Lesson No. 10: Strategic Control

Lesson No.
10
STRATEGIC CONTROL
Powerpoint Templates
Page 1
STRATEGIC CONTROL
• Strategic control is concerned
with tracking the strategy as it is
being implemented, detecting
problem areas or potential problem
areas, and making the necessary
adjustments.
Page 2
STRATEGIC CONTROL
• In the end, the role of strategic
control is to ensure that the goals
and objectives are achieved
through the strategies that have
been formulated.
Page 3
THE CONTROL PROCESS
STEP ONE: Identify the standards of
performance.
STEP TWO: Measure the actual
performance.
STEP THREE: Compare the actual
performance with the standards.
Page 4
THE CONTROL PROCESS
STEP FOUR: Channel the
performance information to the
person in charge of controlling
operations.
STEP FIVE: If discrepancies occur,
institute corrective action.
Page 5
TYPES OF STRATEGIC CONTROL
•According to purpose
•According to approach
Page 6
ACCORDING TO PURPOSE
•Presupposition control
•Implementation control
•Strategic surveillance
•Vigilance control
Page 7
PRESUPPOSITION CONTROL
•This is designed to check
systematically and regularly
whether the strategies set are still
valid given the changes in the
business environment.
•This is also known as “premise
control.”
Page 8
IMPLEMENTATION CONTROL
•This is applied to evaluate
whether the intermediate
strategies are aligned with the
overall strategy.
Page 9
STRATEGIC SURVEILLANCE
•This is a monitoring system
whereby a broad range of
occurrences inside and outside the
organization threatens the
implementation of an organization’s
strategy.
Page 10
VIGILANCE CONTROL
•This is a special type of strategic
control that is applied when
immediate reconsideration of an
organization’s strategy is pursued.
•This is also called “special alert
control.”
Page 11
ACCORDING TO APPROACH
•Sequential strategic control

•Interactive strategic control
•Feedback strategic control
Page 12
SEQUENTIAL STRATEGIC CONTROL
•This is the traditional way of

looking at strategic monitoring.
Formulate Implement Strategic

Strategies Strategies Control
Page 13
INTERACTIVE STRATEGIC CONTROL
•This is the more appropriate
approach of looking at strategic
monitoring.
Formulate Strategic
Strategies Control
Implement
Strategies
Page 14
FEEDBACK STRATEGIC CONTROL
•This is a combination of the

sequential and interactive
approaches.
•Strategy formulation, strategy
implementation and strategic
control are done sequentially.
Page 15
FEEDBACK STRATEGIC CONTROL
•The feedback loop is essentially

interactive.
•Constant feedback are effected
with respect to the formulated and
implemented strategies.
Page 16
PERFORMANCE METRICS
•Feedback strategic control is

essentially measured by
performance.
•Performance = Results / Resources
Page 17
PERFORMANCE METRICS
•In this framework, four parameters
categorize performance, namely:
•Financial performance
•Efficiency/productivity performance
•Market performance
•People performance
Page 18
FINANCIAL PERFORMANCE
•Profitability measures
•Liquidity measures
•Gearing (risk) measures
•Other investor’s measures
Page 19
PROFITABILITY MEASURES
•These are financial indicators that

show the company’s ability to
generate earnings as compared to
its expenses and other relevant
costs incurred during a specific
period.
Page 20
LIQUIDITY MEASURES
•These are financial indicators that

measure the ability of a company to
pay its immediate and short-term
obligations, or the ability of its
current assets to meet current
liabilities.
Page 21
GEARING (RISK) MEASURES
•These are the determinants of
financial leverage.
•It measures the percentage of capital
employed that is financed by debt and
long-term financing.
•These are also known as the “debt
ratios”.
Page 22
EFFICIENCY AND PRODUCTIVITY
PERFORMANCE
•Productivity of resources
•Output / Input x 100
•Employee labor productivity

•Total no. of products manufactured / Total
number of hours worked x 100
Page 23
PERFORMANCE
•Individual employee sales productivity

