December 15, 2019 BUSINESS POLICY

STRATEGIC EVALUATION AND CONTROL

GROUP 2

AYAZ AHMAD 2017-EMBA-(FALL)-001

MEHBOOB UMER 2017-EMBA-(FALL)-011
MUHAMMAD WASIF ZAFAR 2017-EMBA-(FALL)-012
KHURAM SHAHZAD 2017-EMBA-(FALL)-021
IQRA SARFRAZ 2017-EMBA-(FALL)-025
MUHAMMAD UMAIR BASHIR 2016-EMBA-(FALL)-012
SHAHID ELAHI 2016-EMBA-(FALL)-034
 STRATEGIC MANAGEMENT PROCESS:

STRATEGIC EVALUATION:

Strategic Evaluation is defined as the process of determining the effectiveness of a given strategy in
achieving the organizational objectives and taking corrective action wherever required.

“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

Nature of Strategic Evaluation:

 Nature of the strategic evaluation and control process is to test the effectiveness of strategy.
 During the strategic management process, the strategists formulate the strategy to achieve a
set of objectives and then implement the strategy.
 There must be a way of finding out whether the strategy being implemented will guide the
organization towards its intended objectives. Strategic evaluation and control, therefore,
performs the crucial task of keeping the organization on the right track.
 In the absence of such a mechanism, there would be no means for strategists to find out
whether the strategy is producing the desired effect.
 Through the process of strategic evaluation and control, the strategists attempt to answer set
of questions, as below.
 Are the premises made during strategy formulation proving to be correct?
 Is the strategy guiding the organization towards its intended objectives?
 Are the organization and its managers doing things which ought to be done?
 Is there a need to change and reformulate the strategy?
 How is the organization performing?
 Are the time schedules being adhered to?
 Are the resources being utilized properly?
 What needs to be done to ensure that resources are utilized properly, and objectives met?

Importance of Strategic Evaluation:

 Strategic evaluation can help to assess whether the decisions match the intended strategy
requirements.
  Strategic evaluation, through its process of control, feedback, rewards, and review, helps in a
successful culmination of the strategic management process.
 The process of strategic evaluation provides a considerable amount of information and
experience to strategists that can be useful in new strategic planning.
 To check on the validity of strategic choice.
 Congruence between decisions and intended strategy.
 Creating inputs for new strategic planning.

Participants in Strategic Evaluation:

 Shareholders
 Board of Directors
 Chief executives
 Profit-center heads
 Financial controllers
 Company secretaries
 External and Internal Auditors
 Audit and Executive Committees
 Corporate Planning Staff or Department
 Middle-level managers

Strategic Evaluation Process:

Setting Standards of Performance - It must focus on questions like:

 What standards should be set?

 How should the standards be set?
 In what terms should these standards be expressed?

The firm must identify the areas of operational efficiency in terms of people, processes, productivity
and pace. Standards set must be related to key management tasks. The special requirement for
performance of these task must be studied. It can be expresses in terms of performance indicators.

The criteria for setting standards may be qualitative or quantitative. Therefore, standards can be set
keeping in mind past achievements, compare performance with industry average or major
competitors. Factors such as capabilities of a firm, core competencies, risk bearing ability, strategic
clarity and flexibility and workability must also be considered.

Measurement of Performance - Standards of performance act as a benchmark in evaluating the

actual performance. Operationally it is done through accounting, reporting and communication
system. The key areas which must be kept in mind are – difficulty in measurement, timing of
measurement (critical points) and periodicity in measurement (task schedule).

Analyzing Variances - The two main tasks are noting deviations and finding the cause of deviations.

 When actual performance is equal to budgeted performance tolerance limits must be set.
  When actual performance is greater than budgeted performance one must check the validity
of standards and efficiency of management.
 When actual performance is less than budgeted performance, we must pinpoint the areas
where performance is low and take corrective action,

The cause of deviations may be - External or internal, Random or expected, Temporary or permanent.
The two main questions to focus upon are:
Are the strategies still valid?
Does the organization have the capacity to respond to the changes needed?

