the assumptions to find out continually testing the assumptions to find out whether they are still valid or not. This whether they are still valid or not. This enables the strategists to take corrective enables the strategists to take corrective action at the right time rather than continuing action at the right time rather than continuing with a strategy which is based on erroneous with a strategy which is based on erroneous assumptions.assumptions.

Implementation ControlImplementation Control

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

Strategic SurveillanceStrategic Surveillance

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

Special Alert ControlSpecial Alert Control

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

Operational ControlOperational Control

Aimed at the allocation and use of Aimed at the allocation and use of organisational resources organisational resources

Concerned with action or performance Concerned with action or performance

How do Strategic Control and How do Strategic Control and Operational Control DifferOperational Control Differ

Attribute Attribute Strategic ControlStrategic Control Operational Control Operational Control

1. Basic question1. Basic question Are we moving in the Are we moving in the right direction? right direction?

How are we performing? How are we performing?

2. Aim2. Aim Proactive, continuous Proactive, continuous questioning of the basic questioning of the basic direction of strategy direction of strategy

Allocation and use of Allocation and use of organisational resources organisational resources

3. Main Concern3. Main Concern Steering the Steering the organization’s future organization’s future

directiondirection

Action controlAction control

4. Focus4. Focus External environmentExternal environment Internal organization Internal organization

5. Time Horizon5. Time Horizon Long- termLong- termShort- termShort- term

6. Main Techniques6. Main Techniques Environmental scanning, Environmental scanning, information gathering, information gathering, questioning and review questioning and review

Budgets, schedules, and Budgets, schedules, and MBO MBO

Process of EvaluationProcess of Evaluation

Setting standards of performanceSetting standards of performance

Measurement of performanceMeasurement of performance

Analyzing variancesAnalyzing variances

Taking corrective actionTaking corrective action

Setting of StandardsSetting of Standards

Quantitative Criteria Quantitative Criteria It has performed as compared to its past It has performed as compared to its past

achievements achievements Its performance with the industry average or Its performance with the industry average or

that of major competitors that of major competitors

Qualitative CriteriaQualitative Criteria There has to be a special set of qualitative criteria for a There has to be a special set of qualitative criteria for a

subjective assessment of the factors like capabilities, subjective assessment of the factors like capabilities, core competencies, risk- bearing capacity, strategic core competencies, risk- bearing capacity, strategic clarity, flexibility, and workability clarity, flexibility, and workability

Measurement of PerformanceMeasurement of Performance

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

Analyzing VariancesAnalyzing Variances

The measurement of actual performance and its The measurement of actual performance and its comparison with standard or budgeted comparison with standard or budgeted performance leads to an analysis of variances. performance leads to an analysis of variances. Broadly, the following three situations may arise:Broadly, the following three situations may arise:The actual performance matches the budgeted The actual performance matches the budgeted performanceperformanceThe actual performance deviates positively over The actual performance deviates positively over the budget performancethe budget performanceThe actual performance deviates negatively from The actual performance deviates negatively from the budgeted the budgeted

Taking Corrective ActionsTaking Corrective Actions

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

Techniques of Strategic Techniques of Strategic Evaluation and ControlEvaluation and Control

Evaluation Techniques for Strategic Control Evaluation Techniques for Strategic Control

Evaluation Techniques for Operational ControlEvaluation Techniques for Operational Control

Evaluation Techniques for Strategic Evaluation Techniques for Strategic ControlControl

Techniques for strategic control could be Techniques for strategic control could be classified into two groups on the basis of the classified into two groups on the basis of the type of environment faced by the organisation. type of environment faced by the organisation. The organisation that operate in a relative stable The organisation that operate in a relative stable environment may use strategic momentum environment may use strategic momentum control, while those which face a relatively control, while those which face a relatively turbulent environment may find strategic leap turbulent environment may find strategic leap control more appropriate.control more appropriate.

Evaluation Techniques for Evaluation Techniques for Operational ControlOperational Control

Operational control is aimed at the Operational control is aimed at the allocation and use of organisational allocation and use of organisational resources resources

The evaluation techniques are classified The evaluation techniques are classified into three parts: into three parts:

Internal analysis Internal analysis

Comparative analysis Comparative analysis

Comprehensive analysis. Comprehensive analysis.