STRATEGIC
C h a p t er 13 EVALUATION &
CONTROL
Strategic control
“Strategic control is the process use by organizations to control the formation & execution of
strategic plans”-Timothy
Strategic control enables organizations to adapt to changes in the business environment.
It helps in the efficient utilization of organizational resources.
The process supports continuous improvement of strategies and operations.
Strategic control assists in maintaining a competitive advantage in the market.
It provides feedback to management for better decision-making.
Ultimately, strategic control ensures that the organization's long-term mission, vision, and
objectives are successfully achieved.
Strategic control is the process of monitoring and evaluating an organization's strategies and
their implementation.
It ensures that strategic plans are formulated and executed effectively to achieve
organizational goals.
Strategic control helps managers assess whether the organization is moving in the desired
direction.
It involves comparing actual performance with planned objectives and standards.
Any deviations from the planned strategy are identified through the control process.
Corrective actions are taken when performance does not meet expectations.
Features of Strategic Control
• Future-Oriented: Focuses on achieving long-term management for better decision-making and
organizational goals and objectives. strategy improvement.
• Continuous Process: Strategic control is carried • Comprehensive: Covers all major areas of the
out regularly throughout strategy formulation and organization, including finance, marketing,
implementation. operations, and human resources.
• Performance Measurement: Evaluates actual • Decision-Supportive: Helps managers make
performance against predetermined standards and informed strategic decisions based on
objectives. performance data.
• Corrective Action: Identifies deviations and takes • Resource Optimization: Ensures efficient and
necessary actions to improve performance. effective utilization of organizational resources.
• Goal-Oriented: Ensures that organizational • Competitive Focus: Helps maintain and
activities are aligned with strategic goals. strengthen the organization's competitive
advantage.
• Flexible: Allows organizations to adapt to changes
in the internal and external environment. • Long-Term Perspective: Emphasizes sustainable
growth and organizational success over time.
• Feedback Mechanism: Provides information to
Strategic Information system
• A System Information System (SIS) is an organized combination of people, hardware,
software, data, and procedures that collects, processes, stores, and distributes information
to support decision-making, coordination, and control within an organization. It helps
managers obtain accurate and timely information for planning, monitoring, and achieving
organizational objectives.
• Examples of System Information Systems
• Management Information System (MIS): Generates reports for managers to support
decision-making.
• Enterprise Resource Planning (ERP): Integrates business functions such as finance, HR,
production, and sales.
• Customer Relationship Management (CRM): Manages customer data and interactions.
• Inventory Management System: Tracks stock levels and inventory movement.
• Payroll System: Processes employee salaries and benefits.
• Decision Support System (DSS): Assists managers in solving complex business problems.
Benefits of SIS
•Decision Support System – Better decisions, data analysis, strategic monitoring
•Proper Use of Resources – Resource optimization, cost control, efficiency
•Best Use of Knowledge – Knowledge sharing, learning, informed decisions
•Sustain Rapid Response – Quick action, adaptability, market changes
•Generating Database – Data storage, performance tracking, forecasting
•Creating Barriers to Entry – Unique systems, competitive protection, market position
•Maintaining Customers – Customer satisfaction, loyalty, retention
•Gain Competitive Advantage – Superior performance, strategic success, market leadership
Real Examples
Bhat-Bhateni (Nepal) Infosys (India)
Software/System: SAP ERP (commonly used by large retail Software/System: Oracle HCM Cloud and internal HR
chains) systems
Purpose: Inventory management, sales tracking, and stock Purpose: Employee management and performance tracking.
control.
Flipkart (India)
eSewa (Nepal) Software/System: SAP ERP, Hadoop, and Analytics Platforms
Software/System: Custom Transaction Processing Platform Purpose: Inventory control, customer analytics, and sales
Purpose: Process digital payments and manage transactions. monitoring.
Ncell (Nepal) Amazon
Software/System: Salesforce CRM / Telecom CRM systems Software/System: Amazon Redshift and AWS Analytics Tools
Purpose: Customer management and service support. Purpose: Business intelligence, sales analysis, and strategic
monitoring.
Daraz Nepal
Software/System: Alibaba E-Commerce Platform and SAP Netflix
Software/System: Apache Spark, AWS Analytics, and
Purpose: Order processing, inventory management, and
Recommendation Systems
logistics.
