STRATEGIC EVALUATION & CONTROL

Shruti Das
03480003913
Roshan Jha
08780003913
Navita Aggarwal 09580003913
Kratika Agarwal 09880003913

INTRODUCTION

Continued..
Evaluation is vital to the organizations well-being
because:
It compares performance with desired results and
gives feedback for management to evaluate and take
corrective actions.
It alerts management to potential/actual problems
in a timely fashion.

Strategy evaluation is often an appraisal

of performance. Strategists ask questions like

Have the firms assets increased?

Has there been an increase in profitability?
Has there been an increase in sales?
Has there been an increase in productivity?
Have profit margins, ROI, and EPS ratios increased?

What is strategy evaluation?

Glueck and Jauch Evaluation of strategy is that

phase of the strategic management process in which the top
managers determine whether their strategic choice as
implemented is meeting the objectives of the enterprise.
Two aspects in this phase
Evaluation which emphasizes measurement of results of
a strategic action and
Control which emphasizes on taking necessary actions in
the light of gap that exists between intended results and
actual results in the strategic action.

Nature of strategic management & control

Nature of the strategic evaluation and control process is to
test the effectiveness of strategy.
During the two proceedings phases of the strategic
management process, the strategists formulate the strategy to
achieve a set of objectives and then implement the
strategy.
There has to be a way of finding out whether the strategy
being implemented will guide the organisation towards its
intended objectives.
Strategic evaluation and control, therefore, performs the
crucial task of keeping the organisation on the right
track.
In the absence of such a mechanism, there would be no
means for strategists to find out whether or not the strategy
is producing the desired effect.

Importance of Strategic Evaluation

Need for feedback, appraisal and reward

Check on the validity of strategic choices
Congruence between decisions and intended strategy
Successful culmination of strategic management process
Creating inputs for new strategic planning

STRATEGIC CONTROL
It takes 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 requirement.
It is early warning systems and differ from post action
controls which evaluate only after the implementation
has been completed.

Types of strategic controls

1.
2.
3.
4.

Premise Control
Implementation control
Strategic surveillance
Special alert control

Premise Control
Premise control 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.
Premise control serves the purpose of continually testing
the assumptions to find out whether they are still valid or
not. It helps in the strategists to take corrective action at
the right time.
Premise control responsibility can be assigned to
corporate planning staff.

Implementation control
The Implementation of a strategy results in a series of
plans, programmes, and projects.
Resources allocation plays important role.
Implementation control may leads into strategic
rethinking.
Implementation control can be implemented by
identifying and monitoring strategic requirement with
respect to market success. It also helps in determining
whether to go for diversification or not.

Strategic surveillance
It is generalized aimed at designed to monitor a board
range of events inside and outside the company that are
likely to threaten the course of firms strategy.
It can be done through a broad based, general
monitoring on the basis of selected information sources
to uncover that are likely to affect the strategy of an
organization.

Special control
It is based on trigger mechanism for rapid response and
immediate reassessment of strategy in the light of
sudden and unexpected events.
Crises and critical situations that occur unexpectedly
and threaten the course of a strategy.

Techniques of Strategic Control

Classified into two groups:
A. Strategic Momentum Control(For Stable environment):
Aimed at assuring that the assumptions on the basis of which strategies
were formulated are still valid and what needs to be done in order to
allow the organization to maintain its existing strategic momentum.
Three techniques used could be:
I. Responsibility control centres
II. The underlying success factors
III. Generic strategies

B. Strategic leap Control(Turbulent environment):

Defining new strategic requirements and cope with emerging
environmental realities when the environment is relatively unstable.
Four techniques of evaluation used for exercising strategic leap control:
I. Strategic issue management
II. Strategic field analysis
III. Systems modelling
IV. Scenarios.

