Strategic Implementation & Control

8/13/2019 Strategic Implementation & Control

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Introduction

The final stage in strategic management is strategyevaluation and control. All strategies are subject tofuture modification because internal and externalfactors are constantly changing.

In the strategy evaluation and control processmanagers determine whether the chosen strategyis achieving the organization's objectives.

The fundamental strategy evaluation and control

activities are: reviewing internal and externalfactors that are the bases for current strategies,measuring performance, and taking correctiveactions.


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Definition

Strategic evaluation and control could be

defined as the process of determining the

effectiveness of a given strategy in achieving

the organizational objectives and taking

corrective action wherever required.


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Nature of Strategic Evaluation

Nature of the strategic evaluation and control process is totest the effectiveness of strategy.

During the two proceedings phases of the strategicmanagement process, the strategists formulate the strategy toachieve a set of objectives and then implement the strategy.

There has to be a way of finding out whether the strategybeing implemented will guide the organisation towards itsintended objectives.

Strategic evaluation and control, therefore, performs thecrucial task of keeping the organisation on the right track.

In the absence of such a mechanism, there would be nomeans for strategists to find out whether or not the strategy isproducing the desired effect.


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Strategic Evaluation and Control

Strategic evaluation operates at two levels:

Strategic level - wherein we are concerned more

with the consistency of strategy with the

environment.

Operational levelwherein the effort is directed

at assessing how well the organisation is pursuing

a given strategy.


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Evaluation and Control in Strategic

Management:

Evaluation & control information consists of performance data

and activity reports (gather in step3), operational Managers

must know about any undesired performance caused by the

inappropriate use of SMP in order to correct the employee

activity.

Top management need not be involved. It, however, the

processes themselves cause the undesired performance, both

top managers and operational managers must know about it

so that they can develop new implementation programme orprocedures.


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Evaluation and Control information must be

relevant to what is being monitored.

Evaluation and Control are not easy activities;

one of the obstacles to effective control is the

difficulty in developing appropriate measures

of important activities and outputs .

This process provides the feed back necessary

for management to evaluate the results and

take corrective action, as needed.


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The process of strategic evaluation &

Control 1. Determine what to measure:

Top managers and operational managers must specify

Implementation process and results to be monitored and

evaluated. The processes and results must be measurable in

a reasonably objective and consistent manner. The focus

should be on the most significant elements in a process

the ones that account for the highest proportion of

exposure or the greatest no. of problems.


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2. Establish standards of Performance:

Standards used to measure performance are detailed

expressions of strategic objectives. They are measures ofacceptable performance results. Each standard can be usually

includes a tolerance range, which defines any acceptable

deviations. Standards can be set not only for final output, but

also for intermediate stages of production output.


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3. Measure actual performanceMeasurements must be made at predetermined times.

4. Compare actual performance with the standard

If the actual performance results are within the desired

tolerance range, the measurement process stops here.


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5. Take corrective action:

If the actual results fall outside the desired tolerance

range, action must be taken to correct the deviation.

The action must not only correct the deviation but also

prevent its recurrence. The following issues must be

resolved:

1. Is the deviation only a chance fluctuation?

2. Are the processes being carried out in correctly?

3. Are the processes appropriate for achieving the

desired standards?


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Process diagram

Yes

Determinewhat to

measure.

Measure

performance.

Takecorrective

action.

STOP

NoDoes

perform-ance match

stand-

ards?

Establishpredetermined

standards.

1 2 3 4 5


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Objectives of Strategy Evaluation and

Control

Organizations are most vulnerable when they are

at the peak of their success.

Erroneous strategic decisions can inflict severe

penalties and can be exceedingly difficult, if notimpossible, to reverse.

Strategy evaluation is vital to an organizations

well-being; timely evaluations can alertmanagement to problems or potential problems

before a situation becomes critical.


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Importance of Strategic Evaluation

During the course of strategy implementation

managers are required to take scores of decisions.

Strategic evaluation can help to assess whether the

decisions match the intended strategy requirements. In the absence of such evaluation, managers would not

know explicitly how to exercise such discretion.


