Module 5: Strategy evaluation & control

Module 5: Strategy evaluation & Control

12 Sessions [Apply]

Strategic Evaluation; Importance-

Barriers.
Strategic Control & Operational
Control, Techniques.
Green Strategy for Sustainability.

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Strategic Evaluation
The purpose of strategic evaluation is to evaluate
the effectiveness of strategy in achieving
organizational objectives.

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Importance
• Understand the coordination between the
tasks
• Check on the validity of strategic choice
• Congruence between decisions and
intended strategy
• Need for feedback, appraisal and reward
• Creating inputs for new strategic planning

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Barriers
• Limits of controls
• Difficulties in measurement
• Resistance to evaluation
• Short-termism
• Relying on efficiency versus effectiveness:
(It is instructive to remember that efficiency is
‘doing the things rightly' while effectiveness is
‘doing the right things’)

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•Process of Evaluation
The process of evaluation basically deals with
four steps:
[Link] standards of performance
[Link] of performance
[Link] variances
[Link] corrective action

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Strategic Control
• Strategic Control could be defined as the process of
• 1determining the effectiveness of a given strategy
in
• 2achieving the organizational objectives and
• 3taking corrective action wherever required.

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Strategic Control
The four basic types of strategic controls
[Link] control
[Link] control
[Link] surveillance
[Link] alert control

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Premise Control
• Every strategy is based on certain assumptions about environmental and
organizational factors
• For instance, a company may base its strategy on important assumptions related
to environmental factors (e.g. favourable government policies), and
organisational factors (e.g. expected breakthrough in research and development
(R&D)).
• Premise control serves the purpose of continually testing the assumptions to find
out whether they are still valid or not. This enables the strategists to take
corrective action at the right time rather than continuing with a strategy
based on erroneous assumptions.
• The responsibility for premise control can be assigned to the corporate planning
staff that can identify key assumptions and keep a regular check on their validity.

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Implementation Control
•The implementation of a strategy results in a series of plans,
programs, and projects. Resource allocation is done for
implementing these.
•This control leads to strategic rethinking
•Ex: Diversification , resource allocation,

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Strategic Surveillance
broad-based, general
Strategic surveillance can be done through a
monitoring on the basis of selected information
sources to uncover events that are likely to affect
the course of strategy of an organisation.
Organisational learning and knowledge management systems can help capture
much of the information that is otherwise lost in organisation. This information
can be used for strategic surveillance.

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Special Alert Control
• The last of the strategic control systems is the special alert control, which is
based on a trigger mechanism for rapid response and immediate reassessment of
strategy in the light of sudden and unexpected events. Special
•

• alert control can be exercised through the formulation of contingency strategies

and assigning the responsibil- ity of handling unforeseen events to crisis
Examples of such events can be the
management teams.
sudden fall of a government at the central or
state level, instant change in a competitor's
posture, an unfortunate industrial disaster, a
breach in information security, or a natural
catastrophe.

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Evaluation Techniques for
Strategic Control
• Strategic momentum control These types of evaluation techniques are aimed
at assuring that the assumptions on the basis of which strategies were
formulated are still valid and what needs to be done in order to allow the
organisation to maintain its existing strategic momentum. For achieving
these aims there are three techniques which could be used: responsibility control
centres, underlying success factors, and generic strategies
• Strategic leap control Organisations are required to make strategic leaps in
order to make significant changes when the environment is relatively
unstable. Strategic leap control can assist such organisations by helping to define
the new strategic requirements and to cope with emerging environmental
realities. There are four techniques of evaluation used for exercising strategic
leap control: strategic issue management, strategic field analysis, systems
modelling, and scenarios

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Operational Control
• aimed at allocation and use of
organisational resources through evaluation
of the performance of organisational units
such as divisions or SBUs to assess their
contribution to the achievement of
organisational objectives

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Operational Control
Attribute Strategic Control Operational Control
Basic Question Are we moving in the right How are we performing
direction
Aim Proactive Allocation of Resources
Main Concern Steering Control Action Control
Focus External Internal
Time Horizon Long Term Short Term
Main Techniques Environmental Scanning Budgets, MBO