Taking Corrective Actions - It consists of the following:

 Checking of performance - It includes in-depth analysis and diagnosis of the factors that
might be responsible for bad performance.
 Checking of standards - It results in lowering or elevation of standards according to the
conditions.
 Reformulate strategies, plans, objectives - Giving a fresh start to the strategic management
process

Techniques of Strategic Evaluation:

Gap Analyst:
Techniques used to measure the GAP between organization’s current position and its desired position.
Marketing Research, Production and Financial data is analysed and compared with other
organizations.
Tools: Spreadsheet and Fish.
SWOT Analysis:
For strategic evaluation, SWOT analysis is used comprises of strengths, weaknesses, opportunities
and threats.
Strengths and Weaknesses are the internal factors while opportunities and threats are external factors.
Tools: Smart Sheet.
PEST Analysis:
PEST analysis stands for Political, Economic, Social and Technological Factor. This is also
interlinked with SWOT Analysis.
Political factor might include such aspects as impending legislations regarding wages and benefits
financial regulations. Economic factors include all shifts in economy, Social factor include
demographic and changing attitudes. Technological factor includes the changes in technologies as
per the demographic area.
Benchmarking:
Benchmarking is measuring of how close the organization has reached to its final objectives.
Benchmarking can be done against themselves and with other organizations also.
Tools: Matrix Technology, Comparison Tables, Pie Chart, Bar Chart etc.

STRATEGIC CONTROL:

Strategic control is a term used to describe the process used by the organizations to control the
formation and execution of strategic plans.
 They are subject to future modification because of constantly changing internal and external
environment.
 Fundamental strategy evaluation and control activities are:
Reviewing internal and external factors, measuring performance and taking corrective actions.
Strategic control is also focused on the achievement of future goals, rather than the evaluation
of past performance.
Purpose:
How well are doing now how well we will be doing in the immediate future for which reliable
information is available?
The point is not to bring to light past errors but to identify needed corrections to steer the corporation
in the desired direction. That must be made with respect to currently desirable long-range goals and
not against goals and plans.

Strategic Control Process:

 Determine what to control - What are the objectives the organization hopes to accomplish?
 Set control standards - What are the targets and tolerances?
 Measure performance - What are the actual standards?
 Compare the performance the performance to the standards - How well does the actual
match the plan?
 Determine the reasons for the deviations - Are the deviations due to internal shortcomings
or due to external changes beyond the control of the organization?
 Take corrective action - Are corrections needed in internal activities to correct organizational
shortcomings, or are changes needed in objectives due to external events?
 Feedback from evaluating the effectiveness of the strategy may influence many of other
phases on the strategic management process.
Types of Strategic Control:

 Premise Control- It identifies the key assumptions and keeps track of any change in them to
assess its impact on strategy and implementation. The goal is to find if the assumptions are
still valid or not. It is generally handled by the corporate planning staff considering the
environmental and organizational factors.
 Implementation Control- It includes evaluating plans, programs, projects, to see if they
guide the organization to achieve predetermined organizational objectives or not. It leads to
strategic rethinking. It consists of identification and monitoring of strategic thrusts.
 Strategic Surveillance- It aims at generalized control. It is designed to monitor a broad range
of events inside and outside the organization that are likely to threaten the course of the firm.
Organizational learning and knowledge management systems capture the information for
strategic surveillance.
 Special Alert Control- It is a rapid response or immediate reassessment of strategy in the
light of sudden and unexpected events. It can be exercised through formulation of contingency
strategies and a crisis management team.

ENTERPRISE RESOURCE PLANNING:

Business process management software, that allow the organizations to use system of integrated
applications to manage planning, Leading, Analyzing and controlling of their organization for their
operational excellence.
Some ERP tools such as SAP and oracle are used. This ERP system is linked with other organizations
as well as with another subsidiary.

BPC module are used for planning and Benchmarking their processes in order to evaluate and control
the organization with the best of its operations.

ENTERPRISE RISK MANAGEMENT:

Enterprise risk management, often shortened to ERM, is a type of process management strategy
that seeks to identify, understand, and prepare for the kinds of dangers, hazards, and other
potential deviations from standard operating procedures that could be perceived a s risks.

The culture, capabilities, and practices, integrated with strategy-setting and performance, that
organizations rely on to manage risk in creating, preserving, and realizing value.

Enterprise Risk Management Workflow:

MEASURE OF CORPORATE PERFORMANCE:

Some of methods that are used to evaluate and assess overall corporate performance are:

 Balanced Scorecard.
 Stakeholder Measures.
Research about the above listed methods will help in comparing the advantages and limitations of
using them in measuring corporate performance. Also, this research will help managers in deciding
what measure is the best to adopt, regarding the strategies they are pursuing.