Concept of Control in Strategic Management

Control is taking corrective actions if any deviation exists between the standard and actual. It
ensures that the organization is using appropriate strategies to deal with the environmental
conditions.
Strategic control takes into account the changing assumptions that determine a strategy,
continually evaluate the strategy as being implemented and take the necessary steps to adjust the
strategy to the new requirements. It serves as early warning system which is different from the
post action control.
Strategic control attempts to answer the question as are we moving in the right direction? It aims
at proactive and continuous questioning of the basic direction of the strategy. Strategic control
mainly focuses on external environment and considers a long period of time and exercised by the
top management in support of the middle and lower level. The objective is to verify that the firm
is using appropriate strategies for the conditions in the external environment and the company's
competitive advantages.
Strategic control is concerned with tracking a strategy as it is being implemented, detecting
problems or changes in its underlying premises, and making necessary adjustments- Pearce and
Robinson
In conclusion, it may be stated that strategic control ensures proper direction of strategy.
Process of Strategic Control
The process of strategic control may be mentioned through the following steps.
1. Determine what to measure: The first step in the strategic control process is determining the
major control areas of an organization. The controls are based on the organizational vision,
mission and objectives developed during the strategic planning process. The choice of areas is
important because it is expensive and virtually impossible to control every aspect of the
organization.
2. Set control standards: The second step in the control process is establishing control standards.
A standard is a target against which the subsequent performance is compared. The standards
enable managers to evaluate performance. Normally, performance is measured in terms of
quantity, quality, time, cost, and behavior.
3. Measure performance: Once standards are determined, the next step is measuring the actual
performance. Strategic control involves continuous measurement of performance. Under this,
assessment is made in a regular manner to ensure that plans, programs, projects, budget and
procedures are moving towards organizational objectives. A strong management information
system works as foundation for performance evaluation.
4. Compare performance with standards: After the measurement of actual performance, it should
be compared to the standards. It determines the variation between actual performance and
standard. If the actual performance matches the standard, the process of strategic control stops,
otherwise, attempts should be made to determine the reasons of the deviations.
5. Determine reasons for the deviations: The fifth step of the strategic evaluation and control
process involves finding the reasons of deviations between the standard and actual performance.
The organization needs to identify whether the deviations are due to internal shortcomings or
external changes which are beyond the control of the organization.
6. Take corrective action: The final step in the strategic control process is to take the corrective
action. This includes re-examination of plans, programs, goals, and strategies.
Strategic Information System
Competition is the major factor determining the success or failure of a firm. Competitive
strategies are formulated and implemented in search of competitive advantage through cost,
quality, and speed. A strategic information system helps a firm to gain a competitive advantage.
It has both internal and external focus.
A strategic information system is aligned with the business strategy and structure. It helps a
business to respond the environmental changes more effectively and create a competitive
advantage.
A strategic information system uses two models. The competitive force model describes the
forces that shape the industry's competition. The value chain model describes the activities
needed to create products or services.
Features of Strategic Information Systems
The following are the major features of strategic information system.

 It is directly linked to business strategy.

 It fundamentally changes the way a business is carried.
 It uses an information system based on the computer for competitive advantage.
 It acts as the decision support system. It develops a strategic approach by aligning
information systems with the business objectives.
 It urges the use of knowledge in the most innovative way.
 It significantly affects business performance.

Importance of Strategic Information System

  A strategic information system is important in the following ways.
 Provides necessary information for strategic decision-making.
 Creates barriers to entry by producing innovative products difficult for competitors to
imitate.
 . Generates database for improving marketing effectiveness.
 Lowers the overall costs of the business.
 Leverage technology in each stage of the value chain.

Types of Control
Control is a managerial activity that ensures the organizational activities are heading towards the
right direction. On the basis of focus, control may be classified into three types.
1. Input controls: They focus on inputs such as knowledge, skills, abilities, values and motives of
the employees. They ensure the proper input in the work process.
2. Behavioral control: They specify work procedures. They are related to the ways of doing
organizational activities through policies, rules and procedures.
3. Output control: They focus on performance outcomes. They deal with the end results through
the use of targets or milestones.
Meaning of Strategy Evaluation
Strategy evaluation involves tracking a strategy as it is being implemented. It is also concerned
with detecting problems or changes in the strategy and making necessary adjustments. It ensures
that the organization is moving in the right direction.
Under strategic management, strategies are formulated under a number of assumptions. The
assumptions may not be valid or relevant due to the considerable gap between the strategy
formulation and implementation. This may also be due to changes in environmental components.
Hence, strategies should be evaluated continuously.
Criteria for Evaluating Strategy
According to Richard Rumelt, strategy should be evaluated on four bases: consistency,
consonance, feasibility, and advantage. Consonance and advantage are based on a firm's external
assessment, whereas consistency and feasibility are based on an internal assessment.
1. Consistency: A strategy should be consistent with goals and policies, Organizational conflict
and interdepartmental disputes may be the sign of strategic inconsistency.
2. Consonance: A strategy should be in consonance with its environment. It must be responsive
to the external as well as internal environment of the organization.
3. Feasibility: A strategy should be feasible to the organization in terms of its resources and
capabilities. It also includes examining whether an organization has demonstrated in the past that
it possesses the abilities, competencies, skills, and talents needed to carry out a given strategy.
4. Advantage: A strategy should be evaluated in terms of creation of competitive advantage in
terms of resources, skills, or position.
Characteristics of Strategy Evaluation
The major characteristics of strategy evaluation are mentioned below.
1. Environmental assumption: Strategy evaluation is based on environmental assumptions which
may not be valid due to the gap between the strategy formulation and implementation. When the
assumptions are not relevant, it signals strategic adjustment or change.
2. Focus: Strategy evaluation has both a long-run and short-run focus. It considers operational as
well as strategic activities. However, it mainly focuses the later.
3. Feedback: Strategy evaluation provides adequate and timely feedback. Furthermore, it alerts
management to problems before a situation turns critical.
4. Goal oriented: Strategy evaluation measures performance and direction to ensure the
organization is heading toward goal achievement. Hence, it is goal oriented.
5. A continuous process: Strategy evaluation is a continuous process and proactive in nature. This
is because the environment changes constantly.
Measures of Corporate Performance
Performance is the end result of any activity. In other words, it is the accomplishment of a given
task. Performance is measured on ground of standard, cost, quality and speed. Measuring
performance is very important for effective organizational control. Performance may be
categories in several ways. One of them is financial performance, market performance and
shareholders value performance. Similarly, corporate performance may also be categories as
quantitative and qualitative criteria.
1. Quantitative criteria: It largely reflects market performances. They are the target performance
outcomes for normally one year. They are called financial performance. Quantitative criteria of
performance include;