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Evaluation techniques for
Operational Control
1. Internal analysis
• VRIO framework,
• value chain analysis,
• quantitative (financial and non-financial)
analysis,
• qualitative analysis

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1. VRIO framework: The basic idea behind the VRIO
framework is that sustainable strategic advantage results
through the use of capabilities that are valuable, rare,
inimitable and organised for usage.
2. Value chain analysis focuses on a set of interrelated
activities performed in a sequence for producing and
marketing a product or service. The utility of value chain
analysis for the purpose of operational evaluation lies in
its ability to segregate the total task of a firm into
identifiable activities which can then be evaluated for
effectiveness.

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3. Quantitative analysis takes up the financial parameters and
the non-financial quantitative parameters such as physical
units or time in order to assess performance. (Numbers and
figures from the data)

4. Qualitative analysis supplements the quantitative analysis

by including those aspects which are not feasible to measure
on the basis of figures and numbers. The methods that could
be used for qualitative analysis are based on intuition,
judgement, and informed opinion. Techniques such as
surveys and experimentation can be used for evaluation of
performance for exercising operational control.

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ii. Comparative analysis
• Comparative analysis Comparative analysis which consists of historical
analysis, industry norms, and benchmarking compares performance of a firm
with its own past performance or with other firms:
1. Historical analysis is a frequently used method for comparing performance
of a firm over a given period of time. This method has the added benefit of
enabling a firm to note how the performance has taken place over a period of
time and to analyse the trend or pattern. Such an analysis can offer the firm
better perception of its performance as compared to an absolute assessment.

2. Industry norm is a comparative method for analysing performance that brings

the advantage of making a firm competitive in comparison to its rivals in
the same industry. Being a comparative assessment, evaluation on the basis
of industry norms enables a firm to bring its performance at least up to the
level of other firms and then attempt to surpass it.

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• Benchmarking is a comparative method where a firm finds the best
practices in an area and then attempts to bring its own performance
in that area in line with the best practice. The best practices are the
benchmarks that could be adopted as the standards by the firm to
exercise operational control. Through this method, performance can be
evaluated continually till it reaches the best practice level. In order to
excel, a firm shall have to exceed the benchmarks. In this manner,
benchmarking offers a tangible method to firms to evaluate performance.
• Keep on attempting the practices and
comparing with your own results .

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III. Comprehensive analysis
Comprehensive analysis which adopts a total approach rather than
focusing on one area of activity or a function or department.
1. Key factor rating is a method that takes into account the key factors in
several areas and then sets out to evaluate performance on the basis of
these. This is quite a comprehensive method as it takes a holistic view of the
performance areas in an organization.

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• Business intelligence systems is one of the concepts used for discovering
knowledge from various in- ternal and external data repositories
available to an organisation to support effective decision making. By
itself, business intelligence systems are not meant for exercising
operational control but they have the potential to act as valuable inputs of
information that can be used for operational control. In fact, one of the
primary applications of business intelligence systems is in the area of
corporate performance management. This can be accomplished by
accessing data warehouses, using data mining tools, and creating
analytical reports that can help in performance evaluation.

• (IINPODS – OBJECTIVE, Question…)

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• Balanced scorecard method is based on the identification of four key
performance measures of customer perspective, internal business
perspective, innovation and learning perspective, and the financial
perspective. The method is a balanced approach to performance
measurement as there are a range of parameters taken into account for
evaluation. The balanced scorecard, coupled with business intelligence
systems offers a way to measure an organisation's performance
against its strategic objectives while focusing on building capabilities
to achieve these objectives.
• The balanced scorecard examines performance related to customers,
internal processes, human resources and finance. It can be used for
deciding the key drivers of performance and focusing attention on the
goals and targets thus helping to create a balanced system of performance
evaluation.

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Green Strategy

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• Ethical Value
• Environment concern
• Sustainability
• Innovation

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