Purpose: Analyze user behavior and support content
strategy.
Tata Group (India)
Software/System: SAP ERP and Oracle ERP
Purpose: Business planning, reporting, and decision-making.
Control: Types
• Operational control
• Operational control focuses on managing and monitoring day-to-day
activities to ensure tasks are performed efficiently and according to
plan.
• Features
Short-term focus
Concerned with routine operations
Ensures efficiency and quality
Continuous and regular monitoring
Implemented by lower and middle-level managers
Continuously or at regular intervals (daily, weekly, etc.).
How is it Done?
• Ways/Methods of
Operational Control • Set performance standards.
• Supervision • Measure actual performance.
• Budgetary control • Compare actual performance with
standards.
• Quality control
• Identify deviations.
• Inventory control
• Take corrective actions.
• Performance reports
Strategic control
• “strategic control involves the monitoring and evaluating of plans,
activities, and results with a view towards future actions”-Julian &
Scrifres
Strategic Control tools
Premise Implementa
control tion Control
Strategic Special Alert
• Premise control
• Implementation control
• Strategic control
• Special Alert control
Strategy evaluation
Strategic evaluation and control is the final stage of the strategic management process, where
managers assess whether strategies are producing the desired results and take corrective actions if
needed.
According to Wheelen & Hunger, strategic evaluation and control is the process of determining the
extent to which strategic objectives have been achieved and improving organizational performance
through feedback and corrective action.
According to Pearce & Robinson, it is the process of measuring organizational performance, comparing
it with strategic goals, and making adjustments to ensure successful strategy implementation.
The concept is based on the idea that no strategy is perfect forever; internal and external environments
continuously change, requiring regular review and adjustment.
It acts as a feedback mechanism, providing information on whether strategic plans are working as
intended.
Strategic evaluation answers four key questions:
Are strategic objectives being achieved?
Is actual performance meeting expected standards?
What factors are causing deviations?
What corrective actions are needed?
Strategy evaluation
Strategic evaluation and control is like a GPS system for an organization; it checks
whether the organization is moving toward its destination (strategic goals), identifies any
wrong turns (deviations), and suggests route corrections (corrective actions).
It evaluates both strategy formulation (whether the right strategy was chosen) and strategy
implementation (whether the strategy is being executed effectively).
Major areas evaluated include financial performance, customer satisfaction, operational
efficiency, employee performance, market share, innovation, and competitive position.
The ultimate purpose is to ensure goal achievement, improve decision-making, enhance
organizational effectiveness, detect problems early, adapt to environmental changes and
maintain long-term competitive advantage.
Strategy evaluation
Who Does It? – Top management, middle managers, department heads, strategic
planning teams, auditors, and performance evaluation committees.
When is it Done? – Continuously throughout strategy implementation, periodically
(monthly, quarterly, annually), and whenever significant changes occur in the
business environment.
Success Factors – Clear objectives, accurate information, effective communication,
top management support, employee participation, flexibility, accountability, and timely
corrective actions.
Comprising Areas (What It Evaluates) – Financial performance (ROI, EPS, profit),
customer satisfaction, market share, operational efficiency, employee performance,
inventory control, innovation, and strategic goal achievement.
Examples
Nabil Bank monitors deposit growth and introduces new savings schemes if deposits
decline.
Bhat-Bhateni evaluates inventory turnover and adjusts purchasing decisions to
reduce stock shortages.
Features of SE
Assess Strategy Implementation – evaluates whether strategies are being implemented
effectively and producing desired results.
Means of Maintaining Standards – helps ensure that organizational performance
remains consistent with predetermined standards and objectives.
Guideline for Decision Making – provides relevant information and feedback to support
managerial decisions.
Clear Focus on Objectives – keeps organizational activities aligned with strategic goals
and priorities.
Economical in Nature – delivers benefits that outweigh the costs of evaluation and
control activities.
Time Dimension – monitors performance continuously and evaluates both short-term and
long-term results.
Promote Mutual Understanding – improves coordination, cooperation, and
understanding among managers and employees.
Provide Real Feedback – supplies accurate and timely feedback for performance
improvement and corrective action.
