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Strategic Evaluation and Control

The document discusses strategic evaluation and control. It defines strategic evaluation as determining the effectiveness of a strategy in achieving objectives and taking corrective actions. Key parts of strategic evaluation include appraising factors, measuring performance, and making adjustments. The document outlines the strategic evaluation process which includes establishing standards, measuring performance against standards, analyzing variances, and taking corrective actions. It also discusses techniques for strategic evaluation like gap analysis, SWOT analysis, PEST analysis, and benchmarking. Finally, it covers types of strategic control such as premise control, implementation control, strategic surveillance, and special alert control.

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46 views21 pages

Strategic Evaluation and Control

The document discusses strategic evaluation and control. It defines strategic evaluation as determining the effectiveness of a strategy in achieving objectives and taking corrective actions. Key parts of strategic evaluation include appraising factors, measuring performance, and making adjustments. The document outlines the strategic evaluation process which includes establishing standards, measuring performance against standards, analyzing variances, and taking corrective actions. It also discusses techniques for strategic evaluation like gap analysis, SWOT analysis, PEST analysis, and benchmarking. Finally, it covers types of strategic control such as premise control, implementation control, strategic surveillance, and special alert control.

Uploaded by

KBC KGF
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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STRATEGIC EVALUATION

AND
CONTROL
Presented By:-
Nikita Saini
MBA 4th (25)
STRATEGIC EVALUATION

• Strategic Evaluation is defined as the process of determining the effectiveness of a


given strategy in achieving the organizational objectives and taking corrective action
wherever required.
• Strategy evaluation is the final step of strategy management process. The key strategy
evaluation activities are: appraising internal and external factors that are the root of
present strategies, measuring performance, and taking remedial / corrective actions.
• Evaluation makes sure that the organizational strategy as well as it’s implementation
meets the organizational objectives.
IMPORTANCE OF STRATEGIC EVALUATION

• Strategic evaluation can help to assess whether the decisions match the intended
strategy requirements.
• Strategic evaluation, through its process of control, feedback, rewards and review,
helps in a successful culmination of the strategic management process.
• The process of strategic evaluation provides a considerable amount of information
and experience to strategists that can be useful in new strategic planning.
PARTICIPANTS IN STRATEGIC EVALUATION

• Shareholders
• Board of Directors
• Chief executives
• Financial controllers
• Company secretaries
• External and Internal Auditors
• Audit and Executive Committees
• Corporate Planning Staff or Department
• Middle-level managers
PROCESS OF STRATEGIC EVALUATION
ESTABLISHING THE STANDARDS

• While fixing the benchmark, strategists encounter questions such as - what


benchmarks to set, how to set them and how to express them.
• In order to determine the benchmark performance to be set, it is essential to
discover the special requirements for performing the main task.
• The organization can use both quantitative and qualitative criteria for comprehensive
assessment of performance.
• Quantitative criteria includes determination of net profit, ROI, earning per share, cost
of production, rate of employee turnover etc. Among the Qualitative factors are
subjective evaluation of factors such as - skills and competencies, risk taking
potential, flexibility etc.
MEASUREMENT OF PERFORMANCE

• The standard performance is a bench mark with which the actual performance is to
be compared.
• The reporting and communication system help in measuring the performance.
• For measuring the performance, financial statements like - balance sheet, profit and
loss account must be prepared on an annual basis.
ANALYSIS

• While measuring the actual performance and comparing it with standard


performance there may be variances which must be analysed.
• The strategists must mention the degree of tolerance limits between which the
variance between actual and standard performance may be accepted.
TAKING CORRECTIVE ACTION

• Once the deviation in performance is identified, it is essential to plan for a corrective


action.
• If the performance is consistently less than the desired performance, the strategists
must carry a detailed analysis of the factors responsible for such performance.
TECHNIQUES OF STRATEGIC EVALUATION

• GAP Analysis
• SWOT Analysis
• PEST Analysis
• Benchmarking
GAP ANALYSIS

• The gap analysis is one strategic evaluation technique used to measure the gap
between the organization’s current position and its desired position.
• The gap analysis is used to evaluate a variety of aspects of business, from profit and
production to marketing, research and development and management information
systems.
• Typically, a variety of financial data is analyzed and compared to other businesses
within the same industry to evaluate the gap between the organization and its
strongest competitors.
SWOT ANALYSIS

