RAJAT Strategic-Evaluation-and-Control

8/7/2019 RAJAT Strategic-Evaluation-and-Control

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Strategic Evaluation andStrategic Evaluation and

ControlControl

ByBy

RajatRajat VermaVerma

Roll No.95072238768Roll No.95072238768


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Strategic Evaluation and ControlStrategic Evaluation and Control

The purpose of strategic evaluation is toThe purpose of strategic evaluation is to

evaluate the effectiveness of a strategy forevaluate the effectiveness of a strategy for

achieving organizational objectives.achieving organizational objectives. Thus , strategic evaluation and controlThus , strategic evaluation and control

could be defined as the process ofcould be defined as the process of

determining the effectiveness of a givendetermining the effectiveness of a given

strategy in achieving the organizationalstrategy in achieving the organizational

objective and taking corrective actionobjective and taking corrective action

where ever required.where ever required.


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Nature of Strategic EvaluationNature of Strategic Evaluation

and controland control Objective basedObjective based

EconomicEconomic

ObjectivityObjectivity PervasivenessPervasiveness

SimplicitySimplicity

Communication and involvementCommunication and involvement


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Importance of Strategic EvaluationImportance of Strategic Evaluation

Means to secure feedbackMeans to secure feedback

Motivational ToolMotivational Tool

Check on the validity of strategic choiceCheck on the validity of strategic choice

Congruence between decisions and intendedCongruence between decisions and intended

strategystrategy

Successful culmination of strategic managementSuccessful culmination of strategic management

processprocessCreating inputs for new strategic planningCreating inputs for new strategic planning

Ability to coordinate the tasks performedAbility to coordinate the tasks performed


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Participants in StrategicParticipants in Strategic

EvaluationEvaluation Board of DirectorsBoard of Directors

Chief ExecutivesChief Executives

Strategic Business UnitStrategic Business Unit Financial Controller, Company SecretariesFinancial Controller, Company Secretaries

and Auditors.and Auditors.


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Barri rs i al atiBarri rs i al ati

Limits of ControlsLimits of Controls

Difficulties in measurementDifficulties in measurementResistance to evaluationResistance to evaluation

ShortShort--termterm

Relying on efficiency versus effectivenessRelying on efficiency versus effectiveness


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Requirement of Effective EvaluationRequirement of Effective Evaluation

Control should involve only the minimum amountControl should involve only the minimum amount

of informationof information

Control should monitor only managerial activitiesControl should monitor only managerial activities

and resultsand results

Control should be timelyControl should be timely

Long term and short term control should be usedLong term and short term control should be used

Control should aim at pinpointing exceptionsControl should aim at pinpointing exceptionsRewards for meeting or exceeding standardsRewards for meeting or exceeding standards

should be emphasizedshould be emphasized


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Levels of strategic evaluationLevels of strategic evaluation

and controland control1.Strategic Control1.Strategic Control

2.Operational Control2.Operational Control


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Four Types of Strategic ControlsFour Types of Strategic Controls

Premise ControlPremise Control

Implementation ControlImplementation Control

Strategic SurveillanceStrategic Surveillance

Special alert controlSpecial alert control


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Premi e ControlPremi e Control

Premises control is necessary to identify thePremises control is necessary to identify thekey assumptions and its implementation.key assumptions and its implementation.Premise control serves the purpose ofPremise control serves the purpose of

continually testing the assumptions to find outcontinually testing the assumptions to find outwhether they are still valid or not. Thiswhether they are still valid or not. Thisenables the strategists to take correctiveenables the strategists to take correctiveaction at the right time rather than continuingaction at the right time rather than continuing

with a strategy which is based on erroneouswith a strategy which is based on erroneousassumptions.assumptions.


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Implementation ControlImplementation Control

Implementation control is aimed at evaluatingImplementation control is aimed at evaluatingwhether the plans, programmes, and projectswhether the plans, programmes, and projects

are actually guiding the organization towardsare actually guiding the organization towards

its predetermined objectives or not.its predetermined objectives or not.


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Strategic SurveillanceStrategic Surveillance

Strategic surveillance aimed at a moreStrategic surveillance aimed at a moregeneralized and overarching controlgeneralized and overarching control

designed to monitor a broad range of eventsdesigned to monitor a broad range of events

inside and outside the company that are likelyinside and outside the company that are likely

to threaten the course of a firms strategy.to threaten the course of a firms strategy.


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Special Alert ControlSpecial Alert Control

Special alert control, which is based on aSpecial alert control, which is based on a

trigger mechanism for rapid response andtrigger mechanism for rapid response and

immediate reassessment of strategy in theimmediate reassessment of strategy in the

light of sudden and unexpected eventslight of sudden and unexpected events


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Operati al tr lOperati al tr l

Aimed at the allocation and use ofAimed at the allocation and use of

organisational resourcesorganisational resources

Concerned with action or performanceConcerned with action or performance


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How do Strategic Control andHow do Strategic Control and

Operational Control DifferOperational Control Differ

AttributeAttribute Strategic ControlStrategic Control Operational ControlOperational Control

1. Basic question1. Basic question Are we moving in theAre we moving in theright direction?right direction?

How are we performing?How are we performing?