Techniques for
strategic
control
Strategic
Momentum
Control

Responsibility
control centres

Generic
Strategies

Strategic
leap Control

The
underlying
success factors

Strategic issue
management

Strategic field
analysis

Systems
modelling

Scenarios

OPERATIONAL CONTROL

It is aimed at allocation and use of

organizational resources through evaluation
of the performance of organisational units
such as divisions, SBUs etc. to assess their
contribution to the achievement of
organisational objectives.

Process of Evaluation
It basically deals with four steps:
I. Setting standards of performance
II. Measurement of performance
III. Analysing variances
IV. Taking corrective action.

Strategy/Plan
/Objectives

Setting
standards of
performance

Actual
Performance

Management
of
performance

Analysing
Variance

I. Strategy/ Plan/ Objectives:

.Results in a set of performance standards which form the
basis for evaluation through measurement of performance.
II. Setting Of Standards:
.Three questions while dealing with standard setting:
-What Standards should be set?
-How should these standards be set?
-in what terms should these standards be expressed?
.Three pronged basic approaches:
-Key managerial tasks,
-special requirements for the performance of the key tasks,
-performance indicators:
*Quantitative criteria
*Qualitative criteria

III. Measurement of performance:

Actual performance is depicted and compared with the
standards which act as the benchmark.
Operationally, measuring is done through the accounting,
reporting and communication systems.
The other important aspects of measurement relate to
.Difficulties in measurement.
.Timing of measurement.
.Periodicity in measurement

IV. Analysing Variances:

Comparison of actual performance with the standards set will
lead to an analysis of variances. Three situations may arise:
.The actual performance matches the budgeted
performance.
.The actual performance is better.
.The actual performance is below.
V. Taking Corrective Action:
.Checking of performance
.Checking of standards
.Reformulating strategies, plans and objectives

Techniques of Operational Control

Internal
Analysis

Comparative
Analysis

Comprehens
ive

VRIO
framework
Value Chain
analysis
Quantitativ
e analysis
Qualitative
analysis

Historical
analysis
Industry
norm
Benchmark
ing

Key factor
rating
Business
intelligence
systems
The
balanced
scorecard

Internal analysis

1. VRIO framework- the basic idea is that sustainable

strategic advantage results through the use of capabilities
that are valuable, rare, inimitable and organised for usage.
2. Value chain analysis- focuses on a set of inter-related
activities performed in a sequence, for producing and
marketing a product or service.
3. Quantitative analysis- takes up the financial parameters &
non-financial quantitative parameters such as physical units
or time in order to assess performance.
4. Qualitative analysis- supplements the quantitative analysis
by including those aspects which are not feasible to measure
on the basis of figures & numbers.

Comparative analysis

1. Historical analysis- is a frequently used method for

comparing performance of a firm over a given period of time.
Such an analysis can offer the firm a better perception of its
performance as compared to an absolute assessment.
2. Industry norm- is a method for analysing performance that
brings with it the advantage of making a firm competitive in
comparison to its rivals in the same industry.
3. Benchmarking- is a comparative method where a firm finds
the best practices in an area & then attempts to bring its own
performance in that area in line with the best practice.

Comprehensive analysis
1. Key factor rating- is a method that takes into account the key
factors in several areas and then sets out to evaluate
performance on the basis of these. This is quite a comprehensive
method as it takes a holistic view of the performance areas in an
organisation.
2. Balanced scorecard- method is based on the identification of
four key performance measures of customer perspective,
internal perspective, innovation and learning perspective and
the financial perspective.

Strategic control & Operational control

Attributes

Strategic control

Operational Control

1. Aim

Proactive, continuous
questioning of the basic
direction of strategy

Allocation and use of

organisational
resources

2. Main concern Steering the organisations

future direction

Action control

3. Focus

External environment

Internal organisation

4. Time horizon

Long-term

Short-term

5. Exercise of
control

Exclusively by top
management, may be through
lower-level support

Mainly by executive or
middle-level
management on the
direction of the top
management

6. Main
techniques

Environmental scanning,
information gathering,
questioning and review

Budgets, schedules
and MBO

7. Basic
question

Are we moving in the right

direction?

How are we
performing?