• The SWOT analysis is another common strategic evaluation technique used as a part
of the strategic management process. The SWOT analysis evaluates the organization’s
strengths, weaknesses, opportunities and threats.
• Strengths and weaknesses are internal factors, while opportunities and threats are
external factors.
• This identification is essential in determining how best to focus resources to take
advantage of strengths and opportunities and combat weaknesses and threats.
PEST ANALYSIS

• Another common strategic evaluation technique is the PEST analysis, which identifies
the political, economic, social and technological factors that may impact the
organization’s ability to achieve its objectives.
• Political factors might include such aspects as impending legislation regarding
wages and benefits, financial regulations, etc.
• Economic factors include all shifts in the economy, while social factors may include
demographics and changing attitudes. Technological pressures are also inevitable as
technology becomes more advanced each day.
• These are all external factors, which are outside of the organization’s control but
which must be considered throughout the decision making process.
BENCHMARKING

• Benchmarking is a strategic evaluation technique that’s often used to evaluate how


close the organization has come to its final objectives, as well as how far it has left to
go.
• Organizations may benchmark themselves against other organizations within the
same industry, or they may benchmark themselves against their own prior situation.
• A variety of performance measures, as well as policies and procedures, may be
evaluated regularly to identify where adjustments are necessary to maintain the
sustainable competitive advantage.
STRATEGIC CONTROL

• Strategic controls take into account the changing assumptions that determine a
strategy, continually evaluate the strategy as it is being implemented, and take the
necessary steps to adjust the strategy to the new requirements.
• Most commentators would agree with the definition of strategic control offered by
Schendel and Hofer: "Strategic control focuses on the dual questions of whether: (1)
the strategy is being implemented as planned; and (2) the results produced by the
strategy are those intended.“
TYPES OF STRATEGIC CONTROL

• Premise control
• Implementation control
• Strategic surveillance
• Special alert control
PREMISE CONTROL

• Every strategy is based on certain planning premises or predictions.


• Premise control has been designed to check systematically and continuously
whether or not the premises set during the planning and implementation process are
still valid.
• It involves the checking of environmental conditions. Premises are primarily
concerned with two types of factors:
a. Environmental factors (for example, inflation, technology, interest rates, regulation,
and demographic/social changes).
b. Industry factors (for example, competitors, suppliers, substitutes, and barriers to
entry)
IMPLEMENTATION CONTROL
• Implementing a strategy takes place as a series of steps, activities, investments and acts
that occur over a lengthy period.
• The two basis types of implementation control are:
a. Monitoring strategic thrusts (new or key strategic programs): Two approaches are
useful in enacting implementation controls focused on monitoring strategic thrusts: (1) one
way is to agree early in the planning process on which thrusts are critical factors in the
success of the strategy or of that thrust; (2) the second approach is to use stop/go
assessments linked to a series of meaningful thresholds (time, costs, research and
development, success, etc.) associated with particular thrusts.
b. Milestone Reviews: Milestones are significant points in the development of a
programme, such as points where large commitments of resources must be made. A
milestone review usually involves a full-scale reassessment of the strategy and the
advisability of continuing or refocusing the direction of the company.
STRATEGIC SURVEILLANCE

• Strategic surveillance is designed to monitor a broad range of events inside and


outside the company that are likely to threaten the course of the firm's strategy.
• The basic idea behind strategic surveillance is that some form of general monitoring
of multiple information sources should be encouraged, with the specific intent being
the opportunity to uncover important yet unanticipated information.
• Strategic surveillance appears to be similar in some way to "environmental
scanning." Strategic surveillance is designed to safeguard the established strategy
on a continuous basis.
SPECIAL ALERT CONTROL

• Another type of strategic control is a special alert control.


• "A special alert control is the need to thoroughly, and often rapidly, reconsider the
firm's basis strategy based on a sudden, unexpected event."
• The analysts of recent corporate history are full of such potentially high impact
surprises (i.e., natural disasters, chemical spills, plane crashes, product defects,
hostile takeovers etc.).
• An example of such event is the acquisition of your competitor by an outsider. Such
an event will trigger an immediate and intense reassessment of the firm's strategy.
Form crisis teams to handle your company's initial response to the unforeseen events.
THANK YOU

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