2. Aim2. Aim Proactive, continuousProactive, continuousquestioning of the basicquestioning of the basicdirection of strategydirection of strategy

Allocation and use ofAllocation and use oforganisational resourcesorganisational resources

3. Main Concern3. Main Concern Steering theSteering theorganizations futureorganizations future

directiondirection

Action controlAction control

4. Focus4. Focus External environmentExternal environmentInternal organizationInternal organization

5. Time Horizon5. Time Horizon LongLong-- termterm ShortShort-- termterm

6. Main Techniques6. Main Techniques Environmental scanning,Environmental scanning,

information gathering,information gathering,questioning and reviewquestioning and review

Budgets, schedules, andBudgets, schedules, and

MBO

M

BO


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Evaluation Process ForEvaluation Process ForOperational ControlOperational Control


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Strategy/

Plan/

Objectives

Setting

standards of

performance

Actualperformance

Measurement

of

performance

Analyzing

varianceCheck

Performanc

e

Check

Standard

Reformulate

Feedback


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Setti f StandardsSetting fStandards

Quantitative CriteriaQuantitative Criteria It has performed as compared to its pastIt has performed as compared to its past

achievementsachievements

Its performance with the industry average or thatIts performance with the industry average or thatof major competitorsof major competitors

Qualitative CriteriaQualitative Criteria

There has to be a special set of qualitative criteria for aThere has to be a special set of qualitative criteria for asubjective assessment of the factors like capabilities,subjective assessment of the factors like capabilities,core competencies, riskcore competencies, risk-- bearing capacity, strategicbearing capacity, strategicclarity, flexibility, and workabilityclarity, flexibility, and workability


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Mea urement ofPerformanceMea urement ofPerformance

The evaluation process operates at theThe evaluation process operates at the

performance level as action takes place.performance level as action takes place.

Standards of performance act as theStandards of performance act as the

benchmark against which the actualbenchmark against which the actual

performance is to be compared. It isperformance is to be compared. It is

important, however, to understand how theimportant, however, to understand how the

measurement of performance can takemeasurement of performance can takeplace.place.


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Analyzing VarianceAnalyzing Variance

The measurement of actual performance and itsThe measurement of actual performance and itscomparison with standard or budgetedcomparison with standard or budgetedperformance leads to an analysis of variances.performance leads to an analysis of variances.

Broadly, the following three situations may arise:Broadly, the following three situations may arise:The actual performance matches the budgetedThe actual performance matches the budgetedperformanceperformance

The actual performance deviates positively overThe actual performance deviates positively over

the budget performancethe budget performanceThe actual performance deviates negativelyThe actual performance deviates negativelyfrom the budgetedfrom the budgeted


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Taking Corrective ActionTaking Corrective Action

There are three courses for correctiveThere are three courses for correctiveaction: checking of performance, checkingaction: checking of performance, checking

of standards, and reformulating strategies,of standards, and reformulating strategies,

plans, and objectives.plans, and objectives.


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Technique of StrategicTechnique of Strategic

Evaluation and ControlEvaluation and Control

Evaluation Techniques for Strategic ControlEvaluation Techniques for Strategic Control

Evaluation Techniques forOperational ControlEvaluation Techniques forOperational Control


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Evaluation Technique for StrategicEvaluation Technique for Strategic

ControlControl

Techniques for strategic control could beTechniques for strategic control could be

classified into two groups on the basis of theclassified into two groups on the basis of the

type of environment faced by the organisation.type of environment faced by the organisation.The organisation that operate in a relative stableThe organisation that operate in a relative stable

environment may use strategic momentumenvironment may use strategic momentum

control, while those which face a relativelycontrol, while those which face a relatively

turbulent environment may find strategic leapturbulent environment may find strategic leapcontrol more appropriate.control more appropriate.


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Evaluation Techniques forEvaluation Techniques for

Operational ControlOperational Control

Operational control is aimed at theOperational control is aimed at the

allocation and use of organisationalallocation and use of organisational

resourcesresources

The evaluation techniques are classifiedThe evaluation techniques are classified

into three parts:into three parts:

Internal analysisInternal analysis

Comparative analysisComparative analysis

Comprehensive analysis.Comprehensive analysis.


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Evaluation TechniquesEvaluation Techniques

Under Strategic ControlUnder Strategic Control

1.1. Strategic momentumStrategic momentumcontrolcontrol

a)a) Responsibility controlResponsibility control

centerscentersb)b) Underlying successUnderlying success

factorsfactors

c)c) Generic strategiesGeneric strategiesapproachapproach

2.2. Strategic leap controlStrategic leap controla)a) Strategic issue mgt.Strategic issue mgt.

b)b) Strategic field analysisStrategic field analysis

c)c) Systems modelingSystems modeling

d)d) scenariosscenarios

Under Operational ControlUnder Operational Control

1.1. Internal analysisInternal analysis

a)a) Value chain analysisValue chain analysis

b)b) Quantitative analysisQuantitative analysis

c)c) Qualitative analysisQualitative analysis

2.2. Comparative analysisComparative analysis

a)a) Historical analysisHistorical analysis

b)b) Industry normsIndustry norms

3.3. Comprehensive analysisComprehensive analysis

a)a) Balancing score cardBalancing score card

b)b) Key factor ratingKey factor rating

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RAJAT Strategic-Evaluation-and-Control

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