ENS 343-I

ENGINEERING MANAGEMENT
TOPIC: STRATEGIC CONTROL

PREPARED FOR:
ENGR. MARINELA C. BANSUELA, Ph.D.
ASSOCIATE PROFESSOR II

PREPARED BY:
KENNETH JOHN E. DECIPOLO
BSME: 4TH YEAR
 What is Strategic Control?

Strategic control deals with monitoring the strategy after it has been executed in
the organization. This involves taking stock of the strategy and making any
necessary corrections or clearing out any problems seen in its implementation. The
authors Newman and Logan have used the term "steering control" to point out
certain critical aspects of strategic control. Normally a significant amount of time
elapses between the initial execution of the strategy and the final result. In the
interim the organization makes substantial investments in the form of time, projects
and capital investments to complete the execution of the strategy. The strategy is
also impacted by events in the external environment of the organization. In this
scenario, the organization needs steering control to guide the organization through
the critical aspect of implementation. The organization needs to have a mechanism
for correcting any shortcomings in the implementation of the strategy.

Strategic control thus provides the organization the ability to monitor the progress of
the strategy implementation, to identify any flaws and to take the necessary
corrections in the implementation of the strategy. The analysis of the data pertaining
to the implementation plays a very important part in this. The data is collected and
then compared to pre designed standards so that any major deviation in the
performance can be identified. The amount of data that has to be collected for this
purpose has to be of a significant quantity so that the analysis of the data can yield
logical actions for the organization.

 Process of Strategic Control?

1. Determine what to Control

 The first thing to be decided are the activities that the organization wants to keep
track of and control. These are normally decided based on the objectives, mission,
vision and the goal setting done as a result of planning. It is necessary for managers
to decide what they must control because it is not possible to monitor and control
every activity. It is very necessary that the top management is fully committed to the
process of strategic control and that it communicates clearly to the rest of the
organization why the controls are being put in place. Without the involvement of top
management, strategic control will not be successful.

2. Set Control Standards

Once the organization has decided what it wants to control, the next step is to set
standards for each of these. Standards are nothing but targets against which the
actual performance can be measured to judge if the performance is up to mark or
not. Standards represent the benchmark against which the organization can
measure its current performance, define future targets and also evaluate historical
performances. They can be both quantitative and qualitative. The five bases on
which standards are set are quantity, quality, time, cost and behavior. Each of these
need to be further analyzed for establishment of control standards.

Once the standards are set, the organization needs to set upper and lower limits
for the standard. These are also called tolerance limits. These targets also have to
be in line with the organizational goals and objectives.

3. Measure Performance

The next step is to actually measure the output or performance and compare
against the standard. This measurement can differ from case to case. In some cases
it could be a normal observation of some events whereas in other it may involve
detailed analysis. They can also be based on some historical standard. Strategic
control standards are based the practice of competitive bench marking the process
of measuring a firm's performance in its industry. of the top performance in against
that of the Strategic controls can also be initiated through the process of competitive
bench marking. In this the standards are set based on the performance in the best of
the companies in the industry. The rapid growth of computers and IT has also made
it possible for managers to access latest and the most analytical performance
reports. These should be analyzed carefully by managers and should form the basis
for concrete action.

4. Compare Performance to Standards

Next the actual performance is compared to the standard set. If the earlier stages
are done properly and systematically in the organization, then the actual comparison
of the performance and the standard is a very easy process. There can be problem
especially if some the standards pertain to behavioral aspects. The measurement in
 these cases can often be impacted by extraneous variables which are beyond the
control of the organization.

5. Determine the Reasons for the Deviations

Once the divergence is seen in the actual performance and the standard, the
next step is to understand why the divergence has been caused. The organization
needs to examine if the shortfall in achievement is due to genuine shortcomings in
the internal factors of the organization or because of external events which are not
possible for the organization to control.

6. Take Corrective Action

The last step in the process is to initiate remedial action. Managers can do one of
the following :
 Do nothing
 Rectify the actual performance
 Change the standard

Making no change is advisable when no significant deviation is seen between the

actual performance and the standard. When the deviation is significant, then
managers need to decide on a course of action. The remedial action is dependent
on what kinds of deviations are seen and what kind of autonomy the managers have
to take remedial action. The deviations could be because of many reasons it could
be because of faulty strategy. design or wrong implementation. Each of these
requires a different action plan by the organization.

