SM-Module- 6
STRATEGIC EVALUATION AND CONTROL
CORPORATE STRATEGY
MBA205
STRATEGY EVALUATION
[Link] process of evaluating strategies
[Link] evaluation framework
Balanced scorecard- BSC
[Link] of an effective evaluation
system
[Link] planning
5.21st century challenges in strategic
management.
The process of evaluating
strategies
1. Establish Performance Benchmarks
Define Key Performance Indicators
(KPIs): Set specific, measurable goals
(e.g., target profit margins, market
share growth, or customer acquisition
costs).
Set Tolerances: Determine acceptable
variances (e.g., ± 5%) from expected
outcomes.
2. Measure Actual Performance
• Collect Continuous Data: Track
internal execution (sales figures,
resource utilization, project delivery
timelines) and external market changes.
• Monitor Milestones: Compare current
results against the established KPIs
and timeline milestones.
3. Analyze Variances
• Evaluate the Gap: Identify areas where
performance falls short of or exceeds
benchmarks.
• Diagnose the Root Cause: Distinguish
between an execution problem (flawed
implementation) and a strategy problem
(flawed initial assumptions about
market conditions
4. Take Corrective Action
• Adjust and Pivot: Reallocate
resources, alter operational tactics,
or entirely reformulate the strategy if
external assumptions no longer hold.
• Implement Strategic Controls: Utilize
continuous methods like Strategy
Evaluation & Control Guide to monitor
premises (assumptions), execution
speed, and trigger special alerts for
unforeseen crises
What is Strategic Control?
Tracks a strategy as it
is implemented, detects
problems or changes in
its underlying premises,
and makes necessary
adjustments
Four Types of Strategic Control
Strategic
Surveillance
Premise Control
Special Alert Control
Implementation Control
Strategy Formulation Strategy
Implementation
Time 1 Time 2 Time 3
What is Strategic Control?
Tracks a strategy as it is implemented,
detects problems or changes in its
underlying premises, and makes
necessary adjustments.
Questions Involved in Assessing
a Strategy’s Success
Four Types of Strategic Control
1. Strategic surveillance
2. Premise control
3. Special alert control
4. Implementation control
Strategy formation Strategy implementation
Time 1 Time 2 Time 3
Definitions of Strategic
Controls
• Premise Control - Designed to check systematically and
continuously whether premises on which the strategy is
based are still valid
• Implementation Control - Designed to assess whether
the overall strategy should be changed in light of the
results associated with the incremental actions that
implement the overall strategy
• Strategic Surveillance - Designed to monitor a broad
range of events inside and outside the firm that are
likely to affect the course its strategy
• Special Alert Control - Thorough, and often rapid,
reconsideration of the firm’s strategy because of a
sudden, unexpected event
Strategic Controls
•Premise Control - Designed to check systematically and
continuously whether premises on which the strategy is
based are still valid
•Implementation Control - Designed to assess whether the
overall strategy should be changed in light of the
results associated with the incremental actions that
implement the overall strategy
•Strategic Surveillance - Designed to monitor a broad
range of events inside and outside the firm that are likely
to affect the course its strategy
•Special Alert Control - Thorough, and often rapid,
reconsideration of the firm’s strategy because of a
sudden, unexpected event
Four Types of Strategic Control
1. Strategic surveillance
2. Premise control
3. Special alert control
4. Implementation control
Strategy formation Strategy implementation
Time 1 Time 2 Time 3
CORPORATE STRATEGY
MBA205
STRATEGY EVALUATION
[Link] process of evaluating strategies
[Link] evaluation framework
Balanced scorecard- BSC
[Link] of an effective evaluation
system
[Link] planning
5.21st century challenges in strategic
management.
Learning and Growth
"To achieve our vision, how will we sustain
our ability to change and improve?"
• This perspective involves staff learning and training in
order to improve the knowledge resource. Managers
should be able to identify where they should be
investing their funds for personnel development, not
just through training but through mentor schemes and
improving communication amongst staff.
Considerations for measurement include:
1. Job satisfaction
2. Employee turnover
3. Levels of specialist knowledge and skills
4. Training opportunities
Internal Business Processes
"To satisfy our shareholders and
customers, what business processes must we
excel at?"
• This perspective allows managers to see how
well their business is performing based on
whether their products and services are
meeting the needs of their customers. Carefully
designed metrics will be needed to monitor this
area.
Considerations for measurement include:
1. Activities per function
2. Process alignment
Customers
"To achieve our vision, how should we appear to our
customers?"
• For those of you aware of the marketing orientated
business, opposed to the sales orientated businesses of
the past, will know that customer satisfaction is now
more and more at the forefront of every marketer, and
therefore every business's mind.
