STRATEGICEVALUATIONANDCONTROL

TYPESOFCONTROL,STRATEGIC
EVALUATIONPROCESS,IMPORTANCE
bbamantra | September19,2015 | Articles | NoComments

STRATEGICEVALUATIONANDCONTROL

Strategic evaluation and control is the process of

determining the effectiveness of a given strategy in
achieving the organizational objectives and taking
correctiveactionswheneverrequired.
Control can be exercised through formulation of
contingencystrategiesandacrisismanagementteam.
Therecanbethefollowingtypesofcontrol
(i) Operational control It is aimed at allocation and use of organizational
resources through evaluation of performance of organizational units, divisions,
SBU`stoassesstheircontributioninachievingorganizationalobjectives.
(ii) Strategic control It takes into account the changing assumptions that
determineastrategy,continuallyevaluatethestrategyasitisbeingimplemented
andtakethenecessarystepstoadjustthestrategytothenewrequirements.
Thefourbasictypeofstrategiccontrolare
1. Premise control It identifies the key assumptions and keeps track of any
changeinthemtoassessitsimpactonstrategyandimplementation.Thegoalis
to find if the assumptions are still valid or not .It is generally handled by the
corporateplanningstaffconsideringtheenvironmentalandorganizationalfactors.
2. Implementation control It includes evaluating plans, programs, projects, to
see if they guide the organization to achieve predetermined organizational

objectives or not. It leads to strategic rethinking .It consists of identification and

monitoringofstrategicthrusts.
3.StrategicsurveillanceItaimsatgeneralizedcontrol.Itisdesignedtomonitor
a broad range of events inside and outside the organization that are likely to
threaten the course of the firm. Organizational learning and knowledge
managementsystemscapturetheinformationforstrategicsurveillance.
4. Special Alert control It is a rapid response or immediate reassessment of
strategy in the light of sudden and unexpected events. It can be exercised
throughformulationofcontingencystrategiesandacrisismanagementteam.

STRATEGICEVALUATIONPROCESS
(A)SettingstandardsofperformanceItmustfocusonquestionslike:
Whatstandardsshouldbeset?
Howshouldthestandardsbeset?
Inwhattermsshouldthesestandardsbeexpressed?
The firm must identify the areas of operational efficiency in terms of people,
processes, productivity and pace. Standards set must be related to key
managementtasks.Thespecialrequirementforperformanceofthesetaskmust
bestudied.Itcanbeexpressesintermsofperformanceindicators.
The criteria for setting standards may be qualitative or quantitative. Therefore
standardscanbesetkeepinginmindpastachievements,compareperformance
withindustryaverageormajorcompetitors.Factorssuchascapabilitiesofafirm,
core competencies, risk bearing ability, strategic clarity and flexibility and
workabilitymustalsobeconsidered.
(B) Measurement of performance Standards of performance act as a
benchmarkinevaluatingtheactualperformance.Operationallyitisdonethrough
accounting,reportingandcommunicationsystem.Thekeyareaswhichmustbe
kept in mind are difficulty in measurement, timing of measurement (critical
points)andperiodicityinmeasurement(taskschedule).

(C)AnalyzingvariancesThetwomaintasksarenotingdeviationsandfinding

thecauseofdeviations.

Whenactualperformanceisequaltobudgetedperformancetolerancelimits
mustbeset.
When actual performance is greater than budgeted performance one must
checkthevalidityofstandardsandefficiencyofmanagement.
Whenactualperformanceislessthanbudgetedperformancewemustpinpoint
theareaswhereperformanceislowandtakecorrectiveaction,
The cause of deviations may be External or internal, Random or expected,
Temporaryorpermanent.Thetwomainquestionstofocusuponare:
Arethestrategiesstillvalid?
Does the organization have the capacity to respond to the changes
needed?
(D)TakingcorrectiveactionsItconsistsofthefollowing
CheckingofperformanceItincludesindepthanalysisanddiagnosisofthe
factorsthatmightberesponsibleforbadperformance.
Checking of standards It results in lowering or elevation of standards
accordingtotheconditions.
Reformulatestrategies,plans,objectivesGivingafreshstarttothestrategic
managementprocess

IMPORTANCE
CONTROL

OF

STRATEGIC

EVALUATION

Thereisaneedforfeedback,appraisalandreward
tocheckonthevalidityofstrategicchoice
Congruencebetweendecisionsandintendedstrategy
Creatinginputsfornewstrategicplanning

AND