Process of strategy evaluation &
control
• Determine what to measure
• Establish pre-determined Standards
• Measure performance
• Take corrective action
Process of Strategy Evaluation &
Control: Example of Declining
Deposits
•
in a Bank
Issue: Declining Deposits in a Bank
• Determine What to Measure – The bank identifies key measures such as total
deposits, number of deposit accounts, customer retention rate, and growth in
savings accounts.
• Establish Pre-determined Standards – The bank sets targets, for example, a
10% annual growth in deposits, customer retention rate above 90%, and at
least 500 new deposit accounts per month.
• Measure Performance – Actual results are collected and analyzed. The bank
finds that deposits have decreased by 5%, customer retention has fallen to
80%, and new account openings are below target.
• Take Corrective Action – The bank introduces higher interest rates on savings
accounts, launches promotional campaigns, improves digital banking services,
and strengthens customer relationship programs to increase deposits.
Benefits of Strategy evaluation &
Control
Execution of strategic
plan
Effective supervision Improve efficiency
Means of
Basis of future action
coordination
Moral Checks on
Aid to decentralization
employees
Measures of Corporate performance
a. KPIs (Key Performance Indicators) – c. Inventory Control System – a system used to
measurable indicators used to evaluate the monitor and manage inventory levels
success of an organization in achieving its efficiently.
objectives. Indicators: stock turnover, inventory accuracy,
Indicators: sales growth, market share, carrying cost, stock-out rate.
employee productivity, customer retention. Example: Walmart and Bhat-Bhateni use
Example: Amazon tracks delivery time, inventory systems to maintain optimal stock
customer retention rate, and revenue growth levels.
as KPIs. d. Customer Satisfaction – the degree to which
b. Financial Measures (ROI, EPS) – financial customers are pleased with a company's
indicators used to assess profitability and products or services.
overall financial performance. Indicators: customer feedback, satisfaction
Indicators: Return on Investment (ROI), scores, complaint rates, loyalty levels.
Earnings Per Share (EPS), profit margin, Example: Dish Home measures subscriber
revenue growth. satisfaction through retention rates and user
Example: Apple measures ROI on product feedback.
investments and reports EPS to shareholders.
Problems in measuring Performance
•Purpose of Measurement – unclear goals, ambiguous standards, inconsistent objectives.
•Lack of Empowerment – limited authority, restricted decision-making, low autonomy.
•Lack of Mutual Trust – poor relationships, communication gaps, employee resistance.
•Cost and Quality of Data – expensive data collection, inaccurate data, unreliable
information.
•Organizational Policy – rigid rules, bureaucratic procedures, policy constraints.
•Top Management Support – lack of commitment, inadequate resources, weak leadership
support.
•Skills of Evaluators – insufficient training, evaluator bias, poor judgment.
•Lack of Accountability – unclear responsibilities, weak ownership, difficulty assigning
blame or credit.
Features of an effective strategic control & evaluation
•Integrate with Planning – aligned with organizational plans and strategies.
•Accuracy – provides correct and reliable information.
•Suitability – matches organizational needs and objectives.
•Simple to Understand – easy to use and interpret.
•Fulfill Objective – helps achieve organizational goals.
•Economical – cost-effective and efficient.
•Comprehensive – covers all important organizational areas.
•Capable to Communicate – shares information and feedback effectively.
•Suggestive – provides recommendations for improvement.
•Flexible – adapts to changing situations and environments.
Guidelines for Proper Evaluation & control
•Initiate Effective Control, establish clear performance standards, regularly monitor
activities, and take corrective actions whenever deviations occur.
•Appropriate Focus, concentrate on key strategic areas and critical activities that have a
significant impact on organizational objectives.
•Reward for Efficiency, recognize and reward employees for achieving targets and
performing efficiently to encourage motivation and better performance.
•Balance in Authority and Responsibility, ensure that employees are given adequate
authority to fulfill their responsibilities and are held accountable for their actions.
•Participative Management, involve employees in planning, decision-making, and
evaluation processes to increase commitment and cooperation.
•Proper Coordination, maintain harmony and cooperation among departments and
individuals to ensure smooth achievement of organizational goals.
•Effective Communication, provide timely, accurate, and clear information throughout the
organization to support decision-making and performance improvement.