31362714 Strategic Operational Evaluation Control

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Strategic Evaluation & Control

By Shalu Pal



Strategic Evaluation & Control Process of determining the

effectiveness of a given strategy in

achieving the organizational objectives,and taking corrective actions whereverrequired



Importance of Strategic

Evaluation Coordinate the tasks performed by individual

managers The provide feedback Decide appraisal & reward Check on validity of strategic choice Enable congruence between decisions &

intended strategy Successful culmination of the strategic

management process Creating inputs for new strategic planning



Participants in Strategic

Evaluation Board of Directors

Chief executives

SBU or Profit centre heads

Financial controllers, companysecretaries, internal & external auditors

Middle level managers



Barriers in Evaluation Limits of controls

Difficulties in measurement

Resistance to evaluation

Short termism

Relying on efficiency VS effectiveness



Strategic Control Are the premises made during strategy

formulation proving to be correct?

Is the strategy guiding the organizationtowards its intended objectives?

Are the organization & the managers

doing things which ought to be done? Is there a need to change &

reformulate the strategy?



Types of Strategic Controls Premise control

Implementation control

Strategic surveillance

Special alert control



Premise Control Necessary to identify the key

assumptions (government policies,

nature of competition, breakthrough inR&D) & keep track of any change inthem so as to assess their impact on

strategy & its implementation Continually tests the assumptions

Responsibility: Corporate Planning Staff



Implementation Control To evaluate whether the plans, programmes

& projects, resulting from implementation of

the strategy, are actually guiding theorganization towards its predeterminedobjectives or not

May lead to Strategic rethinking

Can be put into practice through

- Identification & monitoring of strategicthrusts

- Milestone review



Strategic Surveillance Designed to monitor a broad range of events

inside & outside the company that are likely to

threaten the course of a firm’s strategy Is a more general form of control Information for this can be obtained through

formal yet simple strategic information scanning

systems like Knowledge managementsystems & organizational learning



Special Alert Control Based on a trigger mechanism for rapid

response & immediate reassessment of strategy in light of sudden & unexpected

events (eg: sudden fall of a govt., naturalcatastrophe, unfortunate industrial disasteretc.)

Hope for the best ~ Prepare for the worst

Can be handled by formulation of contingency strategies, & by assigning responsibility of unforeseenevents to crisis management teams



Operation Control

It takes the last phase of mgt functions.

In order to ensure if the org achieves the obj or not.

To measure the strategic actions.

To give feedback and action decision.

Recognizing the linkages that exist betweenstrategic planning and mgt control is vitalto org success.

John C. Cammilus, Mgt Consultant.



It is aimed at the allocation and use of organizational resources through an

evaluation of the performance of organizational units, such as divisions,SBUs and soon, to assess their

contribution to the achievement of organizational objectives.



Difference b/w Strategic and Operational Controlifference b/w Strategic and Operational Control

Basic question

Aim

Main concern

Focus

Time Horizon Exercise control

Main techniques

Are we moving inright direction?

Proactive,continuous questioning of thebasic direction of strategy

Steering the futuredirection of the org

External Environ

Long-term Exclu by top mgt,

may be thru lowerlevel support

Envir scanning, info

gathering,uestionin & review

Attribute Strategic control Operation

control How are we

performing?

Allocation & use of org resources

Action control

Internal

organization Short-term

Mainly by executiveor middle mgt onthe direction of top

Budgets, Schedulesand MBO



Process of evaluation for

operational control



Setting of Standards How to set these standards?Key managerial tasks can be analyzed to find out

key areas of performance. Standards can be

set in these key areas. What standards to set?The special requirements for the performance of

the key tasks help to determine the type of

standards to set. How do we express these standards?Performance indicators that best express the

special requirements could then be decided upon

to be used for evaluation.



Measurement of Performance

Evaluation process operates at the performancelevel as action takes place. Standards of performance act as benchmarks against

which actual performance is measured.Can be done through: accounting, reporting,

communication systems etc.Problems faced during measurement:

Difficulties in measurement Timing of measurement Periodicity of measurement



Analyzing Variances

Comparison of actual performance (AP) with thestandards (S) leads to Analyzing the variances.

AP = S: Ideal but not realistic. Specify a range of tolerance limits.

AP > S: Welcome situation. Also should beconsidered unusual, & a check needs to bemade to test the validity of standards & theefficacy of the measurement system.

AP < S: Alarming. Need to pin point areas whereperformance is below standard & go into thecauses of the deviation.



Taking Corrective Action

3 courses of corrective action: Checking of Performance: If the evaluation process shows

that performance is consistently lower than expected, in-

depth analysis & diagnosis of the factors that might beresponsible for bad performance. Checking of Standards: is less frequent, but done when it

is found there is nothing wrong with the performance.May result in lowering or elevation of standards as

required. Reformulation of Strategy: Most radical & infrequent.

Strategic control will lead to conclusion that strategiesneed to reformulated. Takes the organization right to the

beginning of the Strategic management process.



References

Strategic Management by Arthur A.Thompson & A.J. Strickland

Business Policy by Azhar Kazmi

Business Policy: Strategic Management byL.M. Prasad

Management by James A. F. Stoner et al

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31362714 Strategic Operational Evaluation Control