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Strategic & Operational Evaluation & Control:

Strategic & Operational Evaluation & Control

Strategic Evaluation & Control:

Strategic Evaluation & Control Process of determining the effectiveness of a given strategy in achieving the organizational objectives, and taking corrective actions wherever required

Importance of Strategic Evaluation:

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:

Participants in Strategic Evaluation Board of Directors Chief executives SBU or Profit centre heads Financial controllers, company secretaries, internal & external auditors Middle level managers

Barriers in Evaluation:

Barriers in Evaluation Limits of controls Difficulties in measurement Resistance to evaluation Short termism Relying on efficiency VS effectiveness

Strategic Control:

Strategic Control Are the premises made during strategy formulation proving to be correct? Is the strategy guiding the organization towards 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:

Types of Strategic Controls Premise control Implementation control Strategic surveillance Special alert control

Premise Control:

Premise Control Necessary to identify the key assumptions (government policies, nature of competition, breakthrough in R&D) & keep track of any change in them so as to assess their impact on strategy & its implementation Continually tests the assumptions Responsibility: Corporate Planning Staff

Implementation Control:

Implementation Control To evaluate whether the plans, programmes & projects, resulting from implementation of the strategy, are actually guiding the organization towards its predetermined objectives or not May lead to Strategic rethinking Can be put into practice through - Identification & monitoring of strategic thrusts - Milestone review

Strategic Surveillance:

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 management systems & organizational learning

Special Alert Control:

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., natural catastrophe, unfortunate industrial disaster etc.) Hope for the best ~ Prepare for the worst Can be handled by formulation of contingency strategies , & by assigning responsibility of unforeseen events to crisis management teams

Operation Control:

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 between strategic planning and mgt control is vital to org success. John C. Cammilus, Mgt Consultant .

PowerPoint Presentation:

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 Control:

Difference b/w Strategic and Operational Control Basic question Aim Main concern Focus Time Horizon Exercise control Main techniques Are we moving in right direction? Proactive,continuous questioning of the basic direction of strategy Steering the future direction of the org External Environ Long-term Exclu by top mgt, may be thru lower level support Envir scanning, info gathering, questioning& review Attribute Strategic control Operation control How are we performing? Allocation & use of org resources Action control Internal organization Short-term Mainly by executive or middle mgt on the direction of top Budgets, Schedules and MBO

Process of evaluation for operational control:

Process of evaluation for operational control

Setting of Standards:

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:

Measurement of Performance Evaluation process operates at the performance level 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:

Analyzing Variances Comparison of actual performance (AP) with the standards (S) leads to Analyzing the variances. AP = S: Ideal but not realistic. Specify a range of tolerance limits. AP > S: Welcome situation. Also should be considered unusual, & a check needs to be made to test the validity of standards & the efficacy of the measurement system. AP < S: Alarming. Need to pin point areas where performance is below standard & go into the causes of the deviation.

Taking Corrective Action:

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 be responsible 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 strategies need 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 by L.M. Prasad Management by James A. F. Stoner et al

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