 Techniques for Strategic Control

Budgets
 Budgets are the most extensively used tool for strategic control. In the layman's
language a budget is an outlay of the planned income and expenditure of an
organization. However it is more than that. It is the allocation of scarce resources
amongst competing avenues for deployment. It also highlights the future growth plans of
the organization and also an analysis of what the organization has been able to achieve
and where the shortcomings lie. In a sense it is a forecast about the future and thus the
organization needs to revisit it from time to time. It is of paramount importance in being
able to implement a strategy successfully.

Audits

The American Accounting Association defines audit as "a systematic process of

objectively obtaining and evaluating the evidence regarding assertion about economic
actions and events to ascertain the degree of correspondence between those
assertions and established criteria and communicating the results to interested users".
In organizations, management audits are used to measure the performance of the
management in terms of its effectiveness in achieving the organizational goals.
Management audits are very popular means of control in most of the organizations
today.

Time-Related Control Methods

In this the organization uses analytical tools and techniques for strategic control.
The methods typically used. are CPM (Critical Path Method) and PERT (Program
Evaluation and Review Technique). These are both graphical methods which measure
the progress of various tasks against the set standards of execution. It seeks to identify
the critical elements. These techniques are useful for management as instruments of
control as well as allocation of scarce resources of the organization.

Management by Objectives (MBO)

This is another management technique used in strategic control. This technique

was created by Peter Drucker. In this the organization establishes objectives for itself
and then for functional areas. departments and individuals. This leads to goal
congruence in the organization and everyone works for the attainment of common
goals.

Management Information Systems (MIS)

Management Information System effectively utilizes computer based tools to

provide managers with online, relevant and timely information so that they can
effectively manage the various departments of the organization. To do this effectively,
management information system relies heavily on prediction software which assist
decision making, databases which are reservoirs of data which can be accessed,
hardware support, decision management software, people management tools and
software, project management tools and computer based processes, etc.

Decision Support Systems (DSS)

Decision Support systems (DSS) are specialized type of computerized

information systems which support organizational and managerial decision-making. It is
in the form of highly customized and interactive software which collects relevant data
from various sources and which utilizes decision making models to effectively analyze
these raw data into meaningful output for top management. It is specifically applied to
analyze and solve a particular management problem.

 Advantages of Strategic Control

Control and Efficiency

To measure the efficiency of the production process the managers need to know
how efficiently the inputs are being combined to produce the required output. This
information is provided the managers through the control system in the organization.
These control systems provide managers means to measure how efficient the strategy
is. It also allows them to measure the success or failure of new initiatives and strategies.
In the absence of a control system, managers will be totally handicapped and they will
have no clue as how well their strategy is working and what kind of improvements are
necessary in removing the shortcomings.

Control and Quality

Competition nowadays increasingly focused on improving the quality of the

goods and services being produced. Products compete within their segments and sub-
segments on the basis of features, design and quality. For example, the decision of a
customer to buy a Mahindra XUV over competitors like Tata Safari or Renault Duster
hinges on features, benefits and the quality that these products offer. Strategic control
helps managers to get a feedback on the quality of their products. The managers can
keep a track on the quality of their products by keeping track of customer complaints
received or the customer satisfaction level. Nowadays, online feedback is also available
to organizations.

Control and Innovation

Strategic control also helps the organization to increase the level of innovation in
the organization. Successful companies like Nokia or Apple create the right environment
in the work place which encourages creative thinking and they have incorporated these
aspects in their strategic control systems. This helps in creating the right culture for risk
taking in these organizations.
Control and Responsiveness to Customers

Strategic control also helps organizations to measure the level of customer

satisfaction by evaluating how well the employees are in the customer facing jobs (like
customer care and retention). The organization can also use the information generated
to impart training to employees to improve their weak areas so that the proper service
can be provided to the customer There is also an indirect pressure on employees to
improve their responsiveness to customers when they know that their behavior is being
tracked.
Reference:

https://www.toppers4u.com/2022/05/strategic-control-meaning-types-process.html

https://www.clearpointstrategy.com/strategic-control-process/

https://fi.co/insight/the-three-p-s-of-time-
management#:~:text=Here%20are%20a%20few%20tips,%3A%20Planning%2C%20Pri
oritizing%20and%20Performing.