•Net sales / Number of hours worked x 100
•Efficiency ratio
•Expenses / Revenues x 100
Page 24
PERFORMANCE
•Defect/Reject Rate
•Total no. of defects or rejects / Total no. of
items produced x 100
•Defect Resolution Rate

•Total no. of defects resolved / Total effort spent
x 100
Page 25
MARKET PERFORMANCE
•Market Growth Rate

•Demand (before) – Demand (now) / Demand
(before) x 100
• Market Share
•Total sales for a product / Total sales of the
market for the product x 100
Page 26
MARKET PERFORMANCE
•Net Marketing Contribution

•Sales revenues x Gross margin percentage –
Marketing and sales expenses
• Marketing Return on Sales

•Net marketing contribution / Sales x 100
Page 27
MARKET PERFORMANCE
•Marketing Return on Investment

•Net marketing contribution / Marketing and
sales expense x 100
• Customer Retention
•Total customer retained / Total customers at
the start of the year x 100
Page 28
PEOPLE PERFORMANCE
•Employee Engagement Index
•Employee Satisfaction Index
•Leadership Index
•Effective Communication Index
•Health Profile Index
•Quality of Life Index
•Motivation Index
Page 29
EMPLOYEE ENGAGEMENT INDEX
• Measures an organization’s workplace
approach.
• It is designed to ensure that employees
are committed to the goals and values,
are motivated to contribute to
organizational success, and are able to
enhance their own sense of well-being.
Page 30
EMPLOYEE SATISFACTION INDEX
• Measures employee satisfaction in
terms of whether or not an
employee is happy and content
and whether or not the
organization is able to fulfill their
desires, needs and expectations.
Page 31
LEADERSHIP INDEX
•This index measures leadership
in the ability of the management
of an organization to make sound
decisions and inspire others to
perform well.
Page 32
EFFECTIVE COMMUNICATION INDEX
•This index measures effectiveness

of communication as being a two-
way process that involves sending
right messages that are being
correctly received and understood by
other people.
Page 33
HEALTH PROFILE INDEX
•This index measures the health
“lifestyle” of individuals.
•It generally means a pattern of
individual practices and personal
behavioral choices that are related to
elevated or reduced health risks.
Page 34
QUALITY OF LIFE INDEX
•This index measures quality of life
from both objective and subjective
perspectives
•Quality of life includes a person’s
physical health, psychological state,
personal beliefs, values, goals,
needs, and social relationships.
Page 35
MOTIVATION INDEX
•This index measures the degree of
motivation by which an individual or
the entire organization is inspired to
do their best in any of their
undertakings.
Page 36
THE BALANCED SCORECARD
•This is one of the most recent
developments in performance
measurement introduced by two
management gurus, Robert Kaplan
and David Norton.
Page 37
THE BALANCED SCORECARD
•It is a strategy template which
illustrates four (4) important
perspectives for performance
measurement, namely:
•Learning and growth
•Customer
•Internal process
•Financial
Page 38
LEARNING AND GROWTH
•This motivates employees to
actualize other measures.
Page 39
CUSTOMER
•Customer measures are used by
organizations to increase customer
reach and satisfaction.
Page 40
INTERNAL PROCESS
•For operationally excellent
organizations, relevant measures are
on supply chain.
•For product leader organizations,
the measures are on innovation.
•For customer intimate organizations,
focus is on customer satisfaction.
Page 41
FINANCIAL
•This perspective stresses the need
to define a mechanism that
measures growth and profitability.
Page 42
End of Lesson No. 10
STRATEGIC CONTROL
Page 43

Lesson No. 10: Strategic Control

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Lesson No.

•Sequential strategic control

•This is the traditional way of

Formulate Implement Strategic

•This is a combination of the

•The feedback loop is essentially

•Feedback strategic control is

•These are financial indicators that

•These are financial indicators that

•Employee labor productivity

•Individual employee sales productivity

•Defect Resolution Rate

•Market Growth Rate

•Net Marketing Contribution

• Marketing Return on Sales

•Marketing Return on Investment

•This index measures effectiveness

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