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Techniques of Strategic Evaluation

1)Gap Analysis

The gap analysis is one strategic evaluation technique used to

measure the gap between the organizationscurrent position and its

desired position. The gap analysis is used to evaluate a variety of aspects of business,

from profit and production to marketing, research and development

and management information systems.

Typically, a variety of financial data is analyzed and compared toother businesses within the same industry to evaluate the gap

between the organization and its strongest competitors.


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2) SWOT Analysis

The SWOT analysis is another common strategic evaluationtechnique used as a part of the strategic management process. The

SWOT analysis evaluates the organizations strengths, weaknesses,

opportunities and threats.

Strengths and weaknesses are internal factors, while opportunitiesand threats are external factors.

This identification is essential in determining how best to focus

resources to take advantage of strengths and opportunities and

combat weaknesses and threats.


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3) PEST Analysis

Another common strategic evaluation technique is the PEST

analysis, which identifies the political, economic, social andtechnological factors that may impact the organizationsability to

achieve its objectives.

Political factors might include such aspects as impending legislation

regarding wages and benefits, financial regulations, etc Economic factors include all shifts in the economy, while social

factors may include demographics and changing attitudes.

Technological pressures are also inevitable as technology becomes

more advanced each day. These are all external factors, which are outside of the

organizations control but which must be considered throughout

the decision making process.


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4) Benchmarking

Benchmarking is a strategic evaluation technique thatsoften usedto evaluate how close the organization has come to its final

objectives, as well as how far it has left to go.

Organizations may benchmark themselves against other

organizations within the same industry, or they may benchmarkthemselves against their own prior situation.

A variety of performance measures, as well as policies and

procedures, may be evaluated regularly to identify where

adjustments are necessary to maintain the sustainable competitiveadvantage.


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Participants in Strategic Evaluation

Shareholders

Board of Directors

Chief executives

Profit-centre heads

Financial controllers Company secretaries

External and InternalAuditors

Audit and Executive Committees

Corporate Planning Staff or Department Middle-level managers


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Strategic Audit

Strategy audit is one of the methods forevaluating the performance of the chosenstrategy. It provides a checklist of questions, by

area or issue, which enables a systematic analysisof various organizational functions or activities.Audit is an extremely useful diagnostic tool topinpoint the problems areas and highlights

organizational strengths and weaknesses forcorporate planning. However, the main objectiveof strategic audit is to develop benchmarks.


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The process involves the following steps: -

Identification of functions or process, usuallyan activity which can give a business unit

competitive advantage, that has to be

audited.

Determination of measures of performance of

the function or process.


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CONTROLLING

Controls can be established to focus either on

actual performance results (OUT PUT), on the

activities that generate the performance

(BEHAVIOR) or resources that are used inperformance (INPUT).


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Types of controlling The Primary Types of Organizational Control There are

three primary types of organizational control: strategic

control, management control, and operational control. Strategic control= the process of evaluating strategy, is

practiced both after the strategy is formulated and after itis implemented.

Management control= focuses on the accomplishment of

the objectives of the various sub strategies comprising themaster strategy and the accomplishment of the objectivesof the intermediate plans (for example, "are quality controlobjectives being met?").

Operational control= is concerned individual and group

performance as compared with the individual and grouprole prescriptions required by organizational plans (forexample, "are individual sales quotes being met?").


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Guidelines for Proper Control

Measuring performance is a crucial part of Evaluationand Control. The lack of quantifiable objectives orperformance standards and the inability of theinformation system to provide timely, valid information

are two obvious control problems. In designing a control system, top management should

remember that controls should follow strategy. Unlesscontrols ensure the use of the proper strategy toachieve objectives, dysfunctional side effects may

completely undermine the implementation of theobjectives. The following guidelines are very importantto develop the control system in any organization:


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1. Controls should involve only the minimum amountof information needed to give a reliable picture ofevents. Too many controls create confusion. Focus on

the strategic factors by following the 80/20 rule:Monitor those 20% of the factors that determine 80%of the results.

2. Controls should monitor only meaningful activities

and result. 3. Controls should be timely.

4. Controls should be long term and short term 5.Controls should pinpoint exceptions.

6. Controls should be used to reward meeting orexceeding standards rather than to punish failure tomeet standards

Strategic Implementation & Control

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