Strategic Evaluation & Control

meaning

Process of determining the effectiveness of a given strategy in

achieving

the

organizational

objectives,

and

taking

corrective

actions wherever required.

Strategy evaluation is the way of finding out whether the strategy
implemented will guide the organization towards its intended objectives
and performs a crucial task of keeping the organization on the right track.

Through

the

process

of

strategic

evaluation

and

control

the

strategists attempt to answer set of the questions?

Are

the premises

made

during

the

strategy

formulation

providing to be correct?

Is the strategy guiding the organization towards its intended

objectives?

Are the organization and the mangers doing the things which
ought to be done ?

Is there a need of change and reformulate the strategy?

How the organization performing?

Are the time schedules being adhered to?

Are the resources being properly utilized?

What needs to be ensured that the resources are properly

utilized?

Importance of Strategic Evaluation

1. Coordinate the tasks performed by individual managers

2. Provide feedback
3. Decide appraisal & reward
4. Check on validity of strategic choice
5. Creating inputs for new strategic planning.

Four Criteria (Richard Rummelt): He explains four criteria for strategy valuation. These four
criteria are
as follow
Consistency
Consonance
Feasibility
Advantage
Consistency
A strategy should not present inconsistent goals and policies.

If managerial problems continue despite changes in personnel and are issue based, then
strategies may be inconsistent.

If success for one department means failure for another department, then strategies may
be inconsistent.

If policy problems/issues continue to be brought to the top for resolution, then strategies
may be inconsistent.
Consonance

Strategists need to examine sets of trends as well as individual trends in evaluating strategies.

Strategy must represent an adaptive response to the external environment and critical
changes occurring within it.

Most trends are the result of interactions among other trends.

Difficult in matching key internal and external factors in formulation of strategy.

Feasibility

Strategy must neither overtax available resources nor create unsolvable sub problems.
2

Can the strategy be attempted within the physical, human and financial resources of the
enterprise?

Limitation on strategic choice imposed by individual and organizational capabilities must

be considered.

Important to examine whether in the past the organization has demonstrated the
capabilities, abilities, competencies, skills, and talents to carry out strategy.

Advantage
Creation or maintenance of competitive advantage
Superiority in resources, skills, or position.

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
Limits of controls: Control mechanism presents the dilemma of too

much versus too little.

Difficulties in measurement:mainly relate to the reliability and

validity of the measurement techniques used for the evaluation ,
lack of quantifiable objectives or performance standards and the
inability of the information system to provide timely and valid
information.

Resistance to evaluation: likely to be resisted by the managers .

3

Short termism: managers often tend to rely on short term

implications of activities and try to measure the immediate results

.often the long term impact of performance on strategy and the
extended effect of the strategy on performance is ignored.

Relying on efficiency VS effectiveness:Efficiency is doing the things

rightly and effectiveness is doing the right things.

Barriers in Strategic Evaluation

Motivational Problems

The first problem in strategic evaluation is the motivation of managers (strategists) to

evaluate whether they have chosen correct strategy after its results are available. Often
two problem; are involved in motivation to evaluate the strategy: psychological problem
and lack of direct relationship between performance and rewards.

Operational Problems

Even if managers agree to evaluate the strategy, the problem of strategic evaluation is not
over, though a beginning has been made. This is so because strategic evaluation is a
nebulous process; many factors are not as clear as the managers would like these to be.
These factors are in the areas of determination of evaluative criteria, performance
measurement, and taking suitable corrective actions. All these are involved in strategic
evaluation and control. However, nebulousness nature is not unique to strategic
evaluation and control only but it is unique to the entire strategic management process.

Strategic Control

It is the process by which managers monitor the ongoing activities of

an organization and its members to evaluate whether activities are
being performed efficiently and effectively and to take corrective
action to improve performance if they are not -Sam Walton

Types of Strategic Control

Strategic control involves tracking a strategy as it's being implemented. It's also concerned with detecting
problems or changes in the strategy and making necessary adjustments. As a manager, you tend to ask
yourself questions, such as whether the company is moving in the right direction, or whether your
assumptions about major trends and changes in the company's environment are correct. Such questions
necessitate the establishment of strategic controls.

Premise Control
Every strategy is based on certain planning premises or predictions. Premise control is
designed to check methodically and constantly whether the premises on which a strategy is
grounded on are still valid. If you discover that an important premise is no longer valid, the
strategy may have to be changed. The sooner you recognize and reject an invalid premise,
the better. This is because the strategy can be adjusted to reflect the reality.

Special Alert Control

A special alert control is the rigorous and rapid reassessment of an organization's strategy
because of the occurrence of an immediate, unforeseen event. An example of such event is
the acquisition of your competitor by an outsider. Such an event will trigger an immediate
and intense reassessment of the firm's strategy. Form crisis teams to handle your company's
initial response to the unforeseen events.

Implementation Control
Implementing a strategy takes place as a series of steps, activities, investments and acts
that occur over a lengthy period. As a manager, you'll mobilize resources, carry out special
projects and employ or reassign staff. Implementation control is the type of strategic control
that must be carried out as events unfold. There are two types of implementation controls:
strategic thrusts or projects, and milestone reviews. Strategic thrusts provide you with
information that helps you determine whether the overall strategy is shaping up as planned.
With milestone reviews, you monitor the progress of the strategy at various intervals or
milestones.

Strategic Surveillance
Strategic surveillance is designed to observe a wide range of events within and outside your
organization that are likely to affect the track of your organization's strategy. It's based on
the idea that you can uncover important yet unanticipated information by monitoring
multiple information sources. Such sources include trade magazines, journals such as The
Wall Street Journal, trade conferences, conversations and observations.

Process of evaluation for operational control

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 to be compared.
Can be done through: accounting, reporting, communication
systems etc.

Compare the firms performance over different time periods.

Compare the firms performance to competitors.

Compare the firms performance to industry averages.

Problems Faced During measurement

Difficulties in measurement:

If the standards are appropriately set

Timing of measurement:

Timing refers to the point of time at which evaluation has

to take place. In general it could be said that a delay in
measurement can defeat the purpose of evaluation itself.
On other hand measuring before time cannot serve the
purpose either.
6

 It is better to measure at critical points in a task

schedule. Generally the critical; points will be the end of
a definable activity or the conclusion of the task.

Periodicity of measurement:

Deals with the issue of how often to measure . Normally like the
budgets and P&L accounts are prepared at the end of the year. But
there might be several functions like production and marketing
where the measurement will have to be done in a shorter duration
possibly on monthly or may be weekly
4 Techniques of Evaluation : Strategic leap Control
1)Strategic issue management: is aimed at identifying one or more
strategic issues and assessing their impact on the organization.

A strategic issue is a forthcoming development either inside or

outside of the organization which is likely to have an important
impact on the ability of the enterprise to meet its objective.

2)Strategic field analysis: is a way of examining the nature and

extent of synergies that exist or are lacking between the
components of the organization
3)Systems modeling is based on computer based models that
simulate the essential features of the organization and its
environment .

Through system modeling organizations may exercise pre

action control by assessing the impact of the environment on
the organization because of the adoption of a particular
strategy.

4)Scenarios are perceptions about the likely environment a firm

would face in the future .