• Marketers know that poor performance in this area leads
to customers switching to alterative suppliers and if this
is not addressed a future decline could continue.
Considerations for measurement include:
1. Customer satisfaction rate
2. Customer retention
3. Delivery performance
4. Quality performance
Financial
• "To succeed financially, how should we appear
to our shareholders?"
• At the start of this post we said that the balanced
scorecard was a useful tool as it looks at areas other
than finance to judge the performance of a business.
• This does not mean however that traditional financial
metrics should be ignored and that is why they make up
the fourth perspective. Financial metrics are still
important to see exactly how profitable the business is.
Considerations for this perspective include:
1. ROI
2. Cash flow
3. Financial results
Financial Perspective
• Objective: What you aim to achieve financially
(e.g., Increase Revenue, Reduce Costs, Improve
ROI)
• Measures/KPIs: Metrics to track performance
(e.g., Revenue Growth Rate, Operating Margins,
ROI)
• Targets: Specific goals for each measure (e.g.,
10% revenue growth, 15% operating margin)
• Initiatives: Projects or actions to achieve
targets (e.g., Enter new markets, Cost reduction
program)
Customer Perspective
• Objective: Goals related to customers (e.g.,
Improve Customer Satisfaction, Increase Market
Share)
• Measures/KPIs: Metrics to assess customer-
focused performance (e.g., Customer
Satisfaction Score, Net Promoter Score, Market
Share)
• Targets: Specific goals for each measure (e.g.,
Score of 85 in Customer Satisfaction, 20%
market share)
• Initiatives: Actions to reach customer goals
Internal Process Perspective
• Objective: What the company must excel at
internally (e.g., Enhance Operational Efficiency,
Improve Product Quality)
• Measures/KPIs: Metrics for internal processes
(e.g., Process Efficiency, Defect Rates)
• Targets: Specific goals for each measure (e.g.,
95% process efficiency, Reduce defect rate by
50%)
• Initiatives: Actions to improve processes (e.g.,
Implement lean management, Quality control
programs)
Learning & Growth
Perspective
• Objective: Goals for culture, people, and
organisational capacity (e.g., Improve Employee
Skills, Foster Innovation)
• Measures/KPIs: Metrics for learning and growth
(e.g., Employee Satisfaction, Number of New
Patents)
• Targets: Specific goals for each measure (e.g.,
Employee satisfaction score of 90, 5 new
patents per year)
• Initiatives: Projects to achieve these goals (e.g.,
Training and development programs, Innovation
workshops)
Characteristics of Strategic
Controls
Types of Strategic Control
Basic Premise Implementati Strategic Special Alert
Characteristics Control on Control Surveillance Control
Key strategic Occurrence of
Objects of Planning premises
thrusts and
Potential threats recognizable but
control and projections
milestones
and opportunities unlikely events
Degree of
focusing High High Low High
Data acquisition:
Formalization Medium High Low High
Centralization Low Medium Low High
Use with:
Environmental Yes Seldom Yes Yes
factors
Industry
factors Yes Seldom Yes Yes
Strategy-
specific factors No Yes Seldom Yes
Company-
specific factors No Yes Seldom Seldom
What are Operational
Controls?
Systems that guide, monitor, & evaluate
progress in meeting short-term
objectives, providing post-action
evaluation and control over short
periods.
Establishing Effective
Operational Control Systems
1. Set standards of
performance
Steps 2. Measure actual
involved in performance
post action
control 3. Identify deviations
systems
from standards set
4. Initiate corrective
action
Types of Operational Control
Systems
Budgets
Schedules Key success factors
CORPORATE STRATEGY
MBA205
STRATEGY EVALUATION
[Link] process of evaluating strategies
[Link] evaluation framework
Balanced scorecard- BSC
[Link] of an effective evaluation
system
[Link] planning
5.21st century challenges in strategic
management.
CORPORATE STRATEGY
MBA205
STRATEGY EVALUATION
[Link] process of evaluating strategies
[Link] evaluation framework
Balanced scorecard- BSC
[Link] of an effective evaluation
system
[Link] planning
5.21st century challenges in strategic
management.
Characteristics of an
effective evaluation system
• Strategy assessment is the process of
analysing a strategy to see how
successfully it has been implemented
and carried out.
• It is an internal analytical tool that
should be utilised as part of the
organization’s overall strategy
analysis when making strategic choices.
1. Are we on track to meet our key business
objectives?
2. How far have we come towards achieving our
vision?
3. Are our strategic focus areas still relevant?
4. Which of our objectives has been completed?
5. Do we have enough projects to achieve
unfinished objectives?
6. Are our KPIs still useful for tracking progress
towards our goals?
7. Where did we fall short of our objectives? Why
did this occur?