 Operating income
 Profitability
 Growth in operating incomes
 Growth in Net profit
 Return on capital employed
 Cash flows etc.
2. Qualitative criteria: A qualitative criterion of performance is used to measure the outcome of
the organization over a long period of time. It is concerned with competitiveness and future
business prospects. The qualitative criteria of performance include the following:

 Quality of products, services and programs

 Development of new product, services or programs
 Satisfaction of customers
 Relationship between management and employees
 HR attractiveness
 Employee commitment and satisfaction.

Problems in Measuring Performance

Organizational performance is a multidimensional concept. It shows how much an organization
matches its vision, mission, and goals. Measurement of organizational performance is a core
activity of strategic management. However, there are some problems in measuring performance..
1. Qualitative measurement: The qualitative aspects of performance are often ignored or difficult
to measure. For example, the sales figure would be satisfactory but it may be difficult to measure
whether the customers are satisfied or not.
2. Integrative measurement: The performance should not be measured in isolation. Rather, it
should be integrated with other aspects of the organization which is difficult to achieve. They
may be many contributors to the output or outcome.
3. Adopting balance scorecard: The balanced scorecard is a strategic management tool that views
the organization from four perspectives: financial, customer, business process and learning and
growth. It's a difficult task to integrate these indicators and measuring the true organizational
performance. Moreover, most of the organizations tend to focus the financial aspects only to
measure their performances.
4. Short-term vs. long-term outcomes: The short-term performance of an organization may be
satisfactory. However, it may be hampering the long- term or strategic outcomes. Likewise, too
much focus or long-term outcome may ignore the short-term performance. It's a challenging job
to balance the short-term and long-term outcomes or performance.
5. Efficiency vs. effectiveness: Efficiency is about using the available resources productivity. It
shows the ratio of input and output. Effectiveness is the quality or value or impact of the output.
It is the extent to which objectives are attained. Measuring the performance based on both
efficiency and effectiveness is a challenging job.

Characteristics of an Effective Evaluation and Control

 The following are the major characteristics an effective evaluation and control.
1. Provide direction: Strategy evaluation and control ensure that the organization is moving in the
right direction.
2. Continuous activity: Strategy evaluation and control are related to implementation of strategy.
Hence, they are continuous activities.
3. Top management activity: Since strategic evaluation and control are sensitive activities, the
top management is involved on them.
4. Cost effective: Strategic evaluation and control should be viable from cost benefit view. In
other words, the benefits sought from strategic evaluation and control should exceed the cost
associated with this.
5. Focus on key performance: Strategic evaluation and control focus on key performance area.
They emphasize the external elements that affect the strategy implementation directly.
6. Future oriented: Strategic evaluation and control guide strategy implementation over a long
period of time. Hence, they are future oriented.
Guidelines for Proper Evaluation and Control
There is no our ideal evaluation and control system. It depends on the size, management style,
purpose, problems, and strengths. The following are the some of the guidelines for proper
evaluation and control.
1. Economical: Evaluation and control activities must be economical. Too much information
distorts control and evaluation. It should be meaningful and relate to a firm's objectives.
2. Timeliness: Evaluation and control activities should provide timely information to the
managers.
3. Provide true picture: Evaluation and control should be designed to provide a true picture of
what is happening.
4. Action oriented: Information derived from the evaluation and control process should facilitate
action. It should not merely be information- oriented.
5. Foster mutual understanding, trust, and common sense: Evaluation and control should foster
mutual understanding, trust, and common sense among the units or departments in an
organization.
6. Simple: Evaluation and control should be simple. Complexity creates confusion.
7. Convincing: Evaluation and control should be able to convince the employees that failure to
accomplish certain objectives within a prescribed time is not necessarily a reflection of their
performance.